Diagnosing Service-Profit Chain at Caterpillar Financial Services

This case study presents a service-profit chain diagnosis and design for Caterpillar Financial Services Corporation, focusing on production and delivery aspects. It examines how the company translates customer and product requirements into production processes using strategies like Quality Function Deployment (QFD) and the Philips Business System. The analysis covers planning, organizing, and delivering products and services, emphasizing long-term planning, supply chain management, and consistent performance measurement. The study also explores how Caterpillar monitors and manages its systems through Product-Service Systems (PSS) and customer feedback, utilizing various communication channels and technologies. Key metrics such as Consumer Satisfaction (CSAT) and Net Promoter Score (NPS) are used to measure and improve the production and delivery systems. The strengths of Caterpillar Financial Services include consumer loyalty and strategic talent acquisition, while opportunities for improvement involve integrating independent databases and holding more frequent management meetings to enhance operational efficiency and decision-making. This diagnosis aims to provide actionable insights for Caterpillar Financial Services to optimize its service-profit chain and achieve sustainable success.

Service-Profit Chain Diagnosis & Design
Caterpillar Financial Services Corporation
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Service-Profit Chain Diagnosis & Design

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DO replace the <Red Font> instructions in the template sections with your response and change the
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Each Assessment Item (1-1, 1-2, 2-1, 2-2, 4-1, and 4-2) includes three main sub-sections including
Description & Discussion, Strengths, and Opportunities for Improvement. Each Assessment Item (e.g., 1-
1) should be no more than 5 pages excluding the Questions in the box and the Maturity Model table. For
each Assessment Item in this report follow the instructions below.
Description & Discussion
1. Describe the systems or processes that address the question(s) and identify the key linkages to
other organization systems (customers, operations, suppliers and partners, workforce,
measurement and analysis, strategic leadership, and governance)
2. Describe how the approach (systems) supports the strategy?
3. Identify the quantitative performance measures (metrics) used to manage and improve the
approaches (systems).
4. Identify the stakeholders that are involved with and impacted by the systems and processes.
5. Support the description and discussion with solid management and research literature including
course textbooks.
Strengths
1. Identify the strengths to sustain and leverage.
2. Describe each strength with three to four sentences.
3. Support all your strengths with solid references - management literature and empirical
evidence.
Opportunities for Improvement
1. Identify the opportunities for the organization to improve - four to five sentences.
2. Describe each issue, problem, or gap in their approach to addressing the assessment item.
3. Describe why the organization should care - the “so what” (implications) and the expected
benefits of improving.
4. Identify resources and inspiring examples that will help the organization understand how the
issue might be addressed.
5. Support all your opportunities with key concepts and solid references from the management
literature and empirical evidence.
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2-1 Production & Delivery
2-1a Translate Requirements - How does the organization translate customer requirements (1-
1) and product and service requirements (1-2) into production and delivery requirements? How
does the production and delivery system create value for key stakeholders and support the
overall organization strategy?
2-1b Plan & Organize - How does the organization plan, organize, and locate production and
delivery facilities to help ensure sustainable access to suppliers, partners, and customers? How
does the organization deliver the products and services to the customers? What are the primary
channels for interacting with customers and delivering products, services, and customer
experiences?
2-1c Monitor & Manage - How does the organization proactively monitor and manage the
production and delivery systems to create and deliver products and services that meet or exceed
the product/service (1-2) and customer requirements (1-1)? How does the organization
communicate with the customers to manage expectations during the production and delivery
processes?
2-1d Measure & Improve - How does the organization design, manage, and improve processes
throughout the production and delivery system to ensure they meet or exceed the requirements
of the internal and external customers? What are the key measures (metrics) and how are they
analyzed and used to manage and improve the production and delivery systems?
Description & Discussion
Caterpillar Financial Services Corporation, together with its auxiliaries, gives retail and discount
financing options for Caterpillar Inc’s. (Caterpillar) items to clients and merchants around the
world. Its retail financing incorporates financing of Caterpillar gear, apparatus, and motors. The
