Cummins Inc. (CMI): Business Model Canvas [11-2024 Updated]

Understanding the business model of Cummins Inc. (CMI) reveals how this global leader in engine manufacturing and power solutions maintains its competitive edge. With a robust framework that includes key partnerships, innovative activities, and a commitment to sustainability, Cummins effectively addresses the diverse needs of its customer segments. Explore the intricacies of its Business Model Canvas to uncover how Cummins delivers high-performance products while fostering long-term relationships across various industries.

Cummins Inc. (CMI) - Business Model: Key Partnerships

Joint ventures for product development

Cummins has engaged in several joint ventures to enhance its product offerings and technological capabilities. A notable example is the joint venture with Hyundai to develop hydrogen fuel cell technology, which aims to leverage both companies' strengths in clean energy solutions. The joint venture is expected to contribute to Cummins' revenue as the demand for hydrogen technology increases globally.

Suppliers for components and materials

Cummins works closely with numerous suppliers to ensure a steady supply of high-quality components and materials. In 2024, Cummins reported total sales of $25.7 billion, with approximately 35% of sales attributed to its Components segment, which relies heavily on these supplier relationships. Key suppliers include:

• BorgWarner - Provides turbochargers and emissions solutions.
• Honeywell - Supplies turbochargers and other performance components.
• ExxonMobil - Supplies lubricants and fuel additives critical for engine performance.

These relationships are crucial for maintaining Cummins' reputation for quality and reliability in its products.

Strategic alliances with technology firms

Cummins has formed strategic alliances with various technology firms to innovate and expand its technological capabilities. For instance, its partnership with Google Cloud focuses on developing advanced analytics and cloud-based solutions for fleet management. This partnership is expected to enhance operational efficiency and reduce costs for customers. Additionally, Cummins collaborates with Microsoft to integrate AI and IoT technologies into its product lines, aiming for improved performance and sustainability.

Collaborations with regulatory bodies

Cummins actively collaborates with regulatory bodies to ensure compliance with environmental standards and to influence policy development in the industry. In 2024, Cummins reached an agreement with the U.S. Environmental Protection Agency (EPA) to resolve regulatory claims regarding emissions compliance, which involved a payment of $1.9 billion. This collaboration is vital for maintaining Cummins' operational licenses and for fostering a positive relationship with regulatory authorities.

Partnership Type	Partner	Focus Area	Financial Impact
Joint Venture	Hyundai	Hydrogen Fuel Cells	Projected revenue growth in clean energy sector
Supplier	BorgWarner	Turbochargers	Critical for maintaining product quality
Strategic Alliance	Google Cloud	Analytics & Cloud Solutions	Operational efficiency improvements
Regulatory Collaboration	U.S. EPA	Emissions Compliance	$1.9 billion settlement

Cummins Inc. (CMI) - Business Model: Key Activities

Manufacturing engines and components

Cummins Inc. manufactures a diverse range of engines and components across several segments. For the three months ended September 30, 2024, the total sales from the Engine segment amounted to $2.913 billion, a slight decrease of 1% from the previous year. The Components segment generated $2.724 billion in sales, reflecting a significant 16% decline primarily due to the divestiture of Atmus. The total manufacturing output includes:

• Heavy-duty truck engines: $1.021 billion
• Medium-duty truck and bus engines: $1.073 billion
• Light-duty automotive engines: $0.395 billion

Research and development for new technologies

Research and development (R&D) is a critical activity for Cummins, focusing on innovation in engine technology and alternative fuel solutions. For the nine months ended September 30, 2024, R&D expenses amounted to $466 million, representing an 8% increase from $441 million in the previous year. The R&D efforts are directed towards:

• Improving fuel economy performance of diesel and natural gas-powered engines
• Development of hydrogen engine solutions
• Advancements in battery electric and fuel cell technologies

Distribution and supply chain management

Cummins has a robust distribution network that contributed $2.952 billion in sales for the third quarter of 2024, marking a 16% increase compared to the same period in 2023. The distribution segment serves various regions, with North America generating $1.950 billion, Asia Pacific $0.343 billion, and Europe $0.310 billion. Effective supply chain management practices include:

• Utilization of advanced logistics to ensure timely delivery of products
• Partnerships with local distributors to enhance market reach
• Integration of technology for inventory management

Aftermarket services and support

Cummins continues to enhance its aftermarket services, which are crucial for customer retention and revenue generation. The aftermarket services segment reported $1.309 billion in sales for the nine months ended September 30, 2024. Key components of this activity involve:

• Providing parts and service support to customers globally
• Implementing service contracts for maintenance and repairs
• Offering training programs for customers and technicians

