One of the best-run industry events that I’ve been to is the annual conference of the National Fluid Power Association (NFPA). This year’s event featured a focus on globalization, and attendees got a fascinating glimpse of what it means for their businesses.
Ken Gray, global product manager, large excavators, Caterpillar Inc., discussed the increasing influence that the developing world has on product development cycles. Gray said that there are three main global growth drivers now: Economic (low inflation rates and under-investment that has occurred in the past), societal (huge population growth rates, increased urbanization and a burgeoning middle class) and industrial (infrastructure and energy needs). Gray stressed that the predicted global population of 7.6 billion in 2020 will have a lot of needs—including food, water, housing, transportation and energy.
In addition, Gray went through some of the confusing emission regulations (such as Tier IV) that global manufacturers increasingly have to deal with. Look at a global map of the different overlapping and competing regulations, and it’s enough to make any engineer’s head spin. It gives me newfound respect for the product managers and engineers who have to grapple with what that means for their designs.
Another huge impact on manufacturing of heavy equipment like excavators comes from the competitive landscape. Ten years ago, a company like Caterpillar had about nine competitors across the globe. Now, the number has exploded to something like 60. It’s no longer possible to keep as close tabs on every competitor or to know as many details about how their equipment is constructed. (Imagine having to simply purchase equipment from all the competitors to deconstruct what they’re doing—truly a nightmare.)
Gray’s key point was that manufacturers should focus on what they do very well and not try to be all things to all customers. He stressed that companies should reduce unnecessary complexity—for example, in what varieties of products are available. Customers probably will be fine with 15 model choices instead of 80. (A side benefit— the manufacturing operation will be so thankful.) Simplify your price lists accordingly. Yet never compromise on quality.
“Deliver quality, and everything else will follow,” Gray told the attendees. “Cost, velocity, price, customer satisfaction, and even employee engagement.”
Caterpillar’s largest hydraulic excavator is the 390—a 523-hp behemoth. But who would have thought 10 or 20 years ago that the largest fleet of them in the world would be located in … ?
… Mongolia. It’s a changing world. You need to start changing your mindset.
How is your company dealing with the challenges of going global? Weigh in on Paul’s blog at the Engineering Exchange.
Paul J. Heney – Editorial Director
Filed Under: Commentary • expert insight