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Caterpillar Enlists Suppliers in Targeting 25% Profit Margin

Cat is reducing its number of suppliers to 6,000 from 9,000 and working more closely with 200 companies identified as critical to future growth.

October 20, 2010

Mike Render, an engineer who has worked for Caterpillar Inc. since the 1970s, has spent the last three years trying to break with the company’s past.

Render suggested his employer partner with a supplier to design a component that cuts emissions, rather than dictate specifications and choose the cheapest vendor. His team ended up working with 12 counterparts from catalytic-converter manufacturer Tenneco Inc. at Caterpillar’s Mossville, Illinois, engine center, where they created a mock production line to work out kinks in the manufacturing process. Output of the component at a Tenneco plant in Nebraska cut Caterpillar’s costs on the item by 20 percent.

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--Bloomberg

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