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Relationships Break-out Session
1st HourWorkshop Leader: Stan Albrecht
Global Supplier ConferenceSeptember 16, 2004
2
Objective•• Engage in discussion on specific topics that can enhance Engage in discussion on specific topics that can enhance
RelationshipsRelationships11stst Hour:Hour:•• Effective Communications (A Tables) Effective Communications (A Tables) •• Early Supplier Involvement (B Tables) Early Supplier Involvement (B Tables)
22ndnd Hour:Hour:•• Supplier Performance Ratings / Certification (A Tables) Supplier Performance Ratings / Certification (A Tables) •• Supplier Participation on Dev Programs (B Tables)Supplier Participation on Dev Programs (B Tables)
33rdrd Hour:Hour:•• Common T&C’s / Corporate Agreements (A Tables) Common T&C’s / Corporate Agreements (A Tables) •• Boeing Becoming a Better Customer / Partner (B Tables)Boeing Becoming a Better Customer / Partner (B Tables)
3
Timeline• Define Issues to be addressed – 25 minutes
• Introduction of 2 Topics / Objectives / Leaders • Boeing Perspective
– Roger Krone – Effective Communications– Senior VP, Army Systems
• Supplier Perspective – Scott Brandenburg – Early Supplier Involvement
– VP Boeing Programs, Honeywell International• Short Q&A with presenters
• Break into 2 Major Topic Groups – 30 minutes• Tabletop discussions about particular topic
– Boeing facilitator at each table• Wrap-up – 5 minutes – Plan for Friday Report-out
Effective Communications
Roger KroneSenior VP, Army Systems
The Boeing Company
Global Supplier ConferenceSeptember 16, 2004
5
What do we hope for?
• Suppliers = teammates
• Work issues together
• Executive involvement
Open and honest communications is a must to establish the collaborative environment we desire so we can work together to solve problems with effective solutions for our customer.
6
Challenges
• Conflicting priorities & competitiveness
• Building mutual trust
• Involvement in decision
An environment of mutual trust with open, honest communications must exist so that the entire team
becomes involved with what we do.
7
Why Integration?• Reduces cost
• Aligns investment
• Improves our capabilities
• Creates an environment that makes us more affordable, enhances customer satisfaction, expands our business and increases productivity.
Effective communication requires integration
8
Best Value for Our Customer
Profitable business
Effective communications
Better relationships
Early Supplier Involvement
Scott E. BrandenburgVP Boeing Programs
Honeywell International
Global Supplier ConferenceSeptember 16, 2004
10
Benefits of Early Supplier Involvement• For Boeing . . .
• Broad access to technologies, business concepts, and customer support experiences and new ideas
• Resource multiplier• For the Supplier . . .
• Understanding the customer’s (Boeing & the end users) needs early in the process
• Buy-In to the product, process, and outcome• For the End User/Operator . . .
• Optimal total solution to any given requirement• They too get a better understanding of the costs/benefits
Better Products, Better Solutions: Everyone Benefits
11
Capture Teams
Capture Teams Bring Cross-Functional Experience
• Cross-Industry• Boeing is the team leader• Multiple suppliers of similar products• Suppliers of system & equipment interfaces
– Related systems suppliers– Sub-tier suppliers– Structures suppliers
• Cross-Functional• Engineering & technology• Manufacturing• Aftermarket support• Business, Financial, & Contractual
• End Users/Operators
12
Identifying Strategy & Developing Solutions
• Early definition of cost/risk vs. benefit/reward• What’s really important?• Is it technically & commercially
viable?• Manufacturable, supportable?• Service ready at product intro?
