Improvement at UTC

Posted on October 22, 2005 by John Hunter

Mike Beck gave an excellent presentation at the Deming Institute conference about the United Technology Corporation management improvement system. I plan on posting more about the session. But for now, here is article that has some details on what UTC has done.

The Unsung CEO [the broken link was removed], Business Week, cover story Oct, 2004:

David has racked up these results despite his penchant for controversial investments that don’t directly benefit the bottom line, at least not within any normal time horizon. His Employee Scholar Program costs a cool $60 million a year, and workers don’t even have to tie their studies to the job. Anything goes, from medieval poetry to medical training, with UTC picking up the tab, including the cost of books and time off.
…
The program covers every employee, from the veteran elevator technician in Zimbabwe to a fresh-scrubbed office assistant in Tyler, Tex., with some education benefits even extending to laid-off workers. And, for each degree earned, employees get up to $10,000 in UTC stock or options.

Dr. Deming advocated such a commitment to education. I don’t know of any company putting this much money behind the concept.

David leaned on Ito, first as a consultant and then as a full-time adviser, to make the techniques he used to analyze the elevators adaptable and accessible to every person in the plant. The program evolved and became known as ACE, or Achieving Competitive Excellence. Instead of the complex formulas and training schedules involved with, say, Six Sigma — where the process of becoming a master black belt can generate more sweat and angst than pursuing an actual master’s degree — “ACE pilots” are production line workers who learn the quality process in a matter of days. They learn to pinpoint problems ranging from fundamental design flaws such as misplaced bolts to a co-worker’s fatigue from staying up with a newborn all night.

One recent result: more logical placement of elevator parts — using special boxes instead of loose bags — that trims $300 off the cost of each elevator and will lead to $26.4 million in savings worldwide this year. More important, the factory floor was reconfigured so that the production process was compact — requiring fewer steps, less reaching, and easier access to parts — as well as more intuitive. There are even taped outlines on floors and surfaces, much like the outlines of bodies at crime sites, to show exactly where each widget should go. This is the “5-S” strategy — sort, straighten, standardize, sustain, and shine.

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