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Cummins ERP System Cummins Inc. A global power leader Enterprise Modeling (201308-W01) Term Project Team Members Arjun Kekatpure Chimezie Njoku Langston Swann 1 Overview Cummins is a global power leader that designs, manufactures, sells and services diesel engines, power generation systems and related products and technologies. 2 Overview General Information: Corporate Headquarters: Columbus, Indiana Founded: 1919 Stock Symbol: CMI (traded on NYSE) Chairman/CEO: Tom Linebarger (joined Cummins in 1994, in current role since January 2012) 2012 revenues: $17.3 billion 2012 Fortune 500 rank: 150 2012 net income: $1.65 billion Employees: Approx. 46,000 worldwide; 16,000 United States 3 History Founded in 1919 by Clessie Lyle Cummins, a self taught mechanic. Officially became Cummins Company in 1929 as a result of a meeting between Clessie Cummins and William Glanton Irwin, a successful banker and investor. Cummins engines became popular in the 1930s at the Indianapolis motor speedway. 4 History Also in the 1930s, Cummins company designed the Model H and the N Series engines, which officially launched Cummins Company as a reliable engine producer. In 1937 it made its first profit. Made more profit in the 1950s as the primary engine provider for trucks and equipments used in the American interstate highway projects. In the 1950s Cummins Company also open is first oversees manufacturing facility is Shotts, Scotland and expanded sales into 98 countries 5 Vision “Making people’s lives better by unleashing the power of Cummins.” 6 Mission Motivating people to act like owners working together. Exceeding customer expectations by always being first to market with the best products. Partnering with our customers to make sure that they succeed. Demanding that everything we do leads to a cleaner, healthier, safer environment. Creating wealth for all stakeholders. 7 Values Integrity. Strive to do what is right and do what we say we will do. Innovation. Apply the creative ingenuity necessary to make us better, faster, first. Delivering Superior Results. Exceed expectations, consistently. Corporate Responsibility. Serve and improve the communities in which we live. Diversity. Embrace the diverse perspectives of all people and honor with both dignity and respect. Global Involvement. Seek a world view and act without boundaries. 8 Strategic Principles Cummins’ goals are defined by the following 6 strategic principles: Leverage complementary businesses Increase shareholder value Become the low cost producer Lead in critical technologies Seek profitable growth Create the right work environment 9 Growth Accelerators Cummins has identified Five Growth Accelerators to help the Company reach its full potential. Adopting a growth mindset - thinking every day about how the Company can be ready for tomorrow’s opportunities Developing from a multinational to a global company - aligning global and regional strategies, and ensuring processes work well in every country so every customer everywhere can benefit from the full power of Cummins. Achieving supply chain excellence - critical to cost leadership, customer service, overall growth and fulfilling Cummins’ mission that “everything we do leads to a cleaner, healthier, safer environment.” Delivering Customer Support Excellence - ensuring every customer interaction is a successful one, whether it’s an internal or an external customer. Investing in leadership development - making the right decisions as Cummins grows, but creating a work environment where employees, working increasingly on global teams, can get the feedback they need to be successful. 10 Organization Structure and Product Lines Cummins has four business units Cummins Engine Business Cummins Power Generation Business Cummins Component Business Cummins Distribution Business Cummins has three additional subsidiaries. It produces and does business through: Cummins Turbo Technologies Cummins Power Generation Cummins Emission Solutions Cummins is overseen by its current Chairman and CEO Thomas Linebarger along with 15 vise presidents who oversee other business processes. 