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Ken MarciaUTC Director Supplier DevelopmentBoard President Supplier Excellence AllianceMay 2005
LEAN PERFORMANCE In the emerging supply chain!!
QUIZ
What is your projected 2007 revenue growth?
TODAY’S SUPPLIER PERFORMANCE
Not lean
$10 Billion of buy / >8,000 product suppliers
Slow inventory turns
EscapesEscapesDefectsDefects
On-timeOn-time
deliverydelivery
LEAN IS INEVITABLE
Volkswagen
Embraer Digicon
LantechFreudenburg NOK
Toyota
Hitachi
Invensys
Hypertherm
Technicolor
Hitachi
LEAN BENEFITS
What percentage of the market
do you own?
Successful Lean Enterprises
Quality < 100 ppm
Delivery to TAKT
Continuous cost improvement
….AND DOMINANT MARKET SHARE
UTC SUPPLIER RATIONALIZATION
0
4,000
8,000
12,000
16,000
2001 2002 2003 2004 200X
Do you consider this a
risk or opportunity?
Supplier
UTC
Integration
Today
Supplier
UTC
Yesterday
SUPPLY CHAIN INTEGRATION IS KEY
Are we managing the risk of our entire Supply Chain?
UTC STRATEGY
“Enable supply chain transformation by deploying
Lean tools, processes, and capabilities.”
Open Ratings
VSM (including mixed model and shared resource flow)
Process Certification
3P (Production Preparation Process)
Supplier Excellence Alliance (SEA)
Transfer knowledge through with our
Operations Transformation Leaders (OTL’s)
Operations Transformation LeadersOTL CERTIFICATION STATUS
OTL NAME: CURRENT LEVELCandidate Name MASTER
Candidate Name
ASSOCIATE PRACTIONER MASTER FELLOWOTL EDUCATION OTL EDUCATION OTL EDUCATION OTL EDUCATION
% ACE COMPLETE 100% % ACE COMPLETE 100% % ACE COMPLETE 100% % ACE COMPLETE 0%
% UTC COMPLETE 100% % UTC COMPLETE 100% % UTC COMPLETE 100% % UTC COMPLETE 0%
% OPS COMPLETE 100% % OPS COMPLETE 100% % OPS COMPLETE 100% % OPS COMPLETE 0%
TOTAL ASSOCIATE COMPLETE 100% TOTAL PILOT COMPLETE 100% TOTAL LEADER COMPLETE 100% TOTAL MASTER COMPLETE 0%
OTL EVENTS OTL EVENTS OTL EVENTS OTL EVENTS
% ACE COMPLETE 100% % ACE COMPLETE 100% % ACE COMPLETE 100% % ACE COMPLETE 0%
% OPS COMPLETE NA % OPS COMPLETE NA % OPS COMPLETE 100% % OPS COMPLETE 0%
TOTAL ASSOCIATE COMPLETE 100% TOTAL PILOT COMPLETE 100% TOTAL LEADER COMPLETE 100% TOTAL MASTER COMPLETE 0%
OVERALL OVERALL OVERALL OVERALL
% ACE COMPLETE 100% % ACE COMPLETE 100% % ACE COMPLETE 100% % ACE COMPLETE 0%
% UTC COMPLETE 100% % UTC COMPLETE 100% % UTC COMPLETE 100% % UTC COMPLETE 0%
% OPS COMPLETE 100% % OPS COMPLETE 100% % OPS COMPLETE 100% % OPS COMPLETE 0%
OVERALL ASSOCIATE % 100% OVERALL PRACTIONER% 100% OVERALL MASTER % 100% OVERALL FELLOW % 0%
OPS COMPETENCIES
UTC COMPETENCIES
ACE COMPETENCIES
ASSOCIATE PRACTIONER MASTER FELLOW
Operations Transformation LeaderOperations Transformation LeaderPractioner Master Fellow
Operations Transformation LeaderOperations Transformation Leader- --Associate
OTL training includes experience and academics
OTL ROLES & RESPONSIBLITIES
Create lean value streams within our supply chain
Transferring knowledge to suppliers.
Transferring knowledge to UTC Supply Management.
Current state – 123 OTL’s2005 plan – 170 OTL’s
Future state – 300 OTL’s
SUPPLIER ROLES & RESPONSIBLITIES
Create Lean Value Streams
Develop skills and competencies
Become self-sufficient
Continuously improve quality, delivery, lead time and total cost
Web-based assessments
No cost to suppliers
Comprehensive reports
Lean
AS 9100
Supply Management
SELF-EVALUATION & IMPROVEMENT
- Web based assessments
PRECISION MATCHED VALVES
Can you implement Process Certification?
70% reduction in scrap/perfect quality
66% reduction in inventory
31% gain in productivity
Supplier won 300 new part numbers
COMPLEX MACHINING ASSEMBLIES
43% Reduction in lead time
68% Increase in capacity
46% increase in sales over 1.5 years
Avoided creating 2nd qualified source
Can you implement Lean in a capital intensive,
shared resource environment?
PW 600 APPLYING 3P PRINCIPLES
Can you manage risk and performance
of a supply chain?
PW 600 Tier 1 contracts reduced from 250 to 30PW 600 Tier 1 contracts reduced from 250 to 30
Non-profit formed 2003
Aerospace Lean model
Most Primes involved
Funding available in CA
Projected funding in 05 inCT, TX, FL
System available nationwide
BAE SystemsBoeingBombardierCessnaHamilton SundstrandHoneywellJPL/NASALockheed MartinNorthrop GrummanParker AerospacePratt & WhitneyRockwell CollinsSikorskyTextronTycoUnited Technologies
Are you making SEA accessible to your supply chain?
Are you taking advantage at your site?
LEAN PROVIDES OPPORTUNITYUTC Aerospace Supplier 1999 to 2003
Inventory turns 6X improvement
Lead time 75% reduction
Revenue growth 100%
UTC cost 15% reduction
…. job growth/retention in a down market
‘LEAN’ MANUFACTURER – New Hampshire
Started ‘lean’ mid- ’90’s
Rated in top 25 places to work
#1 Market position
Export market grew from 20% to 50%
Job growth/retention through economic cycles
…. planning to increase exports to Asia
WHAT SHOULD YOU DO?
1. Commit to creating internal Lean skills and competencies.
2. Register for Open Ratings web-based assessments.Lean, Quality, Supply Managementhttp://sbmanager.openratings.com
3. Learn and apply tools and processesMixed Model VSM, Process Certification, 3P
4. Ask commodity managers on availability of training resources.
5. Leverage the Supplier Excellence Alliancewww.seaonline.org
6. Create a Lean Enterprise
7. Send an email to [email protected] for more information
Don’t Wait
FINAL EXAM
Current State
2007
Quality
On-time delivery
Average leadtime
Inventory turns
Margin
Revenue growth
Market sharePlease grade the exam with your
Leadership Team.