organization likewise gives financing to vehicles, control age offices, and marine vessels that
essentially consolidate Caterpillar items. Moreover, it offers discount financing to Caterpillar
merchants; and buys transient receivables from Caterpillar.
The organization business system
2-1 production and delivery
The firm translates customer and production requirements through use of Quality function
deployment (QFD).It is a strategy to get and examine the voice of the client and after that change
it into item requirements and existing quality affirmation measures all through the plan,
manufacture, test, commercialization, and even item retirement process (Hammer, 2015). This
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technique permits to deliberately changing over client's requests into specialized necessities, for
each phase of item improvement and production. Consequently, Caterpillar Company should
ensure Utilization of six sigma process
Product brief
This translates client requirements and desires to a fundamental arrangement of particulars as the
reason for ensuing plan work. Item short ought to include:
 Performance attributes (condition and use conditions, dependability, and so forth.);
 Sensory attributes
 Applicable principles and statutory controls;
 Packaging necessities;
 Quality affirmation and finances verification
How does the production and delivery system create value for key stakeholders and
support the overall organization strategy?
In order to offer guarantee that achievement I continuous, for example that it should make an
incentive for stakeholders on various junctures and convey on the central goal and vision. The
company should thus embrace the Philips Business system (Gorla, Somers, & Wong, 2010). It
should ensure a single business system in order to lower intricacy, expands speed and,
significantly, enables it to invest more time horizon with clients and increasing improvement
over the organization.
Caterpillar organization should strive to produce more loans, discounts, shares, assets,
information and investments stock and deliver to the premises of client’s .It should do this
through innovation process and systems to create superior value for stakeholders and clients.
Group strategy
The organization manages its key planning portfolio through use of clearly defined planning
templates strategies and allocation of financial resources so to optimize on value addition,
Use of CAPs strategy
The organization strengthens and leverages its vital Capabilities, Assets delivery and Positions so
as to satisfy customer needs. It uses client’s insights, technology innovativeness, and Brand
footprint on the company’s financial brand.
2-1b Plan and organize
Caterpillar accomplishes this by Making long term plan arrangements and venturing into future
investment plans. It also ensures incorporating a supply chain management system.
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Implementation planning can lessen this possibility of disappointment by helping transform
financial planning strategies without hesitation. Conversely, integration a layout that the firm use
to convey to the executives, customers, or different partners is important in planning and
organizing their work (Kerzner, & Kerzner, 2017). It is also important to address the question by
Utilization of hierarchy of leadership structure that guarantee great association .it involves in
Sorting out quick monetary returns yet that assistance make reasonable foundations.
How does the organization deliver the products and services to the customers?
It does this by Building up consistency through Models and Estimating performance
A technique and CSP without setting up principles and estimation is a promise to lip benefit not
client benefit (Kerzner, & Kerzner, 2017). Client centered gauges and fulfillment based
estimations, including the Net promoter Score, implies that you will have a great possibility of
making a dynamic. It also use information based delivery system that can be sharpened and
refined to client desires.
Use of daily, pre and post benefit briefings, 'Overseeing by Stroll About', reviews and agendas
are supporting procedures. Appraisals systems, group gatherings and standard coordinated give
the chance to survey and, implant unwavering quality and rouse staff to go well beyond for
clients .It should also Train and enable staff to deliver services.
What are the primary channels for interacting with customers and delivering products, services, and
customer experiences?
The company interacts with clients through financial training programs on shares and
investment. It also interacts through customer service where the access portals and
chat with support system. They also interact during offering of loans, hiring and during
advertisements and direct sales person. It also does this through social media customer
service
2-1c monitor and manage
Caterpillar financial corporation monitors and oversees product and delivery systems through
Product-Service Systems (PSS) which are plans of action that accommodate firm conveyance of
items and administrations (Hammer, 2015). It also does monitoring through customers
feedback.
Communication
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Service-Profit Chain Diagnosis & Design

