UT Automotive Rolls Out PERC$ to Suppliers
24 March 1998
UT Automotive Rolls Out PERC$ to Suppliers
DEARBORN, Mich., March 23 -- UT Automotive, a United
Technologies company, today unveiled plans to reduce supply chain costs
through a new program that rewards suppliers for their money-saving ideas.
The program, called PERC$ (Partners in Excellence Resulting in Cost
$avings), functions much the same way as the automotive companies' programs
that work to reduce costs with its Tier One suppliers.
At a meeting today with more than 100 of the company's key Tier 2 and 3
suppliers, UT Automotive spelled out specifics of the program -- and reported
that suppliers have submitted more than $1 million in cost-cutting ideas even
before the program's official rollout.
"We're already seeing that this new PERC$ program is going to help us
better manage our supply chain and reduce costs between ourselves and our
suppliers," UT Automotive President Scott Greer said.
Tony Brown, UT Automotive's vice president of Purchasing & Logistics, told
suppliers the PERC$ program also will help the company identify those
suppliers UT Automotive will want to work with in the future.
"The PERC$ program is integral to our current initiative to transform our
supply management process from highly decentralized, fragmented and tactical
to collaborative, integrated and strategic," Brown said.
UT Automotive and its parent company, United Technologies Corp. (UTC),
plan to reduce the number of UTC suppliers by 80 percent and lower purchase
costs by $750 million by the year 2000. UT Automotive alone plans to
consolidate its supply base from 10,000 to 1,000 over the next five years.
A key element of the PERC$ program is its site on the World Wide Web,
which allows for automated tracing of proposals, cost savings and PERC$
Points.
The Web site also enables suppliers to contribute cost-saving, quality and
safety ideas to the site's "bulletin board," as well as learn from other
suppliers' postings. UT Automotive also plans to use the site to schedule
live Q&A sessions conducted by Brown and other UT Automotive leaders in a
PERC$ "chat room."
Other elements of the PERC$ program include:
* Key strategic suppliers will be required to participate in joint
process improvement initiatives with UT Automotive's lean practices team.
* Participating suppliers will be required to submit implementable costs
savings proposals to UT Automotive.
* Suppliers will receive "PERC$ Points" for implementable savings and
will share in those savings.
* Suppliers will be given higher sourcing priority based on their
performance in the PERC$ program in conjunction with their operational
performance on quality, delivery and innovation, which will result in
maintaining or growing their business with UT Automotive.
"We think cutting costs should be a team effort," Brown said. "We also
believe successful teams should be rewarded for their efforts. That's the
idea behind PERC$.
"We're going to be making some tough demands on our suppliers in the
future. But there will be rewards for suppliers who help us reduce costs."
UT Automotive is a $3 billion tier-one supplier of electrical, electronic
and interior trim systems and components to car and light truck manufacturers.
Based in Dearborn, Mich., the company has 40,000 employees and 90
manufacturing, engineering, sales and marketing facilities in 18 countries in
North America, Europe, Asia and South America.
UT Automotive is a subsidiary of Hartford, Conn.-based United Technologies
Corp. , which provides a broad range of high-technology products
and services to the aerospace, building systems and automotive industries.
SOURCE UT Automotive