March 2006 
Volume 04, Issue 10 
Leadership Message

Future begins—and ends—with customers

Jim McNerneyAny company exists because its customers buy what it provides, and Boeing is no exception.

Our customers—whether they are airlines or military services, businesses or governments—want basically the same thing: products, systems and services that provide them with ever more capability at ever lower costs. They need to be more productive.

To help them become so—and to help Boeing grow—we must be more productive, too. And that's something that every Boeing person can help with, by supporting our four companywide initiatives.

Right now, Boeing is in the enviable position of having a record backlog of more than $200 billion. Our product lines are incredibly strong. Our businesses are well positioned in healthy markets. So what do we have to worry about?

Two things: (1) executing on that backlog and (2) adding to it at the same time. In other words, simultaneously improving both productivity and growth—for ourselves and for our customers.

To a great extent, we can control our own destiny. Boeing is providing a set of tools and resources—in the form of four performance-driving initiatives—to support our business plans and help boost our teams' productivity, stimulate our businesses' growth, and enable every individual across the enterprise to make a greater contribution to the company's success.

We start from a position of strength. Both Commercial Airplanes and Integrated Defense Systems are offering products that help their customers operate considerably more efficiently than was possible in the past. Both have introduced Lean practices throughout much of their production operations. Both have developed partnership-style relationships with their suppliers.

And, through our Lean+ and Global Sourcing initiatives, both are working to share best practices and take us to the next levels of efficiency. These and our other two initiatives—Internal Services Productivity and Development Process Excellence—will enable people throughout the enterprise to contribute to improving our business performance, even if they never directly see or touch a product.

McNerney quoteHere's why this is so important.

Commercial Airplanes has had great success in winning new orders from a wide range of customers—primarily international ones. They have chosen Boeing's products for operating efficiency, cabin comfort and a range that enables expanded point-to-point service. As a result, we are now tasked with delivering on a significant ramp up in production over the next two years. In addition to honoring our customer delivery commitments, a successful production ramp up will provide the earnings that power continued investment in new products and services to enable our long-term growth. The initiatives can help us meet this critical challenge.

Eventually, the large U.S. network carriers will recover their financial footing and begin ordering new airplanes to compete more effectively. Our competitors will be just as interested in winning this business as we are, and they will be very aggressive in their efforts to do so. This means Boeing has to continually improve the quality and capability of our products and services at lower costs to our customers. The initiatives will help us do that, too.

Integrated Defense Systems also confronts a significant execution challenge. After having grown 50 percent in the last five years, IDS faces a moderating market. With the defense industry's largest backlog, our greatest challenge is to keep our programs sold in the face of tremendous pressure on the U.S. defense budget. Day-to-day execution throughout the entire supply chain will be the determining factor of success or failure. If programs run behind schedule or over budget, they will face the threat of termination.

The four initiatives will be key here, as well. In addition to helping IDS meet cost and deadline commitments, they will help improve the quality and reliability of its products and services while expanding capability and lowering lifecycle costs—all important to our government customers.

Regardless of business, we're all, basically, part of the Boeing sales, marketing and business-development teams; it's just that most of us help sell our products by designing, delivering and supporting them ever more efficiently. We can never forget that our future begins and ends with our customers. Ultimately, the more productive we become, the more we will help our customers succeed—and the more we will help our own company grow.


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