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Operating Strategies Case Study
Case Title:
Will UTC's Transition to "Growth through Operations Transformation" Payoff?
Publication Year : 2007
Authors: Md. Sadik Hassan, Menaka Rao
Industry: Diversified Business
Region: USA
Case Code: OPS0020B
Teaching Note: Not Available
Structured Assignment: Not Available
OR
Abstract:
United Technologies Corporation (UTC), a universally recognised market leader in several sectors with its presence in over 180 countries had worldwide revenue of $42.7 billion in 2006. Recognising a need to better leverage the purchasing power of UTC and to manage its diverse businesses, the management decided to implement Supply Chain Management (SCM).
In 1997, Kent Brittan, an experienced executive of UTC was given a target of reducing indirect expenses at UTC. By 2000, he not only successfully achieved the target but also surpassed it. In 2001, he designed a program called UT500 through which he saved $1.5 billion. In 2005, Jothi Purushotaman was made Vice President of Operations and supply management team started reporting to him. Purushotaman’s main aim was the growth of UTC through operational excellence. He started an initiative in 2005 called ‘Growth through Operations Transformation’, whereby the growth of UTC was envisaged as a program that would bring in operational excellence by combining supply management, manufacturing and quality.
After deploying SCM in 1997, UTC made 31% increases in their revenue from 1997-2001 and an increase of 53% from 2001-2005. But Jothi Purushotaman’s initiative of “Growth through Operations Transformation” had a disastrous start with just an increase of only 9% in the first two quarters of 2006. Emphasizing on the development in SCM, UTC intended to prove that it could help in cost-reduction of indirect expenses and add to its growth. Would the transition to “Growth through Operations Transformation” payoff?
Pedagogical Objectives:
- To discuss UTC's "Growth through Operations Transformation" initiative
- To discuss the reasons for its disastor in 2006
- To discuss the transition to "Growth through Operations Transformation" and its payoff?
Keywords : UTC; Kent Brittan; Jothi Purushotaman; Supply Chain Management; UT500; Growth through Operations Transformation; Cost-reduction; IBM Global Services; Open Rating; Operating Strategies Case Study; DNBi Supply Chain Management
