Rebuild Options

Guide
The purpose of this document is to provide a “how to" reference for the implementation and
management of a successful Rebuild Option program. The elements of a complete program are
presented in the following sections of this guide:

I. Introduction – Definition of the Rebuild Option concept and customer needs addressed,
customer / dealer benefits and the critical elements of a successful Rebuild Option program.

II. Rebuild Option Implementation - This guide breaks the program into four easy steps:

Create – Which rebuild options to offer and how to create and price rebuild
options.
Sell – How to promote and sell Rebuild Options.
Deliver – Coding rebuild options, parts reusability, remanufactured products,
dealer exchange program and managing impact on parts inventory.
Measure – Monitoring performance of your rebuild options program.

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 Rebuild Option Guide
Introduction................................................................................................................................................... 4
Customer Needs .......................................................................................................................... 4
Rebuild Option Concept ............................................................................................................. 5
Critical Elements of a Successful Program................................................................................. 6
Create .......................................................................................................................................................... 10
RO Coverage Plan..................................................................................................................... 10
Option Definitions .................................................................................................................... 11
Recommended Rebuild Options: .............................................................................................. 12
Core Acceptance Criteria.......................................................................................................... 16
Determining Cost ...................................................................................................................... 16
Option Pricing........................................................................................................................... 17
Sell .............................................................................................................................................................. 18
Sales Training ........................................................................................................................... 18
Selling Tools ............................................................................................................................. 19
Sales Goals................................................................................................................................ 19
Target Customer List ................................................................................................................ 20
Tracking Target Opportunity .................................................................................................... 20
Promotion.................................................................................................................................. 20
Sales Incentive .......................................................................................................................... 21
Inspection Program ................................................................................................................... 21
Deliver ........................................................................................................................................................ 23
Service Capability.................................................................................................................... 23
Option Coding........................................................................................................................... 23
Parts Reusability ....................................................................................................................... 24
Managing Exchange Program................................................................................................... 24
Caterpillar Remanufactured Products ....................................................................................... 25
Keeping RO’s current ............................................................................................................... 25
Measure....................................................................................................................................................... 26
KPI’s – Customer facing........................................................................................................... 26
KPI’s – Operational .................................................................................................................. 26
Variance Monitoring................................................................................................................. 26

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Introduction
The service business for Caterpillar Equipment can be broken into preventive maintenance (PM), and
unscheduled and scheduled repairs and rebuilds. The strategies for maximizing the Caterpillar dealers’
participation in these areas are:
Preventive Maintenance – provide customers with Customer Support Agreements that meet all of the
customer’s maintenance needs (PM CSA’s), and identify additional repair opportunities with machine
inspections built into the CSA.
Unscheduled repairs – First, help customers minimize unscheduled rebuilds through good equipment
management practices including PM CSAs, advanced product monitoring techniques (SOS, Product Link,
etc.) and CSA’s that cover unscheduled rebuilds.
Scheduled repairs & rebuilds – this type of rebuild can also be covered by a CSA. These agreements are
typically called Total Maintenance and Repair (TM&Rs). Without a CSA, a proven strategy is to offer
customers Rebuild Options for individual components or even the entire engine or machine.

Customer Needs
Surveys of Caterpillar customers indicate that the top criteria for selecting a service provider to rebuild
components are:
1. Turnaround Time
2. Technical Expertise
3. Promise Date Matching Completion Date
4. Up Front Fixed Price

Source: EAME Rebuild Options survey of 65 EAME Earthmoving Customers

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Surveys of Caterpillar customers confirm that the majority of customers want firm price quotes for
rebuilds and component rebuilds.
Source: 2005 MPSD Customer Segmentation Study – NACD, UK France, Australia (729 Earthmoving data points)

Preferred Pricing Method For Repairs

All Customers - NACD UK FR AU
100%
90%
80%
67%
70% 61%
57%
60%
45%
50%
36%
40%
30% 22%
18%
15% 14% 13% 15%
20% 11%
5% 6% 5% 5%
10%
0%
Firm Price, Parts Firm Price, Repair Time and Full Service Maint
& Labor Labor Only Material, Parts & & Repair
Labor Contract

DIM WWM DIFM Total

The remaining customer preferences are split between time and material rebuilds and inclusion in CSA
Contracts. These surveys also indicate that complete descriptions of rebuilds, complete control of the
rebuilds, short turnarounds, and a good warranty are important purchasing factors. For these reasons, if
you offer only time and material rebuilds and/or flat-rate labor plus parts, you may not be addressing
the needs of the majority of your customers.
We recommend surveying your customers to verify their preference for fixed price rebuilds and help
build your marketing strategy/plan.