• If any of the answers are negative, what should we do?• Enhance R&D• Earlier, more extensive testing• New or expanded facilities
Early Identification of Issues Allows Time to React
13
Teaming & Systems Architecture• Greater component and sub-system
integration yields better solutions• Eliminates duplicative parts, improves
functionality• Can lead to reduced manufacturing costs
and cycle times• Better vehicle integration• Improved operational support
• Systems Engineering & Architecture• The best technology and capabilities of all
participants • Lower weight, cost, and volume• Higher reliability• Reduced and improved systems design
and testing efforts
Early Teaming Yields Optimal Design Solutions
14
Table-top Discussions
Effective Communications (A Tables) Early Supplier Involvement (B Tables)
• Review Handouts at table to stimulate discussions• Capture discussion highlights on easel charts
– Consider forward actions / next steps
15
Wrap-upThank you for your engaged participation!- Key to building successful relationships
• Boeing facilitators to consolidate results• Discussion summary to be presented Friday
– Discussion Highlights – Actionable Items– Next Steps
• Information from all sessions will be available on Conference Web-site
– Will include more detail from table discussions
Relationships Break-out Session
2nd HourWorkshop Leader: Stan Albrecht
Global Supplier ConferenceSeptember 16, 2004
17
Objective• Engage in discussion on specific topics that can enhance
Relationships1st Hour:• Effective Communications (A Tables) • Early Supplier Involvement (B Tables)
2nd Hour:• Supplier Performance Ratings / Certification (A Tables) • Supplier Participation on Dev Programs (B Tables)
3rd Hour:• Common T&C’s / Corporate Agreements (A Tables) • Boeing Becoming a Better Customer / Partner (B Tables)
18
Timeline• Define Issues to be addressed – 25 minutes
• Introduction of 2 Topics / Objectives / Leaders • Boeing Perspective
– Steve Sargeant – Supplier Performance Ratings/Cert– Director, General Procurement
• Supplier Perspective – Chris Gould – Supplier Participation on Dev Programs
– Director, Boeing Commercial Programs, Vought• Short Q&A with presenters
• Break into 2 Major Topic Groups – 30 minutes• Tabletop discussions about particular topic
– Boeing facilitator at each table• Wrap-up – 5 minutes – Plan for Friday Report-out
Supplier Performance Ratings / Certification
Steve SargeantDirector, General Procurement
The Boeing Company
Global Supplier ConferenceSeptember 16, 2004
20
• Supplier Performance Measurement
• Preferred Supplier Certification
• Common Source Selection Process
Supplier Performance MeasurementH
igh
Perfo
rmin
g Su
pplie
rs
Gold
Silver
Bronze
Yellow
Red
Exceptional
Very Good
Satisfactory
ImprovementNeeded
Unsatisfactory
Quality - 99% Acceptance Delivery - 93 % On Time
Quality – 99.5% Acceptance Delivery - 97 % On Time
Quality – 96.5% Acceptance Delivery - 85 % On Time
Quality - 100% Acceptance Delivery - 100 % On Time
Quality - < 96.5% Acceptance Delivery - < 85 % On Time
Affordability - > 4.0 Customer Satisfaction - > 4.4
Affordability - 3.4 to 3.9 Customer Satisfaction - 3.8 to 4.3
Affordability - > 2.8 to 3.3 Customer Satisfaction - 2.8 to 3.7
Affordability - 1.8 to 2.7 Customer Satisfaction - 1.8 to 2.7
Affordability - Below 1.8 Customer Satisfaction - Below 1.8
22
SPMS Thresholds & Change Implementation Schedule
On Time Delivery
Performance Threshold (%)
Prior to Jan 01, 2004
Effective Jan 1, 2004
Effective July 1, 2005
100 Gold Gold Gold999897969594939291908580<80 Red
Delivery Threshold IncreaseTimeline
Silver
Bronze
Yellow80
90
95
97
93
8590
96
98
On Time Delivery
Performance Threshold (%)
Prior to Jan 01, 2004
Effective Jan 1, 2004
Effective July 1, 2005
100 Gold Gold Gold999897969594939291908580<80 Red
Delivery Threshold IncreaseTimeline
Silver
Bronze
Yellow80
90
95
97
93
8590
96
98
Quality Performance
Threshold (DPMO)
Prior to Jan 1, 2004.
Effective Jan 1, 2004
Effective July 1, 2005
Quality Performance Threshold (%
Accept)0 Gold Gold Gold 100.0
2000 99.84000 99.64500 99.555000 99.56000 99.48000 99.210000 99.012000 98.814000 98.616000 98.418000 98.220000 98.035000 96.550000 95.0>50000 Red <95
Yellow
Quality Threshold Increase Timeline
Silver
Bronze
99.0
98.0
95.096.5
99.0
99.5
99.8
99.55
98.0
Quality Performance
Threshold (DPMO)
Prior to Jan 1, 2004.
