OTIS ELEVATOR CASE ANAYSIS AND SUMMARY:

Company Brief:

OTIS Elevators started out in 1853 by the invention of the “safety brake elevator.” Their
core business is designing, installing and provide service within the industry of elevators,
escalators and walkways. Today OTIS operates worldwide, with headquarter in the U.S.
and different facilities located in European and Asian countries. Through this they have
managed to become market leaders in their field.
Throughout time the business focus of OTIS have changed. Today the focus has moved
from the manufacturing area towards a more total solution, where the most important is
to provide a high class customer service. This is to be seen through their vision: “To
become the recognized leader in service excellence among all companies – not just
elevator companies – worldwide.”

Money inflow of Otis:

OTIS’s source of income is to be divided in two parts, as follows the development of the
market. New markets, as China, mainly profits with new sales, e.g. 62,000 units of
elevators and/or escalators were installed in China in 2002. Concerning the more mature
and satiate markets, as Western Europe and the U.S., 75 % of the profit is provided
service.
This allocation of income also reflects the customer demand, as the ability to satisfy
elevator performance and specification, together with the service cost often becomes the
customer major consideration. This often concludes in discount long-time service
contracts offered by the elevator suppliers. The reason for this reaction is understandable
as that the elevator service market is high competitive due to its steady demand, low entry
barriers and high profitability.
A further indication is that the revenue, now coming from China, eventually will move
from new sales toward provided service. This is estimated since the Chinese market, by
time, will become a more mature market.

Otis elevator failure before 1986:

Before OTISLINE were installed the service personnel were dispatched from local
offices. With no interaction between the different offices, OTIS had a minimal level of
communication throughout the entire cooperation regarding the service area. Due to this
the knowledge sharing was very poor and each local office handled each service request
single handed, minimizing the efficiency. Further, the communication throughout the
organization was also very poor, where service problems never reached the senior
management until they had become critical situations. All together this had a negative
impact on the service time causing the customers unnecessary waiting time.
In order to installing the OTISLINE a huge amount of data and time must have been
required. The transformation must have been a challenge both for the employees as well
as for the managers, whose task area now had been increased. While looking at the
organization chart you see how complicated the way of communication was/is in the
organization. The gain from the new system must have caused a tremendous impact when
it comes to the communication speed between the lower organization layers to the top
management. An increasing of the company knowledge sharing and an improvement of
the product reliability will therefore cause a higher customer satisfaction.
Additional to the OTISLINE another important IT application was implemented called
REM elevator monitoring. This system enables the company to monitor an elevator
control system and thereby detect problems before customers were even aware of them.
Together with the OTISLINE these two systems provide significant data, to improve
customer service.

Otis used IT tool in 2004:

The simple IT-tools used at OTIS, was able to contribute with big improvements because
of the sideway implementation and use of change management tools e.g. Total Quality
Management (TQM) and Lean manufacturing.
The change management tools do not do it alone. An important fact was that OTIS was
opened minded towards these changes and was able to convince and really get through
with their new vision to their employees, all the way from top till bottom in the
organization – there was a will to change, and OTIS was aware of what they needed and
how the changes should be done.
The IT-tools was not only a new and improved work tool. They had constructed a needed
wave of change, all the way around themselves. This again created common standard
work methods, which were implemented to optimize the entire work-flow from receiving
an order till providing the actually hands-on service for customer.
Furthermore, the implementation of the different programs such as OTISLINE, REM,
SIMBA through the different management models will continue the company’s
improvements in many areas, focusing primarily on:
• Delivery Service
• Delivery time
• Response time
• Solving cumulative issues
• Product reliability
• Customer service
• Customer satisfaction
• Speeding communication
• Designing Quality products
• Efficient design
• Reducing costs
• Minimizing inventory levels
• Facilitating business processes
• Enabling information between departments
• Eliminating errors in processes
• Reducing internal lead time
• Monitoring the supply chain
Business Transformation benefits:

By engineering the SIMBA program through the standard-interface and modular based
architecture, it changed the project architecture and the designs process. The
standardization reduced the number of models used and lowered project costs in the value
chain. Distinct engineering programs fell from more than 500 to 50, and the 72 different
types of motors ones used were reduced to 10. In addition, the terminology used became
standardized in order to avoid misunderstandings and create a more effective
environment.
E* Logistics, the most critical project, combined sales, factory and field operations
through the web. This enabled infinite amounts of information to circulate throughout
OTIS and for employees to be in contact with the e*Logistics program.