Rebuild Option Concept

The Rebuild Option concept is to provide tools to dealer PSSR’s to
proactively counsel customers on rebuild indicators and offer
solutions to rebuild major components “before failure
Before failure rebuilds substantially reduce costs because:
Components rebuilt “before failure” have a higher degree of parts
reusability, thus minimizing parts replacement.
Collateral damage due to failure is eliminated. In many cases, the
damage caused by running to failure can be catastrophic and cause the
replacement of major parts that would not normally need to be
replaced. Labor is often reduced because damage is less extensive.
A recent real example of this from Spain: a 375 engine failed after
15,206 hours. The total rebuild cost was 41% higher than if the
engine had been scheduled for a fixed price, before failure rebuild.
When factoring in replacement machine costs associated with the
additional downtime of the after failure rebuild, total costs are normally more than double the rebuild
cost.
In addition to substantially reducing rebuild costs, rebuild options offer other benefits to customers and
dealers.

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 Customer Benefits
Reduce operating costs - before failure rebuilds are less
costly.
Reduce downtime – Because parts and labor resources
are planned, components can often be reconditioned
faster before failure.
Ease of doing business – customers can schedule
downtime and budget for rebuilds because the price is
known in advance.

Dealer Benefits
Ease of doing business – provides sales force with tools to sell service and reduces time settling invoice
disputes.
Increase service differentiation - provides competitively priced services that other workshops can rarely
match.
Increase service profitability by making better use of your service capabilities and improving efficiency.

Critical Elements of a Successful Program

Experience has shown that the following elements are key to a successful Dealer rebuild option
program:

Rebuild Option Strategy & Plan

Dealer Resource Commitment
Service Department Buy-In

Create: Deliver:
- RO Coverage Plan - Service Capability
- Option Descriptions & criteria - Standard Jobs
- Determining Cost - Option Coding
- Option Pricing - Parts Reusability
- Exchange Program
Sell: - Remanufactured Products
- Sales Training - Parts Inventory
- Selling Tools - Keeping ROs Current
- Target Customer List
- Sales Goals Measure:
- Promotion - Variance Monitoring
- Sales Incentive - Identifying and Tracking Target Opportunity
- Inspection Program

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Rebuild Option Strategy & Plan
Each dealership needs an overall Rebuild Option strategy that defines how Rebuild Options fit with
their overall service offerings. This will be a guiding light for decisions that will be made during
implementation. This should be a written document outlining the following essential elements:
Who the competition is and what they offer.
Key models and key components that will be covered.
An expectation of the sales volume and % of rebuild business that will be done through Rebuild Options.
Key differentiators of the dealer’s RO program (ie, warranty, turnaround time, exchange components).
Type of Customer that will be targeted to gain incremental business
Measurable targets should be included with a schedule for completion. Targets include:
- Rebuild Option unit sales
- Parts & Service DCAL
- Service Efficiency
- Overall Profitability
- Customer Satisfaction
It is important the dealer plan becomes a “living document” that is maintained so that at any point in
time it can be referenced to determine if the program is meeting expectations.

Dealer Resource Commitment

A Rebuild Option Marketing Coordinator and Service Operations/Standard Job Coordinator must take
centralized responsibility for instituting and maintaining the dealership's Rebuild Option Program.
The Rebuild Option Marketing Coordinator should have these roles & responsibilities:
- Define customer needs & understand competition
- Work with Service Operations to define the content of rebuild options
- Be the link between Parts & Service for Rebuild Options
- Target high opportunity machines & engines to determine the key Rebuild Options required
by customers in the local market
- Price Rebuild Options to balance a sellable price and risk to the dealership
- Determine where Exchange Components should be leveraged
- Assess capability of individual Service Operations
- Help General Management to define Rebuild Strategy

Service Operations/Standard Job Coordinator Roles & Responsibilities:

