UTC general procurement presents Key Supplier of the Year awards
Purchasing at United Technologies Corp. has created a supplier performance measurement system using score cards that track continuous improvement.
By Susan Avery -- Purchasing, 3/15/2007 2:00:00 AM
For the general procurement team at United Technologies Corp. in Hartford, Conn., the next logical step after developing a system to measure performance of suppliers of indirect goods and services is creating a formal process for recognizing performance of those suppliers.
UTC, which received Purchasing's Medal of Professional Excellence for 2006, announced the recipients of its 2006 General Procurement Key Supplier of the Year award late last year. Two suppliers received the honor: PHH Arval, a subsidiary of PHH Corp. in Sparks, Md., that provides fleet management services, and ITC InfoTech India in Bangalore, India, a provider of engineering services.
The process for recognizing these suppliers begins with a supplier performance measurement and scorecard system developed by the general procurement team. The team, led by Susan Spence, director of UTC general procurement, manages the company's $6 billion annual indirect goods and services spend. Doug Shefsky, quality manager, led the process for selecting the Key Supplier of the Year award.
The performance measurement and scorecard system is relatively simple to use, and, with it, the general procurement team can compare performance of key suppliers. For UTC, key suppliers are those whose goods, like industrial gas, can shut down production, or touch a large number of employees like travel services. Of the 240 indirect suppliers with which UTC has corporate contracts, 22 are considered key.
Using a scale of one to seven, with seven being "delighted", the general procurement team measures suppliers in four areas: cost, quality, delivery, and customer satisfaction. Behind scores for each area is data related specifically to the supplier and its industry. For instance, for the delivery score, a travel agency may be measured on time it takes to answer the telephone, while an MRO supplier may be tracked on its ability to ship orders on time to the delivery dock.
 “We had lively debate and were unanimous in our selection,” says Susan Spence, UTC general procurement director. |
The general procurement team introduced the award to the suppliers at a key supplier forum the company held last spring.
Of the key suppliers, the general procurement team invited those that scored at least a six of seven on the scorecard to do a presentation at a meeting of the general procurement council. The council consists of managers of indirect procurement from the company's businesses—Carrier, Hamilton Sundstrand, Otis, Pratt & Whitney, Sikorsky, UTC Fire & Security, and UTC Power.
For suppliers, UTC considers a score of six as supplier gold in its ACE (Achieving Competitive Excellence) operating system. The general procurement team asked the suppliers to focus their presentations on their companies' future plans, with a particular emphasis on continuous improvement.
"We had some lively debate and while we planned to choose just one key supplier, we were unanimous in selecting the two," says Spence.
She informed the suppliers with a letter and phone call. The team presented the award to PHH Arval at its headquarters. UTC's supply management council, which consists of purchasing leaders from the businesses, presented the award to InfoTech in Bangalore.
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