Segment	Sales (Q3 2024, in billions)	Change (%)	R&D Expenses (2024, in millions)
Engine	$2.913	-1%	$466
Components	$2.724	-16%
Distribution	$2.952	+16%
Aftermarket Services	$1.309

Cummins Inc. (CMI) - Business Model: Key Resources

Advanced manufacturing facilities

Cummins Inc. operates several advanced manufacturing facilities across the globe, with significant locations in the United States, India, and China. As of September 30, 2024, the company reported total capital expenditures of $668 million for the nine months ended, focusing on upgrading and expanding its manufacturing capabilities. The facilities utilize state-of-the-art technology to enhance production efficiency and maintain high-quality standards. Cummins' manufacturing footprint includes:

Location	Facility Type	Annual Capacity (Units)
Columbus, Indiana	Engine Manufacturing	Over 500,000 engines
Jamestown, New York	Power Generation	200,000 generators
Hyderabad, India	Components	300,000 turbochargers
Chongqing, China	Engine Manufacturing	250,000 engines

Skilled workforce and engineering expertise

Cummins employs approximately 60,000 people worldwide, with a significant portion dedicated to engineering and research and development (R&D). The company invested $1.1 billion in R&D during the nine months ended September 30, 2024. This investment supports innovations in diesel and natural gas engines, as well as emerging technologies like hydrogen solutions and battery electric systems. Cummins focuses on attracting and retaining top talent, evidenced by:

• Over 5,000 engineers in R&D roles.
• Partnerships with universities for talent development.
• Continuous training programs to enhance workforce skills.

Strong brand reputation

Cummins has built a robust brand reputation known for quality and reliability in the power solutions market. The company ranked among the top 100 most valuable brands in the industrial sector, with a brand value estimated at approximately $5.2 billion in 2024. Key elements contributing to this reputation include:

• Over 100 years of industry experience.
• Strong customer loyalty with a 90% repeat customer rate.
• A commitment to sustainability and reducing emissions, aligning with global environmental standards.

Intellectual property and patents

Cummins holds a substantial portfolio of intellectual property, with over 5,000 active patents worldwide as of 2024. This includes innovations in engine design, fuel efficiency technologies, and emission reduction systems. The company's commitment to protecting its innovations is reflected in its annual legal expenditures of around $50 million for patent enforcement and defense. The strategic importance of this intellectual property includes:

• Maintaining competitive advantage in the market.
• Facilitating partnerships and collaborations with other technology firms.
• Driving future product development in alternative fuels and electrification.

Cummins Inc. (CMI) - Business Model: Value Propositions

High-performance, reliable engines

Cummins Inc. is renowned for its high-performance engines, with a significant market share across various segments. In the nine months ended September 30, 2024, Cummins reported engine segment sales of $8.99 billion, representing 35% of total sales. The heavy-duty truck market alone accounted for $3.26 billion, while medium-duty truck and bus sales reached $3.14 billion. This strong performance underscores Cummins' commitment to delivering reliable and efficient engine solutions that meet stringent performance standards.

Comprehensive power solutions

Cummins offers a variety of power solutions, including diesel and natural gas engines, hybrid solutions, and fully electric powertrains. The Power Systems segment generated $4.67 billion in sales for the nine months ended September 30, 2024, up 10% year-over-year. This segment's growth reflects increasing demand for power generation solutions, particularly in data center and industrial applications, highlighting Cummins' ability to provide comprehensive energy solutions tailored to customer needs.

Power Systems Segment Sales	Q3 2024 (in millions)	Q3 2023 (in millions)	Percent Change
Power Generation	$1,055	$850	24%
Industrial	$508	$475	7%
Total Sales	$1,687	$1,444	17%

Commitment to sustainability and innovation

Cummins has made strides in sustainability, committing to reducing greenhouse gas emissions from its products. In 2024, the company announced plans to invest approximately $1.2 billion in capital expenditures, focusing on new product lines and sustainable technologies. This aligns with their goal of achieving net-zero emissions by 2050. The emphasis on innovation is also reflected in their R&D spending of $1.11 billion for the nine months ended September 30, 2024, which indicates a strong focus on developing cleaner technologies.

Extensive global service network

Cummins operates an extensive service network that enhances customer satisfaction and operational efficiency. The company reported that its distribution segment generated $8.32 billion in sales, accounting for 33% of total sales, with a notable increase in demand for aftermarket services. This robust service infrastructure allows Cummins to provide timely support and maintenance for its products globally, ensuring reliability and performance for customers across various industries.

Cummins Inc. (CMI) - Business Model: Customer Relationships

Long-term partnerships with OEMs

Cummins Inc. maintains strategic partnerships with various Original Equipment Manufacturers (OEMs) across multiple industries. As of 2024, these partnerships are integral to Cummins' revenue stream, contributing significantly to the company’s sales figures. For the nine months ended September 30, 2024, Cummins reported net sales of $25.7 billion, with a notable portion derived from OEM collaborations. The company’s Engine segment alone generated $8.99 billion in sales during this period, reflecting a 1% increase compared to the prior year, bolstered by OEM relationships.

