United Technologies

1. United Technologies Team 1: William Buckley Mike Alcantara Max Weiss Michelle Dennis

2. Introduction • Fortune 500 Company • Founded in 1853 • Carrier Air Conditioning, Hamilton Aerospace, Otis Elevators, Pratt & Whitney, Sikorsky Helicopter, and UTC Fire and Security, … • 20th largest manufacturer in the US • 47th largest employer in the world • 220,000 employees in 62 countries

3. George David, CEO • Former Otis Elevator President • Promoted to CEO in 1994 • Closed several plants and laid off more than 20,000 employees • Hired Yuzuru Ito • UTC’s Quality Guru • Worked with David while at Otis Elevator

4. ACE – Achieving Competitive Excellence • Based on Ito’s Philosophy • Used to train managers and workforce in the fundamentals of process improvement. • Managers are trained to empower production line workers to make quality improvements to • products • processes • working conditions • Employee empowerment at the lowest level

5. ACE (cont.) • Uses Statistical Analysis • Participants evaluated by internal auditors • Bronze, Silver, Gold • Designed to produce a multitude of small production improvements that are originated by the workforce • ACE “Pilots” - identify production and process improvements in their area of expertise

6. UTC’s quality vision • A quality-first mindset governs all UTC employee actions. • External and internal customers receive innovative products and services that completely satisfy life cycle requirements. • Quality improvement is the job of every UTC employee. • Based on the Principles of Total Quality

7. UTC’s Commitments • Performance • customer needs and feedback • Pioneering Innovation • Cultivating its heritage of invention • Personal Development • Education • Social Responsibility • Safety, ethics, and environmental issues • Shareowner Value • Financial Returns

8. Quality Improvement Results • 600% rise in total returns • $1 billion in cost reductions annually • Due to Supply Chain Purchasing process improvements • In the first six months of 2004 • Net Income grew 25% to $1.4 billion • Net Sales increased 26% to $18.4 billion • In 2005 • Spent $2.9 billion on R&D • Net Income of $3.2 billion on revenues of $42.7 billion

9. Quality at UT Automotive • Problems: • inconsistent data computations across 90 plants • inability to benchmark quality metrics • time-consuming manual collection of data • Solution: • found powerful software tools that gave them • Robust multidimensional analysis capabilities • With overall ease of use • Broad graphics capabilities

10. UT Automotive Results • Immediate access to multiple layers of data, • Shared key indicators that trigger action by plant managers • Increased productivity through • multi-dimensional analysis, • powerful graphical analysis capabilities, and • faster, more informed decision making.

11. David’s Three Classes of Improvement • Quality of Products – Defined by Standard Procedures • Quality Control Process Charting (QCPC) • 5S => sort, straighten, standardize, sustain, and shine • Root Cause Analysis • No Band-Aid Solutions • Process Re-Engineering • minimized the handoffs between operations and operatives => minimized delays, inventories, distance traveled, and costs

12. References • http://www.quality.nist.gov/Foundation.htm The Foundation for the Malcolm Baldrige National Quality Award • http://www.utc.com/press/speeches/1997-06-09_david.htm Remarks of George David, Chairman & Chief Executive Officer. UTC Environment, Health and Safety Conference • http://www.businessweek.com/magazine/content/04_43/b3905001_mz001.htm Business Week, The Unsung CEO • http://www.tdwi.org/research/display.aspx?ID=5541 United Technologies Automotive Drives IT Success Through Business Intelligence • http://www.utc.com/profile/quality/index.htm UTC - ACE, Achieving Competitive Excellence through efficiency - hvac, fuel cells, helicopters, security systems, elevators • http://www.oligopolywatch.com/2004/12/12.html Oligopoly profile: United Technologies