- Work with Rebuild Option Marketing Coordinator to define content of rebuild options
- Build standard work orders (standard jobs) with Parts, Labor & Miscellaneous content to be
used to maximize efficiency in Service Operations
- Work with Service Operations to implement the use of standard jobs for rebuild options
- Implement branch or rebuild center processes to monitor parts, labor & miscellaneous
variance on standard jobs
- Assess capability of individual Service Operations
- Maintain standard jobs based upon branch feedback and work order analysis

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Project Team - A Rebuild Option project team is highly recommended to ensure alignment to the
overall strategy, and buy-in from the Parts & Service teams to deliver as promised and track results.
This team should consist of representatives from Parts, Service (both Marketing & Operations) from
dealer HQ & Branches.

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Service Department Buy-in
In most cases, the packaging of service and parts products into a defined Rebuild Option will represent
a significant change from traditional service marketing methods (Time and Material). Therefore, the
Service Department Management in conjunction with the program coordinator must complete the
definitions and development of the dealership’s Rebuild Options.
When Centralized rebuilding is not utilized, all branch service managers performing a rebuilding
function must be involved to ensure the program is acceptable at the branch level.
Additionally, precise service operations procedures must be established, i.e., work order opening,
coding, rebuild controls/standards, customer follow-up and contacts (see Communications section) in
order to ensure that ROs meet Customer expectations, and the dealer can track their effectiveness and
profitability in performing the RO.

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 Create
RO Coverage Plan
Target models can be determined by considering:
- Products with significant population in your territory
- Products with components that are economically rebuildable, ie, they have
adequate market value to justify investment when component rebuilds are
required (generally Heavy Construction machines and larger)

Query your machine/engine population customer records to identify the

high opportunity models based on current 15-year populations. Filter the
data by model and age (hours). Select the models with the largest
populations that are of an appropriate market value and age (hours) for
component rebuilds. Select the target models from this data and verify
these key models with PSSR’s and Service Managers.
Components to be targeted include:
- Engine
- Transmission, torque converter or integral transmission/torque
converter
- Final drive
- Hydraulic piston motor/pump and hydraulic cylinders
For each component there are several possible solutions. Factors that can influence which solution is
the most attractive for the dealer or the customer are labor costs, market conditions, competition, etc.
Solutions include:
- New
- Complete Reman
- Dealer exchange
- Normal repair
- Dealer rebuild with Cat original production and Reman parts
- Dealer rebuild with Cat Classic parts
- Dealer rebuild/repair with Used parts
Identify lost sales and total opportunity on the target models and components by estimating parts and
service DCAL. It will be useful later for promotion purposes to identify the reasons for the loss. Also
identify competitors and their offerings, their strengths/weaknesses, and what capabilities you have that
can differentiate your dealership from the competition.

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Option Definitions
Rebuild option definitions should be driven by analyzing customer needs to determine the level of rebuild
they want (for example, do your customers need a transmission rebearing/reseal, or a full recondition?)
The rebuild option should include the parts required for the majority of rebuilds, in order to minimize
invoice add-ons after the initial quote.

Rebuild Option descriptions should be done by component

family and consist of the following sections:
1. Rebuild Option Name - For example, Engine Tune
Up, Engine Level I Overhaul, Cylinder Reseal &
Light Hone, etc.
2. Inspection Criteria – Definition of the conditions
that must be met for the component being rebuilt
to qualify as a before failure candidate.
3. Rebuild Option Inclusions - This is a list of the
parts and labor included in the standard rebuild.
This usually includes disassembly, cleaning,
inspecting, assembling with the most commonly replaced parts, painting and testing,.
4. Rebuild Option Exclusions - To avoid confusion, the rebuild description should also state
what is not included in the standard rebuild. Typically, these exclusions would be done for
an additional charge. They might include removal and installation, replacement of major
castings, machining major parts, etc.

