Brittan had support from the top at the beginning
By Maria Varmazis -- Purchasing, 9/7/2006 6:00:00 AM
It's been almost a decade since Kent Brittan was named vice president of supply management and transformed the operation from an “under-managed activity” to a core competency. Though Brittan has retired, the benefits of his work at UTC continue to resonate today.
Brittan was chief financial officer at Otis and had no background whatsoever in purchasing when George David asked him to bring the supply management operation to the forefront. “Leading this initiative was going to involve a lot of cross divisional effort, something we had never done before,” Brittan says.
After making a clear plan for the new procurement effort with David, Brittan benchmarked companies with leading supply management operations, including IBM. “We soon changed the name from purchasing to supply management, because that's what we felt we were trying to do,” he says. “We had a goal of $750 million in savings over four years, which turned out to be $1 billion, but the idea was to make supply management a core competency of UTC.”
When the supply management program was still in its infancy, purchased goods and services represented 65% of total sales revenue which, at the time was approximately $20 billion, says Brittan. “To make [purchasing] a core competency, you have to do it right, which means the right people, incentive program and training. We were determined to make this work, in a company that was not doing cross-divisions purchasing. But certain things had to happen first. We needed support of the presidents of the businesses and their direct reports.”
Brittan saw the greatest potential for cutting spend in cross-divisional purchasing in commodity management. “For aerospace, we set up a separate organization to manage strategic purchasing at a top level, and then we set up on the commercial side a similar commodity management program,” he says.
What really helped was technology. UTC entered into a relationship with IBM Global Services that continues to this day. The supplier helped Brittan and his team overcome one of their biggest challenges: lack of adequate data. “Before IBM, we based the entire organizational structure…on pretty flimsy data at the time,” he says. “We didn't have any other choice. Since then, we worked hard to develop systems to get us good and adequate data.”
Getting the divisions to share data was yet another challenge. “It took a while to break down those barriers,” he says, “but big numbers [in terms of savings goals] get people's attention.”
When asked about his own legacy at UTC, it's the cross-divisional work that Brittan is especially proud of. He says that use of reverse auction tools provided by Freemarkets which has been acquired by Ariba, demonstrated benefits of cross-divisional collaboration. “An auction event that shows the cost, say, of tax preparation, across the entire corporation that can be reduced by significant double digit results by everyone putting their spend together. That leads to other things—what if we put our systems together, what if we did other things together?”
In his retirement, Brittan plans to begin graduate studies in theology at Oxford University this.
Now Playing: Agenda
06/11/2009A tale of 2 companies
06/15/2000Paper-price declines slow in June
06/26/2009Supply management is core of success at UTC
09/07/2006