Effective Jan 1, 2004
Effective July 1, 2005
Quality Performance Threshold (%
Accept)0 Gold Gold Gold 100.0
2000 99.84000 99.64500 99.555000 99.56000 99.48000 99.210000 99.012000 98.814000 98.616000 98.418000 98.220000 98.035000 96.550000 95.0>50000 Red <95
Yellow
Quality Threshold Increase Timeline
Silver
Bronze
99.0
98.0
95.096.5
99.0
99.5
99.8
99.55
98.0
23
Customer & Supplier Satisfaction• Customer Satisfaction (CSAT) focuses
on performance in:• Management • Schedule• Quality• Technical• Financial Matters
• Key suppliers may receive CSAT ratings
• Supplier Satisfaction (SSAT)• Suppliers can anonymously rate Boeing
as a customer using the same criteria as CSAT
24
Contested Rating Process
RatingCorrect ?
ContactProcurement Agent
Fill out E-MailTemplateand Send
N
Y
N
Y
POC ReceiveE-Mail
&Log In
EvaluateContested
Rating & Route forDisposition
Responsible Eval .Receives Request,
Analyzes, and prepares
Disposition
Receive &Approve
Disposition
Forward toSupplier and
Log Out
Receive Disposition
Update CSATand
AffordabilityDatabases
Update LocalSystem If
Del. orQual. isReversed
Update BusinessSystem &
Contact Supplier
Supplier
Site CR Focalor Designee
ResponsibleEvaluator
Informal ProcessFormal Process
Resolution?
RatingCorrect ?
Fill out E-MailTemplateand Send
Fill out E-MailTemplateand Send
Evaluate Inputand
PrepareDisposition
Evaluate Inputand
PrepareDisposition
N
Y
Y
POC ReceiveE-Mail
&Log In
EvaluateContested
Rating & Route forDisposition
Responsible Eval .Receives Request,
Analyzes, and prepares
Disposition
Receive &Approve
Disposition
Forward toSupplier and
Log Out
Receive Disposition
Update CSATand
AffordabilityDatabases
Update LocalSystem If
Del. orQual. isReversed
Update BusinessSystem &
Contact Supplier
Informal ProcessFormal Process
?Resolution
RatingCorrect ?
ContactProcurement Agent
Fill out E-MailTemplateand Send
Fill out E-MailTemplateand Send
N
Y
N
Y
POC ReceiveE-Mail
&Log In
EvaluateContested
Rating & Route forDisposition
Responsible Eval .Receives Request,
Analyzes, and prepares
Disposition
Receive &Approve
Disposition
Forward toSupplier and
Log Out
Receive Disposition
Update CSATand
AffordabilityDatabases
Update LocalSystem If
Del. orQual. isReversed
Update BusinessSystem &
Contact Supplier
Supplier
Site CR Focalor Designee
ResponsibleEvaluator
Informal ProcessFormal Process
Resolution?
RatingCorrect ?
Fill out E-MailTemplateand Send
Fill out E-MailTemplateand Send
Evaluate Inputand
PrepareDisposition
Evaluate Inputand
PrepareDisposition
N
Y
Y
POC ReceiveE-Mail
&Log In
EvaluateContested
Rating & Route forDisposition
Responsible Eval .Receives Request,
Analyzes, and prepares
Disposition
Receive &Approve
Disposition
Forward toSupplier and
Log Out
Receive Disposition
Update CSATand
AffordabilityDatabases
Update LocalSystem If
Del. orQual. isReversed
Update BusinessSystem &
Contact Supplier
Informal ProcessFormal Process
?Resolution
25
The Preferred Supplier Certification Process
AQSEvaluation
AQSAQSEvaluationEvaluation
• CI Sys. Development• Performance Measures• Product/Process Analysis• Management Review
• Variation Control Method• Process Capability &
Optimization• Variation Mgmt in Design
Supplier Business Processes
Supplier Supplier Business Business ProcessesProcesses
• Leadership• Technology• Product Delivery
• Quality• Cost• Support
Supplier Performance
Supplier Supplier PerformancePerformance • Quality Assurance
• On-Time Delivery• Affordability• Customer Satisfaction
““What Is It?”What Is It?”