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 Following are recommended Rebuild Options for:
1. Engines
2. Transmissions
3. Torque Converters
4. Hydraulic Cylinders
5. Hydraulic Piston Pumps & Motors

1. Engines

Inspection Meets Customer Need

Option Included Excluded
Criteria To
Level 1 Component • All Level 1 Parts: bearings, piston • Rocker shaft assembly • Restore lost power
Engine meets Reman rings, gaskets, seals, belts, filters • Pistons and reduce oil
Rebuild Full Core • Cylinder heads • Timing gears, flywheel gear, consumption in an
Criteria • Cylinder liners, turbo, oil pump connecting rods, camshaft engine with no signs
• Temperature regulator & water pump • Injectors, fuel injection pump, fuel of failure Extend
transfer pump, HEUI pump (if engine life
equipped), alternator, starter
• Engine oil cooler, auxiliary oil
coolers
• Fan drive and radiator
• Hydraulic and transmission pumps
• Block or crankshaft
Level 2 Component • All Level 1 Parts: bearings, piston • Alternator, starter • Restore to like-new
Engine meets Reman rings, gaskets, seals, belts, filters • Radiator performance
Rebuild Full Core • Cylinder heads, rocker shaft assembly • Hydraulic and transmission pumps • Maximize next
Criteria • Pistons, cylinder liners, turbo, oil • Block component life
pump • Crankshaft
• Timing gears, flywheel gear,
connecting rods, camshaft
• Injectors, fuel injection pump, fuel
transfer pump, HEUI pump (if
equipped), water pump
• Temperature regulator, Engine oil
cooler, auxiliary oil coolers.
• Fan drive

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 2. Transmissions

Inspection
Option Included Excluded Meets Customer Need To
Criteria
Level 1 Component • All Level 1 Parts: bearings, • Friction plates and discs, clutch • Address leaks in an
Transmis meets Reman piston rings, gaskets, seals, locks, pistons otherwise problem-free
sion Full Core filters • Gears, shafts & carriers transmission
Rebuild Criteria • Transmission pump (if integral) • Transmission Control Group • Extend transmission life
• Torque Converter (if integral) • Transmission pump (if
separate)
• Torque Converter (if separate)
• Cases or Housings
Level 2 Component • All Level 1 Parts: bearings, • Replacement of Transmission • Restore to like-new
Transmis meets Reman piston rings, gaskets, seals, locks, Control Group performance
sion Full Core filters • Cases or Housings • Maximize next component
Rebuild Criteria • Friction plates and discs, clutch life
pistons
• Gears, shafts & carriers
• Reseal Transmission Control Gp
• Transmission Pump
• Torque Converter (if integral)

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 3. Torque Converters

Inspection
Option Included Excluded Meets Customer Need To
Criteria
Level 1 Component • All Level 1 Parts: bearings, • Friction plates and discs, clutch • Address leaks in an
Torque meets Reman piston rings, gaskets, seals, pistons otherwise problem-free
Converter Full Core locks, filters • Gears, shafts, turbine, stator, torque converter
Rebuild Criteria impeller • Extend torque converter
• Case or Housings life
Level 2 Component • All Level 1 Parts: bearings, • Turbine, stator, impeller • Restore to like-new
Torque meets Reman piston rings, gaskets, seals, • Cases or Housings performance
Converter Full Core locks, filters • Maximize next component
Rebuild Criteria • Friction plates and discs, clutch life
pistons
• Gears, shafts

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 4. Hydraulic Cylinders

Name Inspection Criteria Included Excluded Meets Customer Need To

Level 1 (Reseal • Component meets • Seals, O-rings, piston, • Salvage or replace • Address leaks
& Light Hone) reman full core piston nut cylinder components • Bring machine back to
criteria (Rod, Tube, , Head,) 100% productivity

Level 2 (Reseal • Component meets • Seals, O-rings, piston, • Tube, head • Address leaks and likely or
& Light Hone reman full core piston nut known rod damage
& Re-rod) criteria • Rod • Bring machine back to
100% productivity
Level 2 (Reseal • Component still • Seals, O-rings, piston, • Rod, head • Address leaks and likely or
& Light Hone meets reman full piston nut known tube damage
& Re-tube) core criteria • Tube • Bring machine back to
100% productivity

5. Hydraulic Piston Pumps & Motors

Name Inspection Criteria Included Excluded Meets Customer Need To

Before failure
• Component meets • Seals, Bearings, • Pump housing • Address leaks
recondition Retaining rings,
Reman full core
criteria bushings, thrust plates, • Bring machine back to
pressure plates, shims, 100% productivity
springs, gears, shaft,
rotating gp/pistons,
plug, bolts, nuts,
washers, studs, dowels,
spacers, swash plate,
head, barrel

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 Core Acceptance Criteria
It is critical to have a simple standard for PSSR's to use to determine if a condition meets “before
failure” criteria. Because earthmoving customers are unlikely to remove a component that is running
perfectly with no symptoms, it is recommended to use Reman Core Acceptance Criteria to judge the
condition of components. They are simple and allow for a component to have some symptoms.

