Relationships Break-out Session 1st Hour · Break-out Session 1st Hour Workshop Leader: Stan...

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


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


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


2nd HourWorkshop Leader: Stan Albrecht


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



– 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


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



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.



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.



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 ?



Evaluate Inputand

PrepareDisposition

Evaluate Inputand

PrepareDisposition

N

Y

Y

POC ReceiveE-Mail

&Log In

EvaluateContested




Disposition

Receive &Approve

Disposition


Log Out

Receive Disposition

Update CSATand





Contact Supplier


?Resolution

RatingCorrect ?

ContactProcurement Agent



N

Y

N

Y

POC ReceiveE-Mail

&Log In

EvaluateContested




Disposition

Receive &Approve

Disposition


Log Out

Receive Disposition

Update CSATand





Contact Supplier

Supplier

Site CR Focalor Designee

ResponsibleEvaluator


Resolution?

RatingCorrect ?



Evaluate Inputand

PrepareDisposition

Evaluate Inputand

PrepareDisposition

N

Y

Y

POC ReceiveE-Mail

&Log In

EvaluateContested




Disposition

Receive &Approve

Disposition


Log Out

Receive Disposition

Update CSATand





Contact Supplier


?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


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


Supplier Performance Ratings / Cert (A Tables) Supplier Participation on Dev Programs (B Tables)



35







3rd HourWorkshop Leader: Stan Albrecht


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



– 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


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


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


Common T&C’s / Corporate Agreements (A Tables) Boeing Becoming a Better Customer / Partner (B Tables)



47






Relationships Break-out Session 1st Hour · Break-out Session 1st Hour Workshop Leader: Stan...

Documents

Transcript of Relationships Break-out Session 1st Hour · Break-out Session 1st Hour Workshop Leader: Stan...