Mark F. Miller, Sikorsky
United Technologies Corp. is harnessing the spending power at all business units (Sikorsky, Chubb, Pratt & Whitney, Carrier, Otis Elevator, Hamilton Sundstrand and UTC Power) through a joint drive toward commonality and collaboration. Mark F. Miller oversees the project, called UT500.
In one sentence, what are you doing, Mark? It's all about the value proposition for engineering and the fact that we optimize globally across all of the business units, not just at the local level.
What are the key activities? The first thing we did was look at the core competencies required for our engineering work force (15,000 full-time in UTC)—those things that really are a discriminator in the marketplace. What were those high-value disciplines that we really wanted to perform internally and what were those detail design aspects that would be best to outsource? And then in cooperation with our Supply Management group, we looked at the entire supply base for engineering services and analyzed everything from their infrastructure, their ISO certifications to the type of engineers they had and their historical performance. We selected a set of "UT500 preferred suppliers" for future engineering-services offload. In addition, when we give them work, we include a set of UTC-prescribed work methods that they must perform to. And we monitor the quality. Using this approach, we've seen improvements from both a cost and productivity perspective.
Is increased outsourcing an aspect of the project? There has been an increase in the percentage of outsourced services, but what we're really doing is taking what we outsource and making sure that we get the best possible service at the best possible cost. We have really structured the sourcing activity via a Web-based reverse auction process.
Is there any significant change in where the work is being done? Sikorsky led an initiative to establish two new low-cost domestic engineering Design Centers: one in Indiana and one in Kentucky. There are now about 30 engineers at each location, with plans to grow to 100 each by year-end. The Design Centers are able to tap into local universities for talent: Purdue and The University of Kentucky. We haven't taken any work away from Sikorsky employees in Connecticut.
What are the other aspects of the program? One of the other things we put in place concurrent with this was what we call "engineering standard work." At Sikorsky, we established what we call a commonality retention board for the S-92 helicopter where we try to maintain as much commonality at the parts level as possible. We will deviate from that for particular customer requirements, but we drive toward commonality as much as possible, for both lower acquisition and support costs. We're also implementing commonality in the design and analysis tools we use, as well as in engineering work methods.
The UT500 is expected to trim $1 billion or more in non-product cost through better management of costs via enterprise leverage, better business controls, and business collaboration. The first segment of UT500 has reduced costs by $800 million across the corporation.
Mark F. Miller is VP of research and engineering at Sikorsky Aircraft.