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,  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

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.

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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.

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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 Freightliner LLC), Ford and MAN (formerly Volkswagen).  An agreement with Chrysler for supplying the engine for use in Dodge Ram trucks.  Various engine and component supply agreements ranging across midrange and high-horsepower businesses with Komatsu Ltd., as well as various joint ventures and other license agreements in our Engine, Component and Distribution segments. 23

US Work Centers

24 Financial Accounts

Engine Segment Results Financial data for the Engine segment was as follows:

Three months ended Favorable/ Nine months ended Favorable/

September 29, September 30, (Unfavorable) September 29, September 30, (Unfavorable)

In millions 2013 2012 Amount Percent 2013 2012 Amount Percent

External sales $ 2,045 $ 2,131 $ (86 ) (4 )% $ 6,139 $ 6,924 $ (785 ) (11 )%

Intersegment sales 447 396 51 13 % 1,312 1,303 9 1 %

Total sales 2,492 2,527 (35 ) (1 )% 7,451 8,227 (776 ) (9 )%

Depreciation and amortization 53 48 (5 ) (10 )% 156 142 (14 ) (10 )%

Research, development and engineering expenses 103 115 12 10 % 310 341 31 9 %

Equity, royalty and interest income from investees 31 25 6 24 % 106 100 6 6 %

25 Revenue and Margins

 For FY13, the revenue estimates range from $16,885.0 million to $17,193.0, with an average of $17,090.0 million. ( from the previous average of $17,596.4 million)

 Cummins gross profit declined 14.7% to $1.1 billion from $1.2 billion in 4Q11; cost of goods sold (COGS) decreased 12.1% to $3.2 billion from $3.7 billion in 4Q11.

26 Sample Sales Order and Invoice

 Oracle EBS Vision Instance was utilized to create a sample Sales Order and a Customer Invoice for a random customer – ABC Corporation Americas  Following high level steps were needed to accomplish this:  Create User with access to the Receivables Manager and Order Management responsibilities  Add Cummins Item Information to the warehouse inventory  Create Order Header and Lines and Book the Order  Create Customer Invoice against the Sales Order

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Sample Sales Order (Header)

28 Sample Sales Order (Lines)

29 Sample Customer Invoice (Header)

30 Sample Customer Invoice (Lines)

31 Customer Invoice (Lines)

32 Sample Customer Invoice (Print Document)

33 Thank You

We hope you enjoyed our presentation!

For additional information, please visit Cummins website here

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