Determining Cost

Determine Target Models &

Components

With Standard Jobs

Once the dealer has determined which options to offer for which models, it is critical to determine a
target cost for performing each rebuild. This allows you to structure standard jobs to facilitate parts
ordering and provide target hours to the technicians performing the work. It is also a key input to how
the option will be priced.
The essential elements for building and costing rebuild options are parts and miscellaneous lists and
labor hour estimates for the rebuild. Parts and miscellaneous lists and labor hour estimates are best
obtained by reviewing a representative group of your own work orders.
Repair Option BUILDER files for Cat machines and engines can be downloaded from Service
Information System (SIS). The Builder files contain, by component, parts and suggested labor hours
for “remove & install” and for “before failure” and “after failure recondition”. Please note, for “before
failure recondition”, only “must replace” level 1 parts (such as bearings, gaskets, seals) have a 100%
replacement factor. For all other parts (typically level 2 parts such as gears, friction discs) the dealer
must populate with a replacement % between 0 and 100, based upon your experience. Normally, level
3 parts (such as blocks, crankshafts, housings) will be excluded from your before failure fixed price
rebuild options, and thus kept at a 0% replacement level.

Rebuild Options Matrices (for EAME dealers only)

Rebuild data has been collected from leading EAME rebuild option dealers to determine how they
rebuild components that have met Cat Reman Full Core Criteria. Dealers supplied labor hours and the
percentage of time they replace each type of part for each major component by product family.
-
- Level 1 parts such as bearings, gaskets and seals etc are replaced 100% of the time
- Level 2 parts such as gears and shafts are replaced at some frequency between 0% and 100%

This data has been used to determine the cost relationships and labor hour ranges you will find in the
EAME RO matrices. The cost relationship determines the average parts cost required to rebuild each

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component. Using this along with the labor hour ranges gives you information required to determine
your target costs for major component rebuilds.

Option Pricing
Cost is not the only item to consider when establishing the
option price. You must also consider the market situation
and the dealer definition of the product. The cost must be
developed from standard labor times and a specific parts
list that may be factored for reusability or for the use of
remanufactured components
Once a price has been established, it should be compared
with competitive offerings in your territory to determine if
good value is represented to the customer. Be sure to
identify exactly what the competitive product includes (degree of rebuild, quality of parts, paint, dyno-
test, etc.) to guarantee a valid comparison is prepared. Ensure that consistency is achieved across the
product line, for example, alignment between 3306 powered machines. Target margins should be
established and improvement goals should be set to improve reusability or reduce labor hours. This
should allow dealers to meet or beat the margin targets. For those components with unacceptable
margin, determine if rebuild process improvements are needed.
The standards (parts, labor and miscellaneous) must be accessible to the individual performing the
rebuild. This individual must understand the job is an option sale and what parts are normally
replaced/salvaged during the rebuild. This not only contributes to a consistent high quality product but
also insures achievement of target profitability.

Determine Target Models &

Components

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 Sell
Sales Training
There are a number of people who have contact with your customers and
influence their purchase decisions. Some of these people are:

Parts and Service Sales Rep General Parts and Service Managers
Field Servicemen Inside Sales Reps
Shop Supervisors, Foremen, and Service Parts
Countermen
Parts and Service Sales Reps are the most important customer contact group. Parts and Service Sales
Reps will be the primary vehicles to present and explain rebuild options to your customers. To do this,
they need to know and understand the rebuild options themselves. As new rebuild options are
developed and offered, your reps should be updated
regarding:
- Rebuild option definitions: inclusions and exclusions,
and how components qualify for each rebuild option.
- Guaranteed prices, potential add charges, and how prices
were developed.
Additional training is also available specific to Rebuild
Options:
-
- “When to Sell RO”, includes:
- Cat Equipment Management Philosophy
- Repair Economics
- Repair Indicators & Tools
- “How to Sell RO”, includes:
- Customer Needs
- Risk & Cost Analysis
- Our Differentiation
- Positioning Our Differentiation As Customer Advantages
- Handling Objections
-
Field Servicemen should also be kept informed with respect to your rebuild option program. In some
instances they will be performing these rebuilds. In other cases,
customers may ask them about the options. In either case, they
are in a good position to influence customers and therefore need
to have a full understanding of the program.
Shop People and Parts Counter Reps have a lot of customer
contact. It is always possible that a customer might ask them
about your service products. For example, if a customer calls to
order turbocharger bearings and seals, your parts countermen

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should take that opportunity to explain the before failure rebuild concept and how it can prevent
surprises and extra costs.

