April 2006 
Volume 04, Issue 11 
Around Boeing

Shaping supply chain for performance

Norma Clayton
Global Sourcing

Our supply chain touches everyone. And we have lots of opportunity to make it more efficient—and in turn make Boeing and its supplier partners more competitive.

The purpose of the Global Sourcing initiative extends well beyond reducing cost today. It creates the impetus for culture change and establishing expectations for year-over-year productivity gains. Each of our suppliers needs to be viewed as an enabler helping us grow our business.

The Global Sourcing team is in a detailed planning and fact-finding phase. We are spending time to understand the challenges and opportunities within each of the business units. Each of our businesses has a unique set of customers, markets and products. Understanding these differences is essential in order to identify and capitalize on opportunities to leverage our presence and process efficiency at a company level. We are working with the business units on several projects that offer promise in many of these areas. We're assessing the cost of sourcing against world-class standards. I have a pretty good understanding of the Integrated Defense Systems business model, and I'm learning how Commercial Airplanes, Shared Services and Connexion by Boeing conduct their businesses. I believe there are great opportunities for synergy.

The business units have identified some near-term, high-return target areas. They include indirect materials costs associated with Shared Services, and we are actively working that issue. We're examining our general procurement functions to determine if we can gain better leverage, particularly in areas like raw materials and common-commodity purchases, through consolidated requirements purchases and additional dual sourcing.

From a resource perspective, we are examining the efficiency of our field operations to determine the most efficient use of our supplier oversight and governance resources. It's not uncommon while at a supplier's location to see multiple Boeing people—all with good intentions but working their individual supplier-related issues. We must find a better way to optimize our resources, such as through cross-company delegations and governance so we deploy the right people to the right supplier at the right time while freeing up critical resources to work high-risk areas. By integrating our requirements and sharing our resources we substantially reduce cost and improve supplier performance and source selection.

Boeing has some of the best e-commerce tools in the industry. A lot of companies want to benchmark Boeing's e-commerce tools. The reality is we don't use them very well. We have to use the e-commerce tools we've developed over the last five years and make sure we're getting the benefit—while driving commonality and speed at the same time.

And finally, we'll be working with Bill Schnettgoecke, leader of the Lean+ initiative team, to drive Lean principles and best practices further into our supply chain. We need to replicate the goodness we're seeing Lean generate at Boeing and help our suppliers become more cost effective.

In 2006 we're looking for each of the business units to have a Global Sourcing effectiveness plan, cost targets, areas of opportunity, a process and framework for driving productivity and efficiency, and metrics to measure improvement. The Global Sourcing team members will continue to work with the business units to understand their plans, targets, challenges, sharing of best practices and external benchmarking opportunities.

This is important stuff. Everyone has a role within this initiative, and we are dependent on one another to work together as a team to make this happen


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