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Assignment 6 ABB-Caterpillar

Submitted by Rohit Bhagat


Why was Caterpillar planning to discontinue relationship with ABB?

 Disconnect with customers
 ABB’s dictating terms while deciding price, delivery times, and quantity. There was no
concern about maintaining a good relationship and providing the best of the services to the
 There was clear lack of communication between the management and the Units. This was
visible from the fact that the Units resisted the GAM’s making any new decisions for the
existing customers and wanted no interference from them into their business deals. Lack of
trust and Coordination within the BU’s and the GAM’s on key accounts
 Management negligence in trying to build relationship and flexibility between the units
 Lack of transparency from the customer’s side in not informing key plans and internal building
up of similar designing for the Turbochargers
 Lack of understanding of the customer-supplier relationship, their structure, culture and
business practices with no emphasis on customer relationship management
 Lack of flexibility and transparency in the culture of the company in dealing with key

What changes are required in both procurement and selling to rebuild the ABB- CAT relationship?

ABB manager should behave as an advisor and apply consultative techniques to develop
comprehensive, tailored value proposition with Caterpillar. Partnership built on mutual trust to do
continued business
Network-Oriented Perspective defines, explores and creates value within the supplier-customer
ecosystem. ABB Managers should act as “Entrepreneur” who orchestrates value creation and risk
GAM program should be implemented properly with serious commitment from top management
Network-Oriented Perspective to manage Key Customer Accounts, Dan should incorporate Network-
oriented approach and gain the below advantages for ABB:
 Relationship – to form joint value creation with Caterpillar
 Economic – to devise measures to lower total costs, address hidden costs and value drivers
 Knowledge – to seek knowledge-based value that can be translated into high impact activities
in the network of ABB
 Leadership – to motivate and coach cross-function, cross-unit and cross-geography teams of
 ABB and help them understand roles and responsibilities of GAM

On implementing Network perspective approach, it can be leveraged by ABB with the help of 3 key
 Mind-set – to drive value creation and risk management in co-creation business relationships
in close collaboration with internal and external stakeholders of both ABB and Caterpillar
 Context – to specify responsibilities, key performance indicators, competences and
collaboration at ABB-Caterpillar interface
 Competence – to possess skills like Relational, Commercial, Knowledge Management and
Leadership skills