KPIs in Product Development at Pratt & Whitney
Pratt & Whitney, part of UTC (United Technologies Corporation) headquartered in East Hartford, Connecticut, USA, is a world leader in the design, manufacture, and service of aircraft engines and auxiliary power units.
To continuously deliver excellence to the customers, a well-defined and up-to-date metrics needs to be in place.
Pratt & Whitney (part of United Technologies Corporation – UTC) is a world leader in the design, manufacture, and service of aircraft engines and auxiliary power units headquartered in East Hartford, Connecticut, USA.
The company was founded in 1925 by Frederick Rentschler and since then it builds its business on the seven core values: Excellence, Innovation, Dependability, Adaptability, Customer service, Integrity, and Accountability. Pratt & Whitney produces products engineered to order with often lengthy lead times. To ensure goals will be met in time and development is running to plan, the company uses a platform displaying up-to-date Key Performance Indicators.
Pratt & Whitney tracks several KPIs for all programs in the product development process through the Achieving Competitive Excellence (ACE) operating system. ACE is an operating system that UTC uses across its divisions to ensure quality products and unified processes that deliver the intended value proposition to its customers.
The three elements of ACE – Tools, Competency, Culture – are the building blocks of the system that enable Pratt & Whitney consistent improvement activities and provide the basis for delivering value. To measure improvement and assess performance, Pratt & Whitney uses a metric scorecard called the “control tower” reminding to its aviation history. The control tower provides visual displays of important business data, which are typically updated monthly, though updates may occur more frequently according to the needs.
Control tower in Pratt & Whitney (example, does not use actual data) (Roth, 2010)
Pratt & Whitney control tower metrics are divided into six key areas:
- Customer; measured with customer feedback tools within ACE supplied to both customers and internal stakeholders, to give Pratt & Whitney both numerical and comment results on customer satisfaction
- Delivery; measures consist of several milestone-driven controls that address on-time delivery, development time, earned value (SPI) and turnaround time
- Employee; metrics measured against multiple employee fulfillment criteria
- EH&S (environment, health, and safety) is measured in terms of injuries, environmental impact, as well as health & safety risks for the organization
- Quality; displays conformance to specifications, requirements, and contracts
- Financial; measures budget performance (CPI), labor rates, cost to develop the product, non-recurring expenses (NRE) and recurring expenses (RE) such as product cost.
As it can be seen in the image above, gaps between the goal and the achieved result are color-coded and highlighted in control tower, calling for actions to be taken.
Pratt & Whitney’s Best Practices are presented and described on more than 25 pages in the Lean Product Development Best Practices book. Pratt & Whitney’s chapter is only one out of the 10 chapters presenting the real-world application of lean product development in multinational companies.
The hard copy of the book with the 10 cases is available for only 74.99 EUR.
Pratt & Whitney’s Lean Product Development case is available digitally free of charge to our members.
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ABOUT THE AUTHOR(S)
Lean Analytics Association
Doroteja has 3 years of experience collaborating in lean product development projects with a background in mechanical engineering and ultra-precision technologies. She has worked with global organizations from various industrial sectors, either leading or supporting the development and introduction of bespoke lean innovation and new product development solutions.
Doroteja is interested in innovation capability development and over the past years, she has developed several training courses to support organizations achieving quick and efficient knowledge transfer through customized simulated sessions. Being a certified Service Design Thinking Facilitator she believes in “Doing, not speaking” and supporting developments of truly customer-centric products and services.
Doroteja is a co-author of the Lean Product Development Best Practices book and conference publications.
Lean Analytics Association
Dr. Flores has over 20 years of experience collaborating as internal or external consultant in different manufacturing and services organizations, leading several initiatives related to Lean Thinking, Business Process improvement, Six Sigma, Supply Chain, Change Management, Open Innovation, Digital Transformation and Human Centered Service Design; providing also training and coaching.
She is co-founder and president of the Lean Analytics Association (LAA) and visiting scholar at the College of Management of the Ecole Polytechnique Fédérale de Lausanne (EPFL) in Switzerland.
She carried out her Post-doc at EPFL collaborating at the Lean Product and Process (LeanPPD) FP7 European project from 2009 to 2013. She completed her PhD in 2006 at the Politecnico di Milano studying Open Innovation Models to enable Industry-University collaboration for innovation. She obtained her Master’s Degree in Manufacturing Systems in 1999 and a Bachelor’s Degree in Mechanical Engineering from Monterrey Tec (ITESM) in 1996.