Benefits to suppliers:• Facilitates Boeing/supplier integration • Accelerates and sustains performance
improvements• Provides bidder and source selection
preference• Improves competitiveness and industry
recognition
26
Source Selection Process
• Process based on Best Value• Designed to include the right
suppliers at the bidder selection step• Common across all Boeing operating
groups• Boeing overall supplier performance is an
element of process• High performing suppliers are best
positioned to capture future Boeing business opportunities
Bid List Template
27
Common Source SelectionProposal Evaluation Options
Proposal Input Price Mgmt Technical Performance
Price and Contract Terms Only
Price and Contract Terms and
Management
Price and Contract Terms, Management
and Technical
10-40%20-40%
(8% PSC maximum)
20-40%
(8% PSC maximum)
10-40% 10-40%
30-60%
30-60%
70-90% (8% PSC maximum)
10-30%
• Available supply base maintained by strategic sourcing teams• Source selection team determines best value evaluation approach• Team has evaluation flexibility within ranges shown above
28
Summary
• SPMS provides composite and individual pictures of the Boeing supply base
• PSC is the continued development of our high performing suppliers
• Common Source Selection is a focus on ‘best value’
• Our focus is on developing high performing suppliers through improved relationships
Supplier Participation on Development
Programs Chris Gould
Director, Boeing Commercial ProgramsVought Aircraft Industries
Global Supplier ConferenceSeptember 16, 2004
30
Supplier Participation on Development ProgramsAdvantages
• Leverage World Knowledge Base• Structural and Systems Teammates Contributing Early
– Integration of Best Ideas• Equipment Manufacturers Early Involvement
– Maximize Design and Production Processes– Bring Forth the Latest Technologies
• Material– Select Optimal Performing Material Considering Manufacturing
Processes and Product Life Cycle• Optimize Cost and Schedule
• Early Participation Enables Efficient Capacity Planning & Investment
• Shared Development and Test Investment• Facilitates Strong Offset Opportunities
31
Supplier Participation on Development ProgramsChallenges
• New Way of Doing Business• Investment Level (Risk) vs. Return
• Upfront Funding and Commitment• Investment Significantly Ahead of Return/Revenue Stream
• Common Contracts (T’s & C’s) for Investors• Systems Evolution
• Commonality & Functionality• Desire to Gravitate Back to Prescriptive Requirements • Commonality vs. Originality• Legal & Logistical Challenges of Doing Design World Wide• Integration of Staffing and Scheduling
32
Supplier Participation on Development ProgramsEnablers
• Good Product With Strong Market• Electronic Design System
• Common Basic Systems• Electronic Transmission
• Management Commitment• Boeing• Supply Base
• Robust Communications
33
Supplier Participation on Development ProgramsSummary - Discussion Points
• Brings Best Ideas From Around the World to the Product Early On
• Leverage World Investment Capability• Challenges:
• Culture• Logistics• Technology• Business
34
Table-top Discussions
Supplier Performance Ratings / Cert (A Tables) Supplier Participation on Dev Programs (B Tables)
• Review Handouts at table to stimulate discussions• Capture discussion highlights on easel charts
– Consider forward actions / next steps
35
Wrap-upThank you for your engaged participation!- Key to building successful relationships
• Boeing facilitators to consolidate results• Discussion summary to be presented Friday
– Discussion Highlights – Actionable Items– Next Steps
• Information from all sessions will be available on Conference Web-site
– Will include more detail from table discussions
Relationships Break-out Session
3rd HourWorkshop Leader: Stan Albrecht
Global Supplier ConferenceSeptember 16, 2004
37
Objective•• Engage in discussion on specific topics that can enhance Engage in discussion on specific topics that can enhance
RelationshipsRelationships11stst Hour:Hour:•• Effective Communications (A Tables) Effective Communications (A Tables) •• Early Supplier Involvement (B Tables) Early Supplier Involvement (B Tables)
22ndnd Hour:Hour:•• Supplier Performance Ratings / Certification (A Tables) Supplier Performance Ratings / Certification (A Tables) •• Supplier Participation on Dev Programs (B Tables)Supplier Participation on Dev Programs (B Tables)
