This October, the Future of Sourcing Awards will celebrate organizations and individuals that have shown innovation, leadership and transformation in categories that are critical to the sourcing industry. Interviews with the finalists provide helpful insight about their projects, the problem they sought to solve and the impact to their organizations. Read how Boeing addressed their need to digitally transform its design and manufacturing systems to standardize the tool suite, drive tighter integration across the enterprise, enhance business flexibility, and generate significant productivity improvements to produce products with speed and agility.
Innovations in Governance & Compliance: The Boeing Company Supplier Relationships
Boeing identified the need to digitally transform its design and manufacturing systems to standardize the tool suite, drive tighter integration across the enterprise, enhance business flexibility, and generate significant productivity improvements to produce products with speed and agility. A key component of this program is the Product Lifecycle Management (PLM) and Manufacturing Operations Management (MOM) software that Boeing uses to design and build all of its products. Through a competitive RFP that included rigorous analysis of technical and functional capabilities as well as costs/business benefits across the value chain, Boeing agreed to partner with an innovative software supplier to deepen its end-to-end digital collaboration in design and manufacturing, and implemented robust supplier governance to safeguard results.
An early leader in the foundation of computer-aided design capabilities, Boeing quickly proliferated engineering and manufacturing systems leveraging numerous technologies. Mergers and acquisitions further complicated the global footprint of systems combined with the large-scale implementation of advanced manufacturing solutions. The diverse breadth of technology impaired the ability to efficiently leverage the digital thread, design reuse and enable global orchestration of operations. With multiple suppliers in this space, the governance structure was inefficient and haphazard. Data was distributed across many systems, which impacted the ability to utilize the information. Extensive training was needed for engineering and manufacturing personnel when moving from system to system causing significant loss of productivity and performance. Multiple systems with non-standard customizations caused integration nightmares and escalated costs. Due to these obstacles, an effort to innovate the process was imperative.
A Governance Steering Committee, comprised of both Boeing and supplier, was formed to drive and create innovative solutions which address challenges and foster the partnership. A comprehensive governance structure was created to assure that Boeing received all of the innovation and value from the supplier that was anticipated on Day 1 throughout the life of the contract with no value leakage. The board created governance project charters, documented processes, communication strategies and metrics governing the health of this historic partnership. SLA’s were created to capture metrics around capability gaps that were identified in the supplier’s product which measured how quickly and effectively gaps were closed. On a monthly basis, Boeing stakeholders assess supplier performance via a supplier performance survey which measures elements of cost, management, quality, customer satisfaction, technical and schedule. The survey results yield an overall supplier score that triggers mitigation plans if scores decline.
By implementing tools that assist with monitoring the health of our governance structure and supplier performance, we can make adjustments that ensure the long-term success of our strategic partnership. Monthly, quarterly and annual supplier performance reviews help expose any looming breakdowns in the partnership. By analyzing the root causes of any impacts reported in the supplier scorecard and measuring governance activity/productivity, the Governance Steering Committee can make the necessary adjustments in order to improve governance and drive more value out of the contract. Having a robust governance strategy with strict rules of engagement drives innovation as a prime activity (not just a side benefit). In this fashion, we are able to measure managed service deliverables, address emerging business needs and avoid value leakage. Continual improvements through process health checks keeps governance optimized and relevant to the business environment.
Digitally transforming a global company is quite a feat, but necessary to strongly position for the future and remain viable through continuous changes in technology. This digital transformation enables design and operations the ability to move engineers from program to program without losing productivity. In addition, improved data management leverages greater value, reduces costly rework, and increases design and manufacturing automation to produce first time quality. The terms of an agreement with a strategic supplier needs to be dynamic to allow it to evolve with the scope of work and business environment throughout the life of the partnership. By encouraging a collaborative environment with our supplier, we are transforming into a proactive culture allowing us to operate under a shared purpose with personal accountability. Previously we operated with different interests in mind hindering our ability to be agile in our partnership. The new strategy allows us to align on mutually beneficial objectives and to work collaboratively instead of competitively. Our strategic partnership with our supplier has contributed to transformational changes across the enterprise and contributes to Boeing’s goal to operate as One Boeing. Additionally, we partner with the supplier to identify opportunities that might benefit both companies, potentially including mergers & acquisitions or investments in innovative start-ups that add value. A final objective of this initiative was to define the governance that allows our company and its supplier to oversee the implementation, performance, operational management and issue escalation of the partnership. This strategic partnership creates a vested interest in the future success of the contract and relationship of both parties involved.
The business case for this project was compelling yet simple: Boeing needed to be faster, enterprise-wide system integration, commonality and automation to drive the digital thread of data. Our current engineering and manufacturing systems required far too many resources to execute. We collaborated with outside industry consultants as well as internal sourcing, supply chain, finance, IT and enterprise business partners to identify opportunities to digitally transform our business. Potential suppliers were thoroughly evaluated, and a business case was brought forward to the Procurement Review Board for approval from executive stakeholders. This collaboration created a strategy in which the team proposed a transformational outsourcing partnership to provide early visibility into the cost impact of system integration decisions, create an opportunity to incorporate the supplier’s innovation into the product development, and ultimately transformed the business. Stakeholders trust the Governance Steering Committee to make positive changes and have accepted the implementation of governance principles to achieve a successful partnership.