Selling Tools

RO Price List
PSSR’s agree that the ability to quote a firm price during the sales call greatly
improves the probability of making the sale. Here is a sample price list format.
This price list is recommended for anyone that touches the customer…
PSSR's, Parts Counter Staff and Field Technicians.
You will notice that target rebuild interval ranges are provided by model for
each component, this helps less experienced PSSR's identify the right time to
propose a Fixed Price Component Rebuild. It is also recommend that each
dealership look at their Work Order history to determine a realistic After
Failure cost to rebuild your most important major components. In some cases,
you may also want to list the price of a new component here.

Site Operation & Maintenance Advisor (SOMA)

SOMA is a computer-based application designed and developed for users to
perform an assessment of a customer’s site operations and maintenance
practices. In addition to the assessment, SOMA also performs an analysis of
component life, estimating the approximate optimal component rebuild point (Repair Before Failure),
to decrease the customer’s repair costs. Service sales personnel can use SOMA to aid the RO sales
process by estimating component life to create Rebuild Before Failure awareness.
Engine, Drive Train and Hydraulic Rebuild Indicator Quick Reference Guide
(PEGJ0042) - This document provides an excellent quick reference for planned
indicators and rebuild indicators specific to the engine, transmission, final drive,
differential and hydraulics.

Sales Goals
Short and long-term sales goals should be established prior to the launch of the program based on
machine population and target models selected.
Based on the targets, a forecast should be created for expected sales gains and incremental profits to the
dealership. This will help place a value on the program that will assist in the justification of the initial
start-up costs. Items which must be considered are training, developmental time, promotion, and sales
incentives.
Each salesman should have his/her own set of goals for the program. Commission structures should act
as an incentive for selling before failure rebuild options. Incentives need not only apply to salesmen.
Leads programs dealership-wide has been found to be well worth the small investment in time and
awards.

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 Target Customer List
A target customer list will be beneficial to winning incremental RO business. This list should be
populated with customers that have low service DCAL (Do It Myself and Work With Me customers)
and high opportunity for the rebuilds on product models identified by the RO coverage plan described
earlier in the guide. This list will help bring focus to business you don’t have today and provides that
greatest opportunity to sell ROs.

Tracking Target Opportunity

It is important to track RO sales in order to measure the Customer acceptance and your ability to obtain
incremental business. The first objective of tracking RO sales is to ensure the RO offer has been made
to the opportunities identified as critical. Although we will later want to focus on incremental
opportunities, it is valuable to track all offered RO’s through their deal stages. To do this we
recommend developing a simple database, such as this example, to list targeted RO’s (all covered
components in key models that are within desired hour/age range). This will allow Sales Managers to
follow through on a weekly basis with the PSSR team to ensure all key opportunities are identified, and
follow them through the stages of a deal (discussion, quote, acceptance/refusal).
The second objective of tracking RO sales is to obtain actionable feedback from PSSR’s and Customers
to continually shape future offerings. This spreadsheet allows the Sales Manager and RO Specialist to
filter and sort to determine which options are and are not selling, Customer reasons for rejecting an
offer, etc

Promotion
There are several "tools" dealers have effectively used to
promote rebuild options. A few of these include:
Full Brochure – Click on the image to the right to see a
customized brochure for PSSR’s or Parts Counter Reps to
give to Customers, highlights the key messages of:
Extend machine life & Rebuild Before Failure
Get a fixed price and agreed schedule
Cat Dealer expertise and Cat parts quality
Work with your Cat dealer to determine when you need a rebuild
• Spec sheet Inserts provide what is included and the criteria to qualify
for a fixed price, for each major component:
-
- Engine
- Transmission - Hydraulic Piston Pumps & Motors
- Final Drive or Complete Axle - Hydraulic Cylinders

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Cat Care Meetings, Maintenance Management Seminars and Branch Open Houses are good ways to
promote Rebuild Options. Customer meetings allow you to reach a large group of customers at the same
time. These meetings can be used to illustrate and discuss the advantages of rebuild before failure,
introduce new Rebuild Options, and to showcase your service differentiation

"Caterpillar Product Support Campaign" (PERJ0061) promotion kit contains an assortment of

layouts, clip art, and data sheets, for developing mailers, ads, and letters. This material can be very
beneficial when developing promotional material for rebuild options.