11 Procurement Organization & Process Products and services are categorized into: Indirect is defined as all services and any products that are not assembled and shipped to an end customer (including tooling, chemicals, machinery, computers, gages, packaging, training, real estate, and prototypes, etc.) Direct is defined as all products that are manufactured and assembled into a product which is directly shipped to a customer (includes engine components, filters, turbochargers, generators, alternators, etc.) 12 Procurement Organization & Process(contd.) For Direct Purchasing, Cummins has seven business segment purchasing organizations and three regional purchasing organizations: Cummins Emission Solutions Purchasing Cummins Engine Business Purchasing Cummins Filtration Purchasing Cummins Fuel Systems Purchasing Cummins Generator Technologies Purchasing Cummins Power Generation Purchasing Cummins Turbo Technologies Purchasing Cummins East Asia International Purchasing Office (IPO) Cummins European International Purchasing Office (IPO) Cummins India Purchasing International Purchasing Office (IPO) Cummins Corporate Indirect Purchasing has regional offices in the US, Europe (UK/France/Germany/Turkey), Mexico, Brazil, South Africa, China, India, Australia and Singapore. 13 Distribution Process Cummins Distribution drives a comprehensive global distribution strategy and channel management. Capitalizing on synergies in parts and services, this business helps Cummins by providing outstanding support to our customers, while growing a less cyclical and less capital intensive business. The business consists of 17 Company-owned distributors and 10 joint ventures, covering 90 countries and territories through 233 locations. Through this network, trained personnel sell and distribute Cummins- branded products, related services and broader solutions such as maintenance contracts, engineering services and customized integrated products. 14 US Distribution Network 15 Cummins Business Process Business units are set in way that makes it easy for Cummins Inc to produces engines, power generations systems, and other engine components. The Production business units includes Component business, Engine business, and Power generation business and the three subsidiaries. Each of these units design, and manufacture products bequest to it. Cummins Inc created a separate unit specifically for handling procurement and distribution of merchandizes. Cummins distribution unit drives its global distribution strategy and chain management. It capitalizes on synergies in parts and services by providing support to customers. It does so utilizing 17 centers and 10 joint ventures within its distribution network. 16 Cummins Business Process (contd.) Customer can use the e-commerce, provided by Cummins, for planning, ordering, shipping and invoicing. Cummins parcel ship items of 150lbs. Anything over 150lbs are freight shipped via its business units’ facility. Cummins also distributes its product by engaging into a diversified procurement. Products are distributed via diverse suppliers Cummins partner with. 17 Materials Cummins reportable operating segments consist of the following: Engine, Components, Power Generation and Distribution. Cummins engines are used in trucks of all sizes, buses and recreational vehicles, as well as in various industrial applications, including construction, mining, agriculture, marine, oil and gas, rail and military equipment. 18 Bill of Materials BOM Cummins Power Generation - Bill of Materials Model DFAC-5747110 Description DIESEL GENSET Feature Description Component Quantity 0098-8277 LABEL-INFORMATION 1 0099- 2458-08 NAMEPLATE-GENSET 1 0100-3070 DIESEL L10 G1 60HZ 1 0100- 3784-01 ENGINE ACCESSORIES 1 0155-3496 MUFFLER (ACC LIST) 1 0159- 1573-03 TANK-FUEL (500 GAL STD-CHICAGO) 1 0179- 1360-02 INSTL-LOW COOLANT 1 0179-1402 INSTL-RADIATOR 1 0179-2653 INSTL-ALTERNATOR 1 0179- 2927-03 STARTER INSTL 1 19 Pricing Strategy Cummins uses a global procurement system called "Buy It Now", to handle indirect. 2 types of catalogs CIF (Catalog Interchange Format) - This is a simple (Microsoft Excel based) list of catalog items and their attributes that can include pictures. Punchout (External website) - Punchout catalogs are links (within our BuyItNow system) to your website that provides a live, interactive experience to the Cummins buyer. 20 Sample CIF 21 Suppliers Cummins considers their Suppliers a key to their success, and have a dedicated supplier portal where they list Cummins’ expectations regarding ethical behavior, sustainability, environmental stewardship, supplier diversity and more. Cummins requires that their suppliers use Electronic Data Interchange (EDI) to manage our business-to-business communications relationship. Usage of EDI/EDIFACT message formats to documented Cummins Implementation Guides is required. 22 Customers Cummins sells products to original equipment manufacturers (OEMs), distributors and other customers worldwide through a network of approximately 600 company-owned and independent distributor locations and approximately 6,500 dealer locations in more than 190 countries and territories. Largest Customers: Long-term heavy-duty engine supply agreements with PACCAR and Volvo Trucks North America. Mid-range supply agreements with PACCAR, as well as with Daimler Trucks North America (formerly
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