Ken Marcia

1
LEAN PERFORMANCE In the emerging supply chain!!
Ken Marcia UTC Director Supplier
Development Board President Supplier Excellence
Alliance May 2005
2
QUIZ
What is your projected 2007 revenue growth?
3
TODAYS SUPPLIER PERFORMANCE
Escapes
Defects
On-time delivery
10 Billion of buy / gt8,000 product
suppliers Slow inventory turns
Not lean
4
LEAN IS INEVITABLE

• Lantech
• Freudenburg NOK
• Toyota
• Hitachi

Invensys
Hitachi
Technicolor
Volkswagen Embraer Digicon
Hypertherm
5
LEAN BENEFITS
Successful Lean Enterprises Quality lt 100
ppm Delivery to TAKT Continuous cost
improvement .AND DOMINANT MARKET SHARE
What percentage of the market do you own?
6
UTC SUPPLIER RATIONALIZATION
Do you consider this a risk or opportunity?
7
SUPPLY CHAIN INTEGRATION IS KEY
Today
Yesterday
UTC
Supplier
Integration
UTC
Supplier
Are we managing the risk of our entire
Supply Chain?
8
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 (OTLs)
9
Operations Transformation Leaders
OTL training includes experience and academics
10
OTL ROLES RESPONSIBLITIES
Create lean value streams within our supply
chain Transferring knowledge to
suppliers. Transferring knowledge to UTC Supply
Management.
Current state 123 OTLs 2005 plan 170
OTLs Future state 300 OTLs
11
SUPPLIER ROLES RESPONSIBLITIES
Create Lean Value Streams Develop skills and
competencies Become self-sufficient Continuous
ly improve quality, delivery, lead time and total
cost
12
SELF-EVALUATION IMPROVEMENT
Web-based assessments No cost to
suppliers Comprehensive reports Lean AS
9100 Supply Management
- Web based assessments
13
PRECISION MATCHED VALVES
70 reduction in scrap/perfect quality 66
reduction in inventory 31 gain in
productivity Supplier won 300 new part numbers
Can you implement Process Certification?
14
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?
15
PW 600 APPLYING 3P PRINCIPLES
PW 600 Tier 1 contracts reduced from 250 to 30
Can you manage risk and performance of a supply
chain?
16
Non-profit formed 2003 Aerospace Lean
model Most Primes involved Funding available in
CA Projected funding in 05 in CT, TX, FL System
available nationwide
BAE Systems Boeing Bombardier Cessna Hamilton
Sundstrand Honeywell JPL/NASA Lockheed
Martin Northrop Grumman Parker Aerospace Pratt
Whitney Rockwell Collins Sikorsky Textron Tyco Uni
ted Technologies
Are you making SEA accessible to your supply
chain? Are you taking advantage at your site?
17
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
18
LEAN MANUFACTURER New Hampshire
Started lean mid- 90s 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
19
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 linda.kresge_at_utc.com for more
   information

Dont Wait
20
FINAL EXAM
Current State 2007 Quality On-time
delivery Average leadtime Inventory
turns Margin Revenue growth Market share
Please grade the exam with your Leadership Team.