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Ken Marcia UTC Director Supplier Development Board President Supplier Excellence Alliance

LEAN PERFORMANCE In the emerging supply chain!!. Ken Marcia UTC Director Supplier Development Board President Supplier Excellence Alliance May 2005. QUIZ. What is your projected 2007 revenue growth?. TODAY’S SUPPLIER PERFORMANCE. Escapes. Defects. On-time delivery.

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Ken Marcia UTC Director Supplier Development Board President Supplier Excellence Alliance

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  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. TODAY’S SUPPLIER PERFORMANCE Escapes Defects On-time delivery $10 Billion of buy / >8,000 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 < 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 Yesterday Today 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 (OTL’s)

  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 OTL’s 2005 plan – 170 OTL’s Future state – 300 OTL’s

  11. SUPPLIER ROLES & RESPONSIBLITIES Create Lean Value Streams Develop skills and competencies Become self-sufficient Continuously 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 United 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- ’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

  19. WHAT SHOULD YOU DO? • Commit to creating internal Lean skills and competencies. • Register for Open Ratings web-based assessments.Lean, Quality, Supply Managementhttp://sbmanager.openratings.com • Learn and apply tools and processesMixed Model VSM, Process Certification, 3P • Ask commodity managers on availability of training resources. • Leverage the Supplier Excellence Alliancewww.seaonline.org • Create a Lean Enterprise • Send an email to linda.kresge@utc.com for more information Don’t Wait

  20. FINAL EXAM • Current State2007 • Quality • On-time delivery • Average leadtime • Inventory turns • Margin • Revenue growth • Market share Please grade the exam with your Leadership Team.

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