Otis Elevator Company Case Study

1. Case summary

The Otis Elevator company was founded in 1853 by Elisha Grave Otis, inventor of a safety-brake elevator. The principal business of the company is the design, manufacture, installation and after-sale service of elevators, moving walkways and escalators. Despite highly competitive environment in the industry due to low entry barriers and steady demand Otis managed to sustain the leading role by aggressive acquisition policy and radical reengineering of most of its business and technological processes to adopt efficient management best practices.

The majority of the innovations introduced were aimed at optimising the resources used to increase the efficiency of the output and speed of response to customers' demand. Thus, the SIMBA, an engineering program, greatly reduced a number of modules used in the production. Application of Total Quality Management concept allowed significant optimisation of the network of suppliers thus saving costs. Introduction of the Sales and Installation Process brought about standardisation of many sales and field operations contributing to dramatic savings in labour required. Bespoke applications such OTISLINE installed in early 1980s, allowed to monitor and promptly respond to customers concerns. The other one named REM communicated elevators' performance to the central system and allowed to identify and service most of the malfunction problems in advance. Finally, introduction of a new automated system enabled to 'bake in' separate IT initiatives into a single platform named e*Logistic program to ensure a company-wide consistency that touched upon most of the business processes of the company. Apart from purely new systems integration a number of measures were consistently applied to align the employees' mind-sets to new approaches introduced. Ever evolving optimisation practices endorsed the company's move from a push to a pull system achieving cost efficiency even more.

According the company website (2016), the entity currently counts nearly 66,000 employees, 1,000 branches, its net sales are around $12 bln. and net profit exceeding $2.4 bln. Presently, more than 2.6 million escalators are installed throughout 200 countries.

1. Difficulties encountered during introduction of OTISLINE in 1990

Before the OTISLINE was introduced there was no overall view of service delivery and response time, as well as no up-to-date aggregated information. Many of the company's problems stemmed from the lack of necessary information supplied on time. Given the development stage of IT technologies at the times when the system was considered, it was impossible even to image something similar to the OTISLINE in place. In the early 1990s apart from the issue of collecting necessary statistics another topic was to have an adequate tool to process the inflow of data into a usable information. Nowadays, a solution enabling to trigger alerts based on specified criteria is considered usual, whereas at those times it was indeed revolutionary. Not surprisingly, the success of its application speeded communication between field mechanics, customers and management and, consequently, brought about the changes in customers' expectations.