Sales Incentive
This is used in the early stages of the program to focus the PSSR on the Options Program. This may
also be used to focus the PSSR on selling the individual machine inspection leading to any revenue
work that results in conventional compensation.
Some form of an incentive program must continue to keep the PSSR focused on the Option Products as
in many cases the options may result in a higher margin than the equivalent time and material rebuild.

Inspection Program
An Inspection Program is intended to provide the
PSSR with adequate documentation of the
machine condition and to aid the PSSR in the
process of offering rebuilds/options to the
customer. Inspections come in forms as simple as
a walk around to a TA2 using complete
diagnostic equipment performed by a field
service technician.
The critical element of the inspection process is
the communication to the customer, utilizing a
standard machine condition report.
Communication must be transmitted from the
technician to the PSSR of any potential repairs to
be made to the customer’s machine in order for
the PSSR to offer repair options to the customer.
Types of physical inspections depending on the market or customer:
Continuous - dealer continuously involved in the maintenance of the machine (MCS, PMP)
Scheduled - dealer is involved in the scheduled machine maintenance (PM, TA1 or TA2)
Will Call - dealer performs demanded; i.e., Field Call, Shop Rebuild, TA-1, or TA-2
The ultimate inspection program is achieved when the dealer is an integral part of the machine
maintenance. In this situation the dealer is beyond any selling and just alerts the customer of the needed
rebuilds and gains approval. Other types of inspections can evolve into this level.

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With the other forms of inspections the inspector; service department and PSSR need to continually
interface to understand:

- Which rebuilds are required and their priority

- What Scheduling needs to take place
- What turnaround time is expected from the customer – urgency
- Specific rebuild authorization
- Pricing
The customer requires attention to not only authorize the inspection and subsequent rebuild, but any
additional rebuilds discovered during the authorized work. Depending on the dealer this may be
handled by the PSSR and/or Service Department.

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 Deliver
Service Capability
The Customer’s second most important buying criteria when selecting a
rebuild service provider is technical expertise. While a fixed price RO and
fast turnaround time can differentiate your service, a rebuilt component that
performs flawlessly will ensure
repeat business.

An efficient shop layout, proper contamination control

practices and highly trained personnel using the proper
tooling and genuine Caterpillar parts will demonstrate the
quality difference to your customer. Visit Service
Operations for more information.

Standard Jobs
Standard Jobs are the foundation of any Rebuild Option
program. A standard job identifies the parts needed to do the rebuild, parts reuse percentages, labor
hours, miscellaneous charges. The entire process of building, selling, delivering and measuring rebuild
options is linked together through the use of standard jobs. Creating standard jobs requires the
involvement of the Service Department, which also aids in the level of Service Department buy-in.
Building a standard job can be done manually (which is very time-consuming) or performed using the
Repair Option BUILDER software. BUILDER is used to develop rebuild options and maintain rebuild
option prices.

Option Coding
All options must be coded correctly to ensure an accurate history can be retrieved to evaluate the
rebuild option program. At dealerships, this will involve the use of specific SMCS job codes assigned
to standard jobs used for your rebuild options. The mechanic and foreman should also be aware that
any work outside of the option consists must be placed on a separate segment. This not only is required
for job tracking but also to ensure proper invoicing for the rebuild.
Without standard jobs you will not be able to:
- Measure operational performance
- Measure financial performance
- Track and drive service efficiency

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The following is a list of recommended Component Codes (match these to your RO’s):
Component Code Description Component Code Description
1000 Engine 5058 Piston Motor
3030 Transmission 5070 Piston Pump
3101 Torque Converter 5084 Implement Pump
3159 Transfer Gears 5456 Boom Cylinder
3258 Differential 5457 Bucket Cylinder
4050 Final Drive 5458 Stick Cylinder
4351 Hydraulic 5473 Swing Pump
Propel/Drive
Motor

