April 2006 
Volume 04, Issue 11 
Around Boeing

Opportunity to excel

Rick Gross
Internal Services Productivity

There is a significant opportunity at Boeing to increase Support Service productivity. The Internal Services Productivity team is taking a structured approach to evaluating our cost structure, benchmarking it and identifying actions that will make a significant improvement in our support.

Included in the initiative are Boeing's centrally administered costs, Information Technology applications and network operations, nonproduction procurement, and corporate and business unit functional support. We're going to take a hard look at Finance and all the other business unit support functions across Commercial Airplanes, Integrated Defense Systems and Connexion. We're going to set some specific targets, which already have been flowed out to and incorporated into the plan for our corporate administrative functions. We're going to take a hard look at our centrally administered services as well.

As we've been working over the last six weeks, we've spent some time looking at the maturity of existing plans. Some functions already have plans in place and actions being taken toward service and system standardization, application of Lean in the office, and other areas. Through this team we're going to try to pick up the pace and evaluate and determine what actions are needed to bring home the significant productivity gains we know are out there.

Our near-term focus is going to be on IT systems application, our footprint and our facilities costs. We're going to look at the business unit support elements and then, longer term, benefit-administration costs.

A major focus is going to be to shape the demand and expectations around support. Where are there opportunities to curb the demand to create custom and unique solutions? We're going to simplify and standardize our common functional support. We're going to educate people on—and deploy—those Lean principals and practices that will drive process improvement opportunities.

We need to reduce the variability and the complexity in our support functions. Applying Lean will enable us to do that. We're also going to take a hard look at simplifying our organizational structures. If there are opportunities to remove duplication, that is going to be worth some money.

Let's touch on a couple of specifics around simplifying and standardizing. One of the things we need to think about is support as a transaction cost. What's the cost of processing an insurance claim, generating a purchase requisition, or generating a cost-performance report from our Finance team? We think of the goods and services we sell to our BCA, IDS and Connexion customers in terms of cost and price. But we need to instill broadly the mentality about the cost of internal support and service transactions. Then, we're going to evaluate these internal transaction costs, decide whether or not the cost is competitive, and have a conversation about how to improve cost and/or identify other options for providing the service.

Here are some other areas.

Standardization and governance: We spend millions of dollars a year in travel costs. There are opportunities to improve this level of governance and compliance in our travel processes. The more we can get everybody using standard carriers and lodging, the more there is an opportunity for us to get better deals procuring these services. And look at operating supplies: Today you have a significant quantity of choices if you are looking to buy notebooks or paper at Boeing. If we can standardize and reduce the quantity of these offerings, we can increase leverage with suppliers and save significant monies.

Application of Lean in our site service areas: We're looking really hard at preventative maintenance, preventative maintenance scheduling, replacement part ordering and the delivery of those parts and services to the workplace. There are some good plans in place today. In some areas applying Lean is really paying off.

Benefits and insurance administration: If we could consolidate the number of insurance plans we have, or cut the number of service providers we deal with, there is an opportunity for leveraging cost reductions based on increased volume to fewer suppliers. We also need to look at the cost to administer the different plans and transactions and identify and implement improvements to increase efficiency.

I'm convinced there is a huge opportunity in the Internal Services Productivity initiative. As we further progress it will boost Boeing's flexibility to win new business, and help us achieve our market and business objectives.


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