Business Analysis: Caterpillar Inc.

Caterpillar being global leading producer of construction and mining equipment operates in Energy, Transportation, Construction and Resource Industries (*SRG 2014). It is over ninety years Caterpillar Inc. put efforts to develop ambitious sustainability goals to make encouraging impact in every region they operate. With revenues of over $47 billion achieved in 2015 Caterpillar made interested their customers to stimulate infrastructure, energy and natural resource development through acceptance of remanufactured products and components (Caterpillar 2016).
Remanufacturing can be defined as a chain of production activities on product towards its restoration to achieve the original or better performance compliant to quality specifications (SRG
Caterpillar was among the first manufacturers in 1973, which developed the remanufacturing idea when very few organizations could dream about circular economy at that time. Within three decades Caterpillar proved not only commercial viability of remanufacturing altogether with technical rationality in terms of quality specifications but also evidenced delivery of great environmental rewards. For example, Caterpillar delivered over 70,000 ton of remanufactured products in 2010 against 45,000 ton in 2005 (EMF 2013).
First, remanufacturing concept had not been initiated to support the circular economy philosophy as at that time it was not developed yet. Caterpillar adopted principles of remanufacturing following its competition strategy in the diesel engine market.
The study conducted in 1979 by Caterpillar on the truck market in America identified vast opportunities and strong competitive advantage, realized in 1995 with attained considerable share of the U.S.
Today, Caterpillar can derive up to 60% of parts and components from the old engines and they have target to increase the usage of old parts up to 75% (Stahel 1995). To achieve this target Caterpillar need to expand their storage capacity in terms of number of parts stored for remanufacturing, improve inspection and reduction of components disposal. Some of the old engine items (gaskets, bearing, filter, etc.) will wear out and it hardly to utilize old components use up to higher than 75%. However the technical complication is shortage of techniques and devices to inspect the quality of returned parts. For example, bearing frequently has a remaining duration exceeding 85% of total lifecycle at the time they are disposed (Stahel 1995).
Caterpillar targets to keep information log about condition of main parts with support of digital technology to track product units on sites. This technique allows observing overall condition of the parts, number of operated hours and reducing risks of holding and functioning costs for the customer to arrange in-time take back engines process in remanufacturing