United Technologies Corporation: Supplier Development Initiative

14 Pages Posted: 21 Oct 2008

See all articles by Robert E. Spekman

Robert E. Spekman

University of Virginia - Darden School of Business

Emily Jean Gibbons

Independent

Abstract

In mid-2000, United Technologies Corporation (UTC) was two years into a supplier development integration program. The major focus of this initiative was to strengthen relationships with “key” suppliers to fully leverage the supply chain. The qualities sought in the relationships included long-term commitments, confidential information sharing, cooperative continuous improvement efforts, and sharing risks and rewards. Both the nature of these relationships and the associated behaviors were new for UTC and represented a significant challenge. UTC believed it was making progress moving from supplier rationalization toward supplier integration. However, some UTC suppliers believed that they were not receiving any of the gains from these initiatives and viewed UTC as often focused only on cost cutting. UTC's Global Supply Management organization hoped to investigate individual supplier relationships and address supplier concerns. The objective was to assist high-potential suppliers so that they could improve their performance and, at the same time, align better with UTC's goals for a more productive and less costly set of reliable supply chain partners.

Excerpt

UVA-M-0646

UNITED TECHNOLOGIES CORPORATION:

SUPPLIER DEVELOPMENT INITIATIVE

In mid-2000, United Technologies Corporation (UTC) was two years into a supplier development integration program. The major focus of this initiative was to strengthen relationships with “key” suppliers to fully leverage the supply chain. The qualities sought in the relationships included long-term commitments, confidential information sharing, cooperative continuous improvement efforts, and sharing risks and rewards. Both the nature of these relationships and the associated behaviors were new for UTC and represented a significant challenge. UTC believed it was making progress moving from supplier rationalization toward supplier integration. However, some UTC suppliers believed that they were not receiving any of the gains from these initiatives and viewed UTC as often focused only on cost cutting. UTC's Global Supply Management organization hoped to investigate individual supplier relationships and address supplier concerns. The objective was to assist high-potential suppliers so that they could improve their performance and, at the same time, align better with UTC's goals for a more productive and less costly set of reliable supply chain partners.

UTC's Pratt & Whitney Aircraft unit (P&W) had identified Dynamic Gunver Technologies (DGT) as an important supplier in their forward planning. The two companies had signed a memorandum of understanding, agreeing to cooperate toward greater supply efficiency. Neither organization had much experience in performing the tasks associated with gaining the required improvements. Moreover, early efforts had disappointing results. Management at both companies was concerned about meeting long-term objectives. Although the companies had a history of working together, recent events had introduced stress into the relationship. In addition, it was becoming clear that both firms did not share the same vision of their future as supply chain partners.

United Technologies Corporation

. . .

Keywords: Marketing

Suggested Citation

Spekman, Robert E. and Gibbons, Emily Jean, United Technologies Corporation: Supplier Development Initiative. Darden Case No. UVA-M-0646, Available at SSRN: https://ssrn.com/abstract=910085

Robert E. Spekman (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4860 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/spekman.htm

Emily Jean Gibbons

Independent

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