The correspondences planning process concerns characterizing the kinds of data the company
delivers, who will get it, the configuration for imparting it, and the planning (Kerzner, &
Kerzner, 2017). The organization communicates through use of technology process or
systems
Techniques for communication can adopt the process or form such as various written reports.
 Emails
 Formal status reports
 Regular meetings with stakeholders
 Use of online databases
 Use of online schedules
 Companies project websites
2-1d Measure and improve
Caterpillar financial corporation at that point apply remarkable advancement capacities through
use of value adding partnerships to measure progress.it measures the effect of solutions through
improved model (Hammer, 2015). Two dimensional approach undertaken in this case include
social and ecological approaches.
It also utilizes Green product portfolio strategy to measure performance in terms of society
satisfaction.
Some of the key metrics used to quantitatively measure delivery of production system and
customer satisfaction are:
Consumer satisfaction and effort score
CSAT is utilized to quantify whether your item or a service live up to your customers' desires.
Clients evaluate their experience
Net promoter score or NPS for short, is one of the basic methods for estimating client loyalty
Break-even point metric
This is the number you have to get to in a given period (by and large month to month or
quarterly) all together for the organization to take care of its own expenses and continue itself
regardless of whether it isn't making a benefit amid a moderate time.
Leads produced and leads changed over
Caterpillar managers need to monitor where your leads originate from (regular postal mail,
email, advertisements, and so forth.) to enable you to choose where to assign your showcasing
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dollars. In like manner, you ought to likewise know what number of these leads really progressed
toward becoming clients, which helps track development (Hammer, 2015).
Sales indicators. For caterpillar financial organization it can be inform of shares and assets
Literature Resources
Salah, S., Rahim, A., & Carretero, J. A. (2010). The integration of Six Sigma and lean
management. International Journal of Lean Six Sigma, 1(3), 249-274.
Oakland, J. S. (2012). Oakland on quality management. Routledge.
Mir, F. A., & Pinnington, A. H. (2014). Exploring the value of project management: linking
project management performance and project success. International journal of project
management, 32(2), 202-217.
Strengths
Consumer loyalty as a strengths is a factor that encourages you emerge of the challenge of
competition
Making Caterpillar Corporation to have market advantage thus control large market share
Target strengths during acquiring staff talent in hiring .Begin by characterizing the qualities
required for the job and authoritative setting at that point make an ability system to pull in and
create individuals who show those qualities or show potential for development in these territories
(Hammer, 2015).The managers can bolster qualities advancement while onboarding new
colleagues and arranging vocation pathways longer term.
Marshal strengths to rouse workers conduct change.
Individuals oppose evolving conduct. By outfitting individuals with a positive spotlight on what
they do well and can accomplish a greater amount of, and helping them make pathways to all the
more likely access and build up their qualities (Kerzner & Kerzner,2017).
Buildup of a common language of qualities to expand teamwork
At the point when individuals know their own qualities and the qualities of others in their group,
they are better prepared to use them together.
Opportunities for Improvement
<Identify the opportunities for the organization to improve (OFI) from the description and
discussion
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Service-Profit Chain Diagnosis & Design

1. All data bases in the organization which are independent should be connected thus improving
the operation efficiency within the organization. Computer adjustment should be done to ensure
data is more reliable and accessible. When data is more available within the organization
decision making process improves thus building the organization (Laudon & Laudon, 2015).
2. Holding management meetings more frequently. The technique helps the organization to keep
track on major processes incurred in the organization. Generally frequent meetings within the
organization helps in initiating a rolling over or commonly known as the action list .Therefore
the information shared during the meetings facilitates in improving on some aspects which
affects the general performance of the organization (Laudon & Laudon, 2015).
3. Trying different approaches which are related to customer satisfaction survey within the
organization. Use of social media to collect the feedback information from the customers helps
the organization to initiate necessary changes needed. The organization should always check on
both negative and positive comments coming from their respective customers in the market.
4. Emphasizing on use of corrective actions within the organization whereby when processes do
match the intended purpose, the corrective actions should work straight to ensure a solution is
achieved. Some follow up and implementation aspects will be initiated through use of action
plans.
Describe each issue, problem, or gap in their approach to addressing the assessment item.
Improving on use of data connection within the organization. The use of data bases and
computer software’s creates adequate room for organization development.
Meetings helps in analyzing organization problems .The importance of meetings is to develop
the sincere track on the assignments that are made in review meetings. Use of management data
incorporates the concepts to follow in developing the management review meetings. On another
hand customer satisfaction improves the customer loyalty. When consumers are not satisfied
with the organization there will be less profits to be incurred. The utmost challenge comes when
the organization is unable to achieve the motives connected to customer satisfaction.
Describe why the organization should care - the “so what” (implications) and the expected
benefits of improving.
Improving on new opportunities will help the organization to identify the blind spots within the
market. Most of the blind spots in business will opt to hold the organization back thus reducing
the professional development (Laudon & Laudon, 2016).
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Service-Profit Chain Diagnosis & Design