33rdrd Hour:Hour:•• Common T&C’s / Corporate Agreements (A Tables) Common T&C’s / Corporate Agreements (A Tables) •• Boeing Becoming a Better Customer / Partner (B Tables)Boeing Becoming a Better Customer / Partner (B Tables)
38
Timeline• Define Issues to be addressed – 25 minutes
• Introduction of 2 Topics / Objectives / Leaders • Boeing Perspective
– Nancy Miller – Common T&C’s / Corporate Agreements– Senior Manager, Shared Services Group
• Supplier Perspective – Robert F. Ehr – Boeing Becoming a Better Customer /
Partner– President, Electronic Systems, Smiths Aerospace
• Short Q&A with presenters• Break into 2 Major Topic Groups – 30 minutes
• Tabletop discussions about particular topic– Boeing facilitator at each table
• Wrap-up – 5 minutes – Plan for Friday Report-out
Common Terms and Conditions (T & C’s) and Corporate Agreements
Nancy MillerSenior Manager, Shared Services Group
The Boeing Company
Global Supplier ConferenceSeptember 16, 2004
40
Objective• “One Company” face • Anticipate significant cycle time reduction• Allow more focus on unique T&C’s, technical and cost issues• Leverage the requirements; sub-tier inclusion• Promote collaboration and standardization
What opportunities or benefits can be gained ?Progress
• Established target Criteria and key suppliers • Team consisting of Procurement, Legal, Technical• Enterprise General Provisions deployed• Major Suppliers overriding T/C’s – 1 completed, 2 in work• Hundreds of Corp Agreements in place
What time/resources are you investing ?
Common T&C’s / Corporate Agreements
41
Common T&C’s / Corporate AgreementsLessons Learned
• Requires full-time commitment and resources• Willingness to work together is essential• Needs high prioritization by top executives
Challenges• Military and Commercial applications• Integration across internal business structure• Effective communication of enterprise Corp Agrmt / T&C’s
What challenges do you see and how can we overcome ?
Boeing Becoming a Better Customer / Partner
Robert F. EhrPresident, Electronic Systems
Smiths Aerospace
Global Supplier ConferenceSeptember 16, 2004
43
Boeing Becoming a Better Customer / PartnerAttributes of Partnership-Style Relationships
• Early supplier participation• Open, honest, & timely communications• Early resolution of issues What current relationships and practices prevent partnering?
Sharing Risk and Reward• Boeing system-of-systems focus / platform level integrator• Suppliers system & subsystem integration• Contract Approaches
• High Risk - Changing requirements - Cost type contracts• Moderate Risk - FFP contractsWhat contract or payment approaches make sense?
44
Supplier Participation in IPT’s• On-site Supplier IPT Leaders/Members - Lessons learned
• Speed of issue resolution• Expedited communication network• Ensure access to Mgmt• Major step forward in Integrated Supply ChainWhat barriers prevent supplier participation on IPT’s?
Boeing Becoming a Better Customer / Partner
Agility and Adaptability• Suppliers enhance Boeing performance to address changes
• Tier 1 ⇒ Force multiplier• Subsystem integration - greater value to Boeing• Greater reliance on supplier Engineering
• Supplier participation in requirements definitionHow could Boeing involve suppliers and preserve competition?
45
Boeing Becoming a Better Customer / PartnerCapability-based Source Selection
• End users requiring compressed lead times• Rapid prototyping using COTS items & Spiral development• Proven partnership relationship - best solution• Better info from Boeing ⇒ Better supplier solutions
What are the barriers & how do we overcome them?Near-term Actions: Building on Respective Strengths
• Army Systems Supply Chain Effectiveness key findings • Early Supplier Involvement - Utilize suppliers’ expertise
• Cost, schedule, performance - risk mitigation• IRAD Alignment
• Optimize investments• Coordinate product & technology roadmaps
How would you engage in early involvement & IRAD alignment?
46
Table-top Discussions
Common T&C’s / Corporate Agreements (A Tables) Boeing Becoming a Better Customer / Partner (B Tables)
• Review Handouts at table to stimulate discussions• Capture discussion highlights on easel charts
– Consider forward actions / next steps
47
Wrap-upThank you for your engaged participation!- Key to building successful relationships
• Boeing facilitators to consolidate results• Discussion summary to be presented Friday
– Discussion Highlights – Actionable Items– Next Steps
• Information from all sessions will be available on Conference Web-site
– Will include more detail from table discussions