The following is a list of recommended Job Codes:

Job Code Description

007 Recondition After Failure
010 Remove & Install
013 Replace with Exchange
017 Disassemble & Assemble
019 Recondition Before Failure
020 Recondition
023 Repair
028 Rebearing & Reseal
513 Replace with Cat Reman

Parts Reusability
Parts reusability is essential to take full advantage of genuine Caterpillar parts quality. Reusability
guidelines have been published to assist your Service Department. See "Index of Reusability and
Salvage Publications” (SEBF8029) for a complete listing of the available publications.

Managing Exchange Program

Remember, the Customer’s top criteria for selecting a component reuilder is
turnaround time. SEBF7034, “Exchange Operations Planning”, provides
guidance on marketing exchange components.

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 Caterpillar Remanufactured Products

With more than 700 product lines, high-quality, lower-cost Reman options are available for nearly the
entire Caterpillar product line.
Cat Remanufactured Products offers two types of products to support your RO program:
- Complete “Drop-In” major components, such as engine, transmissions, etc. to satisfy fast turnaround,
peak shaving or components, which are not covered in your RO program.
- Minor components, such as water pumps, turbochargers, etc, to support your dealer rebuild program.
This allows you to choose between your own rebuild product, Caterpillar Remanufactured Products, or
new.

Keeping RO’s current

As mentioned under the topic of "Dealer Rebuild Option Plan/Strategy," it is important that the dealer
plans include improvement goals. These goals may change from year to year and may include target
markets, target models, long or short term, expansion of the program, improved profitability or
improved customer satisfaction. Once a program appears to be running properly and initial goals are
met, it can become stagnant and possibly deteriorate if on-going improvement goals are not established
and measured to maintain a high awareness.

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 Measure
For a rebuild option program to be successful, it is essential that a system
be in place to monitor the results. First of all, establish a system to keep
service shops and PSSR's informed of rebuild options sold and key
Customer facing and Operational KPI’s. Also, be very clear of what your
targets and performance are.

Here are recommended KPI’s, formulas, and targets specific to rebuild options.

KPI’s – Customer facing

Metric Measure Target
Variance from quote (Invoice – quote)/quote 0%
Variance days from promise date (Last date of labor on RO Segment – promise date) 0 days

KPI’s – Operational
Metric Measure Target
Standard Job utilization SJ Hours/Total Invoiced Hours 35%
Parts cost variance (Parts cost – Target parts cost) +/- 5%
Target parts cost

Labor cost variance (Labor cost – Target labor cost) +/- 5%

Target labor cost

Turnaround time (for comparison to (Date of Work Order Opening to

After failure work) Date of Last Labor on RO Segment)

Variance Monitoring
Service work orders for rebuilds must be segmented and
coded correctly so that rebuild option history can be
retrieved and evaluated using the process flow chart
below. It is important that any additional work performed
outside the rebuild option scope be separated from the
job so that it does not influence your evaluation.
A regular report should be established that compares the
actual parts and labor on the job to the target amounts. It
is important to remember that individual variances are
not as important as the average variance over several
work orders. If necessary, cost targets can be adjusted based on this information.

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 The report is equally useful to the service shop. By knowing the target cost amounts and the
profitability of each job; the service departments are often able to increase efficiencies to make the
program more profitable. The report should allow you to assess to following for each rebuild option
(such as "D8R Engine Level 1" or "966G Level 2 Transmission ").
- Quantity of sales (number)
- Identify each work order for each option
- Compare target labor hours vs. actual (all rebuilds for one particular option)
- Compare target parts cost vs. actual (all rebuilds for one particular option)
- Compare target miscellaneous cost vs. actual (all rebuilds for one particular option)
This recap report should identify problem areas such as:
- No sales for a particular option, due to limited population or a price/value relationship
out of line with the market.
- An option not meeting profitability goals due to insufficient parts reusability, labor
inefficiency, etc

The variance monitoring system should identify problem areas and if further investigation is necessary to
determine the cause and a subsequent correction. For example, it may occasionally be necessary to adjust
option prices if profitability is not acceptable.

Determine Target Models &

Components

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