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Frontiers March 2013 Issue

companies that have the ability to transport large equipment, such as jet engines,” said Daniel Yoo, freight category leader with Supplier Management. “We partner with Supply Chain Logistics to ensure we select the right supplier so products arrive undamaged and on time, and we get the best value for Boeing.” As Boeing looks for ways to improve its competitiveness, the Supplier Management organization is undergoing a transformation and changing the way it does business to become even more efficient—and get the best value for the company. These changes include reducing the number of suppliers with which Boeing does business. Boeing purchases fall into two types: items that are a part of the Boeing prod-ucts that get delivered to customers, and the items and services that help move Boeing products out the door to custom-ers. Supplier Management purchases the latter, known as non-production goods and services. The 275 employees in Supplier Management purchase such things as factory tooling equipment, safety gear for employees, information technology software used on Boeing computers, hand tools—even the pens Boeing employees use every day. Purchasing all of Boeing’s non- production goods and services is a big job that involves the efficient management of billions of dollars in annual company spending. Using an approach known as Strategic Contracting & Category Management, purchases are grouped into categories— IT applications and hardware, freight, facilities services, travel, and maintenance, repair and operating supplies. Category leaders are responsible for bringing together employees from various Boeing organizations to create a purchasing strategy for their area. Together, they analyze data and determine what to buy from the more than 30,000 suppliers in Boeing’s database, based on the needs of the company. Once a decision is made, the team has several purchasing methods to get the best possible price for Boeing. Today, almost 80 percent of Boeing’s contracted spending is done through competitive bidding—an increase of nearly 30 percent over one year ago. In the past year, the IT category team has been able to significantly reduce costs for the company by going to market as “One Boeing.” “By working together as one company instead of as fragmented groups, the team was able to consolidate our contracts and receive enterprise volume discounts,” said Delores Alexander, IT leader for Supplier Management. “Approaching our suppliers as One Boeing allows us to leverage savings, improve quality and be more efficient.” Supplier Management will begin imple-menting another phase of its strategy this year—reducing the number of suppliers doing business with Boeing. For example, the Maintenance, Repair and Operating supplies category has thousands of suppliers. But 90 percent of Boeing’s purchasing is with only 10 percent of them. Bobby Fales, the category leader for operating supplies, explained the need for streamlining. “Approaching our suppliers as One Boeing allows us to leverage savings, improve quality and be more efficient.” – Delores Alexander, IT leader for Supplier Management “We currently have 200 screwdrivers in our online catalog,” he explained. “By reducing the number of items available for ordering, we make it easier and faster for employees to find what they need.” Doing business with fewer vendors helps Boeing build relationships with suppliers, so they become partners, working together to reduce costs from sourcing to delivery to the internal use of non-production goods. When it comes to getting airplane engines delivered on time, working with fewer, key suppliers has other advantages, Yoo said. “We’ve designated some suppliers as ‘core carriers,’ which means they have the right equipment and skilled drivers to safely transport Boeing goods,” Yoo said. “In turn, these core carriers can invest more in their business with the confidence that Boeing wants—and needs—them to succeed.” n antonella.bellman@boeing.com PHOTOS: (Above left) A forklift purchased through Supplier Management makes it easy to transport an engine into the Everett, Wash., factory for assembly onto a Boeing 777. GAIL HANUSA/BOEING (Right) Jack Stendahl, left, and Gil Molinari, both with Propulsion Systems in Commercial Airplanes, load an engine into an engine buck purchased through Supplier Management. An engine buck is used to move the engine in the factory to the production line so it can be installed on a 737. MARIAN LOCKHART/BOEING 34 BOEING FRONTIERS / MARCH 2013


Frontiers March 2013 Issue
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