| Economic
Supply Chain
As part of our supply chain strategy, we require all major suppliers
and service providers to comply with a series of performance guidelines
and standards. Suppliers must also agree to participate in external
audits conducted by our quality group.
In selecting suppliers, we use the 8 Step Strategic
Sourcing process. This process is a rigorous evaluation, bidding
and implementation tool that factors in environmental issues,
labor standards and employment practices, occupational health
and safety and human rights, as well as performance requirements
for cost, quality, delivery and lead time. Additionally, as part
of our master terms agreement, all suppliers must agree to comply
with UTC’s Code of Ethics.
The performance of 18,000 suppliers and service
providers is also stringently monitored using Open Ratings SBManager™.
SBManager is an Internet-based software tool that monitors the
supply base for performance risk issues, such as financial duress,
impending quality and delivery problems, and degradation in performance
compared to peer groups.
This tool allows UTC to perform Web-based supplier
assessments addressing lean manufacturing capabilities, quality
systems, and supply chain management. After each supplier answers
a rigorous set of questions, the tool produces a set of detailed
reports showing opportunities for the supplier to improve.
Reducing Costs and Environmental Impact
Throughout the Supply Chain
A key element of our supply chain strategy is the procurement
initiative UT500 Plus, a program designed to achieve $500 million
in global cost savings by the end of 2005, primarily through the
application of lean manufacturing principles. UT500 Plus also
helps to cut waste and energy use among our suppliers. Extending
this concept, Pratt & Whitney is working with the U.S. EPA
to run seven different pilot projects with a variety of suppliers
to demonstrate how our “Lean and Clean” manufacturing principles
can generate cost savings as well as environmental benefits. In
one instance, a chrome-plating supplier achieved $500,000 in cost
savings — a substantial amount for a small business.
Spreading
good ideas through the supply chain
UTC works with its suppliers
to help them reach UTC’s standards for responsible
business.
For example, Hamilton Sundstrand
is providing training for its suppliers that will
help them reach UTC environment, health and safety
(EH&S) levels. The program has won active involvement
from suppliers: 600 U.S. suppliers have been notified
of Hamilton Sundstrand’s expectations and have received
questionnaires, to which 250 have responded so far.
Hamilton Sundstrand, in conjunction with EPA Region
One, conducted seven training sessions in 2004, and
in 2005 the program is being expanded to include international
suppliers.
Pratt & Whitney is a corporate
sponsor of the U.S. Environmental Protection Agency’s
Strategic Goals Program, which involves large companies
sharing with suppliers their best practices and knowledge
in EH&S management systems, pollution prevention
and waste minimization. To do that, Pratt & Whitney
hosted and facilitated a series of monthly meetings
with its suppliers in Connecticut and Maine, in conjunction
with EPA Region One.
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| Encouraging Diversity |
Our commitment to diversity
extends through our supply chain. In 2004 we purchased more
than $200 million from minority-owned businesses, and more
than $200 million from women-owned businesses. UTC executives
support the activities of the national and regional Minority
Supplier Development Councils. Chairman and CEO George David
served as National Minority Supplier Development Council (NMSDC)
board president from 1997 to 2001. In 2003 the Connecticut
Minority Supplier Development Council (CMSDC) selected UTC
as Corporation of the Year.
We sponsor
several development programs designed to enhance the performance
of diverse businesses. These include: |
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Quality and lean manufacturing
engagements and seminars |
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A Minority Business Exchange conference
to promote new business and provide insight into new practices |
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A U.S. Department of Defense Mentor-Protégé
Program that provides capability improvement training
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