Dedicated customer support teams

Cummins invests heavily in customer support, employing dedicated teams to ensure client satisfaction and retention. The company reported $65 million in cash generated from operations for the nine months ended September 30, 2024, which highlights the effectiveness of these support teams in fostering customer loyalty. Additionally, Cummins' selling, general, and administrative expenses for the same period were $2.47 billion, reflecting its commitment to maintaining robust customer service operations.

Tailored solutions for specific industries

Cummins offers customized solutions tailored to specific industry needs, particularly in sectors such as power generation, transportation, and construction. The Power Systems segment achieved sales of $4.67 billion for the nine months ended September 30, 2024, a 10% increase from the previous year, driven by tailored solutions for power generation applications. This segment's EBITDA also rose significantly by 32%, reaching $866 million, indicating strong demand for customized offerings.

Engagement through digital platforms

Digital engagement is a central part of Cummins' strategy to enhance customer relationships. The company has been leveraging technology to improve customer interactions and streamline services. For instance, Cummins has invested in digital platforms that facilitate customer engagement and service requests, contributing to a reported 2% increase in international sales, which reached $9.87 billion for the nine months ended September 30, 2024. This digital focus is expected to continue driving customer engagement and satisfaction.

Customer Relationship Strategy	Key Metrics	Impact
OEM Partnerships	Sales from Engine Segment: $8.99 billion	1% increase in sales
Customer Support Teams	Cash from Operations: $65 million	Enhanced customer loyalty
Tailored Solutions	Power Systems Segment Sales: $4.67 billion	10% increase in sales
Digital Platforms	International Sales: $9.87 billion	2% increase in international sales

Cummins Inc. (CMI) - Business Model: Channels

Direct sales to OEMs

Cummins Inc. engages in direct sales to Original Equipment Manufacturers (OEMs) across various sectors, including heavy-duty and medium-duty trucks, construction equipment, and power generation systems. In the nine months ended September 30, 2024, Cummins generated $8.99 billion in sales from its Engine segment, which represents approximately 35% of total sales. The company maintains strong relationships with OEMs, providing them with engines and related technologies, thereby ensuring a steady demand from this channel.

Distribution through third-party dealers

Cummins employs a robust distribution network that includes third-party dealers to reach end customers globally. For the nine months ended September 30, 2024, the Distribution segment accounted for approximately $8.32 billion in sales, or about 33% of total sales. The company’s extensive dealer network allows it to provide localized support and parts availability, enhancing customer satisfaction and operational efficiency. The sales distribution by region shows significant contributions from North America, with sales reaching $5.57 billion for the nine months ended September 30, 2024.

Online platforms for parts and service

Cummins has developed online platforms that facilitate the purchase of parts and services, enhancing accessibility for customers. The company is actively investing in digital capabilities to streamline operations and improve customer engagement. For the nine months ended September 30, 2024, Cummins generated approximately $2.99 billion in parts sales. This online channel not only provides convenience for customers but also helps in managing inventory and reducing lead times for parts delivery.

Trade shows and industry events

Cummins participates in various trade shows and industry events to showcase its products and innovations. These events serve as critical platforms for networking, customer engagement, and promoting new technologies. The company’s participation in major industry events helps strengthen its brand presence and allows it to gather valuable market insights. In 2024, Cummins highlighted innovations in power generation and emissions technology at several leading trade shows, which contributed to a 1% increase in overall sales from the previous year, amounting to $25.66 billion for the nine months ended September 30, 2024.

Channel	Sales (in billions)	Percentage of Total Sales	Key Markets
Direct Sales to OEMs	$8.99	35%	Heavy-duty trucks, Construction
Distribution through Third-party Dealers	$8.32	33%	North America, International
Online Platforms for Parts and Service	$2.99	11%	Global
Trade Shows and Industry Events	N/A	N/A	Global

Cummins Inc. (CMI) - Business Model: Customer Segments

Commercial vehicle manufacturers

Cummins Inc. serves major commercial vehicle manufacturers, providing engines and components tailored to heavy-duty trucks, medium-duty trucks, and buses. For the nine months ended September 30, 2024, the Engine segment generated sales of $8.99 billion, representing 35% of total sales. The heavy-duty truck market alone saw a decrease in sales to $3.26 billion, down 2% compared to the previous year, attributed to weaker demand in North America.

Industrial equipment producers

The industrial equipment sector is another critical customer segment for Cummins. The Power Systems segment reported sales of $4.67 billion for the nine months ended September 30, 2024, marking an 18% increase compared to the previous year. This growth was driven by heightened demand in power generation markets, especially in North America and China.