Prior to e*Logistics, the elements included in project proposal were done with minimal
pieces of automation and data was dispersed through separate systems. Due to this
program, everything became automated and the technology was able to handle the basic
steps which made it possible to easily change an order. The proposal’s information went
directly into OTIS’ financial systems. Also, in sales processing e*Logistics automated the
workflow and helped key documents to circulate to all appropriate personnel.
Furthermore, through CLCs (Contract Logistics Centre’s), order fulfillment was achieved
by concentrating the management of the supply chain. Therefore, nowadays, CLCs is
capable of seeing all worldwide orders from the supply chain, source suppliers, and
components.
Concerning field installation, OTIS moved from a push-system to a pull-system. As a
result, instead of delivering the goods it manufactured, the company set a date based upon
ideal site conditions. Therefore, OTIS is able to deliver goods efficiently and avoid costs
of lost, stolen or damaged goods. The company also has more control over the financial
success since they can overview the whole process.
Mentioned above are some of the benefits achieved and all components can be concluded
with key-words such as availability, effectiveness, centralization and standardization.
These components have made it possible to monitor the whole chain and are effective in
eliminating problems before they occur. In addition, the capabilities to make and revise
plans are easier since changes made are visible all the time. This reduces costs and time
tremendously.
Ari Bousbibs vision “to become the recognized leader in service excellence among all
companies – not just elevator companies – worldwide”, is on its way to reality. The
transformation, from making things, to moving things is now a framework of the
company.
OTIS is always striving to better itself and to further its company’s name in satisfying
every customers need by always looking forward and continuing to create new goals and
visions. That is what creates success.
Analysis

OTISLINE representing system of information applied by OTIS, similar to other ERP

program, which also provide the same specification but different name, depend from the
company implementation. Applying of this OTISLINE, need internet infrastructure to
supporting e-business application, its because the common database can allow every
department of a business to store and retrieve information in real-time. The information
should be reliable, accessible, and easily shared. This company rely on application of e-
business for:
1). supporting process of internal business,
2). applying e-commerce (electronic commerce),
3). promoting cooperation/collaboration between companies.

OTIS wish to transform his operation integrated in one network, connect all OTIS branch
in all the world for the real time. Advantage from this model OTISLINE, will make
standardization in OTIS operation. First objective is to less sale time and to process order.
Then when running a project in a very big number and spreads in many countries, they
remain to allocation the resource that is needed by each project easily. Business operation
with big coverage from various level of management conducting future finance planning
and observation will be more easily to be estimated with accurate forecasting.

With e-logistic, will be able to connect sale, operational area and factory, ordering online
and pricing which can create added value from value chain. If contract have been signed,
installation will conduct for the customer/client and evaluate the installation from process
which as described in the contract. The record will be kept in a database and give data
calculation directly into OTIS financial system assisting to arrange lead-time, lessening
inventory level, and eliminate waste material, operational in this way we know as Just In
Time (JIT) system. Therefore, the first person applying this system information is
proposed by operating area manager, that is David.

OTIS realize that there is no good relation between quality of product and cancellation
tariff, OTIS conclude that contract of conservancy that canceled actually not because of
unsatisfaction from customer/client, but it more come from delayed1 response OTIS in
handling customer demand at after sell service. E-Logistic application give management
a knowledge to control circumstance of business, although they realize the target and
production system is out of out of coverage in cloistered area and given high priority
profit ratio and capital. Changing OTIS system of information need big effort from
management. A number of improvement program is running parallelly, and they have to
work together, simultaneously to get benefit improvement. From year to year, OTIS in
fact have repair system of information step by step, which can we see in the year 2002,
where chief of executive of UTC finally succeed to apply a system which can lessen long
cycle in course of customer buyer behavior, start from process ordering of easier goods
and shorten, deliverance of more timely order although the the customer reside in State
which there is no OTIS branch, a perfect installation with the customer desire, till after
sell service including treatment product of that OTIS.