Improving on opportunities will assist the organization too simply on various aspects which will
facilitate organization development. Efficiency improves since all things are being seen as
simple concepts (Laudon & Laudon, 2016).
Opportunity improvement will set a new milestone in the organization. Recording progress on
the tasks being handled in the organization boosts the morale of the available personnel thus
enhancing organization development.
Identify resources and inspiring examples that will help the organization understand how
the issue might be addressed.
Use of customer related statements. Analyzing customer feedback especially through online
services helps the organization to access utmost information which helps in implementing on
new aspects.
Accessing information from business catalogue also helps on improving in new opportunities
within the organization. Business information shared through use of catalogue helps to induce a
light to the organization thus securing new opportunities (Laudon & Laudon, 2016).
Use of business advisors also helps the organization to realize new opportunities which need to
be utilized effectively. Business experts impart new knowledge on business opportunities thus
assisting organizations to secure adequate market through utilizing business opportunities
available.
Maturity Level
Identify the overall maturity level for the entire 2-1 component:
Maturity Level Descriptions Assessment
4. Integrated and Refined System. At this
level, the system is fully integrated with the
other systems and dimensions of organization
design. At this point, most “fires” are
prevented.
The maturity level will be based on the
initial model (Miller & Rice,2013).The
organization should emphasize on the
improvement procedures whereby there
should be controlled use of available
resources needed in managing data.
3. Aligned System. At this level, the system is
aligned with key aspects of the organization
Best maturity level will be on the issue of
defined maturity aspect. There will be
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Service-Profit Chain Diagnosis & Design

including stakeholders, strategy, scorecard,
culture, and the unique context of the
organization. Preventing many fires at this level
and detecting other fires earlier.
documents and standard procedures which
are recorded in the business to control the
entire operation (Miller & Rice,
2013).Wider range of situations and
development procedures are initiated to
develop on the next maturity level.
2 – Basic Repeatable System. At this level, the
system is explicitly defined and repeatable and
can be improved and deployed to other parts of
the organization. Not fully aligned nor
integrated. Preventing some fires but still
fighting many fires.
The level will be characterized by the
repeatable maturity level technique. The
level will ensure on solving the issues on
the table. It means issues and challenges
will maintained at times of stress within the
organization.
1 – Reacting to Problems: No Defined
System. This level is characterized by “smart
people doing cool stuff.” Unfortunately, it is
neither repeatable nor deployable to any other
parts of the organization. Limited to fighting
fires.
The maturity level needed at this stage will
be based on management (Miller &
Rice,2013).The aspect revealed through
management virtues is to determine the
objectives and procedures needed when
managing personnel in the organization.
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References
Gorla, N., Somers, T. M., & Wong, B. (2010). Organizational impact of system quality, information quality,
and service quality. The Journal of Strategic Information Systems, 19(3), 207-228.
Hammer, M. (2015). What is business process management?. In Handbook on business process
management 1 (pp. 3-16). Springer, Berlin, Heidelberg.
Kerzner, H., & Kerzner, H. R. (2017). Project management: a systems approach to planning, scheduling,
and controlling. John Wiley & Sons.
Laudon, K. C., & Laudon, J. P. (2015). Management information systems (Vol. 8). Prentice Hall.
Laudon, K. C., & Laudon, J. P. (2016). Management information system. Pearson Education India.
Miller, E. J., & Rice, A. K. (2013). Systems of organization: The control of task and sentient boundaries.
Routledge.
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