Power generation companies

Cummins provides power generation solutions to various industries, including data centers and mining operations. For the three months ended September 30, 2024, sales in the Power Generation category reached $1.05 billion, a 24% increase from the previous year. Cumulatively, sales for the nine months totaled $2.90 billion, indicating strong demand in the sector.

Transportation and logistics providers

Transportation and logistics providers represent a significant customer base for Cummins, leveraging their engine technologies for fleet operations. The Distribution segment achieved sales of $8.32 billion for the nine months ended September 30, 2024, a 10% increase year-over-year. This growth reflects robust demand in the aftermarket business, driven by the need for maintenance and replacement parts.

Customer Segment	Sales (in billions)	Percentage of Total Sales	Growth Rate
Commercial Vehicle Manufacturers	$8.99	35%	-2%
Industrial Equipment Producers	$4.67	18%	+10%
Power Generation Companies	$2.90	11%	+24%
Transportation and Logistics Providers	$8.32	33%	+10%

Cummins Inc. (CMI) - Business Model: Cost Structure

Manufacturing and operational costs

The cost of sales for Cummins Inc. for the three months ended September 30, 2024, was $6.285 billion, a slight decrease from $6.360 billion in the same period of 2023. For the nine months ended September 30, 2024, the cost of sales was $19.250 billion, compared to $19.274 billion for the same period in 2023.

The gross margin for the three months ended September 30, 2024, was $2.171 billion, resulting in a gross margin percentage of 25.7%, up from 24.6% in the prior year.

Research and development expenses

Research, development, and engineering expenses for the three months ended September 30, 2024, were $359 million, down from $376 million in the same period of 2023. For the nine months ended September 30, 2024, these expenses totaled $1.107 billion, compared to $1.110 billion in 2023.

Marketing and sales expenditures

Selling, general, and administrative expenses for the three months ended September 30, 2024, were $807 million, a decrease from $831 million in the same period of 2023. For the nine months ended September 30, 2024, these expenses were $2.474 billion, compared to $2.457 billion in 2023.

Administrative and overhead costs

Overall operating income for the three months ended September 30, 2024, was $1.050 billion, an increase from $950 million in the comparable period of 2023. The net income attributable to Cummins Inc. for the three months was $809 million, up from $656 million in the same period of the previous year.

Cost Category	Q3 2024 (in millions)	Q3 2023 (in millions)	9M 2024 (in millions)	9M 2023 (in millions)
Cost of Sales	$6,285	$6,360	$19,250	$19,274
Gross Margin	$2,171	$2,071	$6,405	$6,248
R&D Expenses	$359	$376	$1,107	$1,110
SG&A Expenses	$807	$831	$2,474	$2,457
Operating Income	$1,050	$950	$3,018	$2,973
Net Income	$809	$656	$3,528	$2,166

Cummins Inc. (CMI) - Business Model: Revenue Streams

Sales of Engines and Components

The primary source of revenue for Cummins Inc. comes from the sale of engines and components. In the nine months ended September 30, 2024, total sales for the Engine segment amounted to $8.99 billion, a slight increase of 1% from $8.91 billion in the same period of 2023. The breakdown of engine sales includes:

Engine Type	Sales (Millions)	Percent Change
Heavy-duty Truck	$2,560	-2%
Medium-duty Truck and Bus	$2,336	+13%
Light-duty Automotive	$1,294	-3%
Off-highway	$1,292	-10%

Service and Maintenance Contracts

Cummins also generates revenue through service and maintenance contracts. The Distribution segment reported total sales of $8.32 billion for the nine months ended September 30, 2024, marking an increase of 10% compared to $7.54 billion in the prior year. The revenue from service and maintenance is a critical part of this segment, reflecting ongoing customer relationships and support.

Aftermarket Parts and Accessories

Aftermarket parts and accessories contribute significantly to Cummins' revenue. For the nine months ended September 30, 2024, parts sales within the Distribution segment were reported at $2.99 billion, which is a decrease of 2% from $3.07 billion in the same period of 2023. The demand for parts is driven by the installed base of engines and the requirement for ongoing maintenance.

Licensing and Royalties from Technology Innovations

Cummins earns additional revenue through licensing and royalties related to its technology innovations. In the nine months ended September 30, 2024, equity, royalty, and interest income from investees amounted to $325 million, down from $370 million in the same period of 2023. This revenue stream underscores Cummins' commitment to developing advanced technologies and sustainable solutions in the power and engine sectors.

Updated on 16 Nov 2024

Resources:

1. Cummins Inc. (CMI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Cummins Inc. (CMI)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Cummins Inc. (CMI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.