Posted: April 10th, 2024

The United Aircraft Corporation was an American aircraft manufacturer

Milestone OneDescription of the Organization:The United Aircraft Corporation was an American aircraft manufacturer formed in 1934 at thebreak-up of United Aircraft and Transport Corporation. In 1975, the company became the UnitedTechnologies Corporation. They have been seen as a valued member of the technology sector.With its main focus being on the Aerospace industry, they develop anything from helicopters tovarious industrial products. Due to the fact that they cater to such a large and diverse field, theyoperate through six different entities: Otis, Carrier, UTC Fire & Security, Pratt & Whitney,Hamilton Sundstrand and Sikorsky. They are also the world leader in producing high-speedescalators and elevators. In addition to serving the general public, United TechnologiesCorporation is involved with manufacturing weapons and aircrafts/helicopters for military use.They struck success landing an $18.4 billion dollar deal with Goodrich, but in June 2012 theywere charged with illegally selling weapons to China and were fined $75 million. UnitedTechnologies Corp. is the leading manufacturer of multiple products in various industries andtheir products have always been considered to be top of the line. We are very dependent onUnited Technologies Corporation, as they are continually developing innovative mechanisms thatserve the public and military.Anubhab ChakmaAbout the caseProductivity improvement at United Technologies CorporationIn 2007, George David, the long-time CEO of United Technologies Corporation (UTC), retired.He could look back upon a very impressive 15 years at the helm of a company, during whichtime revenues tripled while net profits went up tenfold. Today, UTC is a $60 billion per annumdiversified manufacturing enterprise whose businesses include jet-engine maker Pratt &Whitney, air conditioning business Carrier, and Otis Elevators.A major source of the profit surge over the last 15 years has been productivity improvements. Atthe heart of these improvements is a program known as Achieve Competitive Excellence(ACE). This program was the result of collaboration between George David and a Japanesequality consultant, Yuzuru Ito, who at one time was a quality expert at Matsushita, the Japaneseconsumer electronics giant. David recruited Ito in order to figure out why Otis' elevatorsperformed so poorly compared to those from rival Mitsubishi. Otis products required a buildingowner to call a mechanic an average of 40 times per year, while Mitsubishi's elevators requiredservice only 0.5 times a year. What Ito uncovered was a range of problems including poordesign, poor manufacturing practices, and a lack of quality control inside Otis' factories. Itoexplained to David how poor quality damaged employee productivity, because time was wastedbuilding defective products. Poor quality also hurt demand because customers were less likely tobuy products from a company with a poor reputation for quality.The solution to these problems at Otis included: designing elevators so that they were easier tomanufacture, which led to fewer errors in the assembly process; reconfiguring the manufacturingAnubhab Chakmaprocess; and empowering factory-floor employees to identify and fix quality problems. Forexample, by changing the placement of elevator parts, and allowing assembly line workers toaccess them more easily, Otis took $300 off the cost of each elevator, which led to worldwideannual savings of $27 million. In addition, the production processes was streamlined, requiringfewer steps, less reaching and movement for workers, and easier access to parts – all of whichboosted productivity.ACE evolved out of the experience at Otis and was subsequently rolled out company wide. Themain thrust of ACE is built around the belief that every person should be involved withcontinuous improvement, from top executives to the most junior workers. ACE “pilots” areproduction-line workers who learn a quality improvement process in just days, and then areempowered to implement and lead their work groups through that process. They learn to pinpointpotential problems, ranging from fundamental design flaws in a product, such as misplaced bolts,to a co-worker's fatigue from staying up with a newborn all night.As the program was implemented across the company, the results were impressive. At Carrier,the number of employees decreased by 10%, the square footage assigned to manufacturing wasreduced by 50%, and, despite these decreases, production increased by 70%. At Pratt & Whitney,dramatic improvements in the quality of jet engines were registered. The average time betweenpart-failure in a jet engine went from 2,500 hours to 170,000 hours – a huge improvementresulting from better design and manufacturing processes. Customers noticed these qualityimprovements, and increased their purchases of United Technologies Corporation products,driving forward revenues and profits.Anubhab ChakmaResearch Questions:1.How did poor quality at United Technologies' Otis unit damage the company's financialperformance and competitive position?2. Why do you think quality was so poor at Otis?3. What did UTC learn by repairing the quality problems at Otis?5. How did it leverage this learning to improve the performance of the entire corporation?6.What general principles about competitive advantage and strategy can be drawn from thiscase?Analysis Plan:For company to be good with its customer and set behind its competitor, the most importantthings for them is to maintain their quality, in the service that they provide and the products. Inthis case of United Technologies the poor quality of the Otis unit had led to the drop of thecompany’s image, which in turn has given them with financial crisis due to decrease in the salesand drop down from its position. For an example if a company uses low-quality parts, systemsbreak down, regardless of any high-quality parts also used. Low-quality parts can causemechanical breakdowns, as well as work slowdowns or even stoppages. We can say that thequality was poor as in their act of increasing the production they made the relocation which dinttook place smooth, as a result there was delay in the production of the elevator, decreasing thequality of service to the customers. On the whole the poor quality was due to the bad design, theAnubhab Chakmamanufacturing practices that the company took into were not good, and the company even lackedquality control. The minor reason can also be the low resource of the company.The lesson that the company learn from their previous quality issue is that, they should haveimplemented easy and error free method to get their products done on time without giving up thequality factors. There should be specialized group that can train and lead the work well. Thewhole manufacturing process should be redesigned.Strategy:The strategy that can be taken into account is that the efficiency and quality of the companyshould be taken proper care, that there should be superior efficiency in terms of having goodmanagement of time and resource such that the company can meet with their client’s requirementon time and with proper resource. In order to have the quality control on their products, theyshould try to have reliable products.

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