Supply Chain Oversight in Unprecedented TimesSupply Chain Oversight in Unprecedented Times

Wayne BrownDirector, Boeing Commercial Airplanes Supplier QualityThe Boeing CompanyMarch 14, 2011

Presentation ContentPresentation Content ► Unprecedented TimesUnprecedented Times

UpsideUpside DownsideDownside

► Areas of FocusAreas of Focus► Strategies For SuccessStrategies For Success

Presentation ContentPresentation Content ► Unprecedented TimesUnprecedented Times

UpsideUpside DownsideDownside

► Areas of FocusAreas of Focus► Strategies For SuccessStrategies For Success

Unprecedented Times – UpsideUnprecedented Times – Upside Today’s Aerospace Environment Today’s Aerospace Environment

News Headlines

US airline shares up on better economic outlook Reuters News    07/26/2010

Boeing, Airbus score $29 billion at air show Everett Herald    07/25/2010

Boeing predicts a greater need for new passenger jets Everett Herald    07/21/2010

American Airlines orders 35 Boeing jets to upgrade its fleet and phase out gas-guzzling planes

Associated Press Newswires    07/21/2010

Dreamliner lands at Farnborough BBC News    07/18/2010

FedEX looks to 777s to deliver an edge Wall Street Journal    07/14/2010

Boeing 747-8s endure hot weather, top 500 flight hours Seattle Post-Intelligencer    06/29/2010

Boeing to make even more 737s Wichita Eagle    06/16/2010

Unprecedented Times – Unprecedented Times – UpsideUpside

Unprecedented Times – UpsideUnprecedented Times – Upside Strong long-term growth Strong long-term growth

ChallengeChallengess

787 delays

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Unprecedented Times – DownsideUnprecedented Times – DownsidePressures Affecting the Supply Pressures Affecting the Supply

ChainChain Production delays have impacted Production delays have impacted suppliers financially and suppliers financially and earningsearnings landscape is mixed landscape is mixed

Dollar depreciation is increasing Dollar depreciation is increasing pressure on revenues for foreign pressure on revenues for foreign supplierssuppliers

Production rate increases on Production rate increases on existing programs and the existing programs and the development of new airplanes development of new airplanes have challenged the supply chainhave challenged the supply chain

Quality and performance issues Quality and performance issues from Partners and major suppliers from Partners and major suppliers have been on the risehave been on the rise

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Production delays have impacted Production delays have impacted suppliers financially and suppliers financially and earningsearnings landscape is mixed landscape is mixed

Dollar depreciation is increasing Dollar depreciation is increasing pressure on revenues for foreign pressure on revenues for foreign supplierssuppliers

Production rate increases on Production rate increases on existing programs and the existing programs and the development of new airplanes development of new airplanes have challenged the supply chainhave challenged the supply chain

Quality and performance issues Quality and performance issues from Partners and major suppliers from Partners and major suppliers have been on the risehave been on the rise

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Unprecedented Times – DownsideUnprecedented Times – DownsidePressures Affecting the Supply Pressures Affecting the Supply

ChainChain

Production delays have impacted Production delays have impacted suppliers financially and suppliers financially and earningsearnings landscape is mixed landscape is mixed

Dollar depreciation is increasing Dollar depreciation is increasing pressure on revenues for foreign pressure on revenues for foreign supplierssuppliers

Production rate increases on Production rate increases on existing programs and the existing programs and the development of new airplanes development of new airplanes have challenged the supply chainhave challenged the supply chain

Quality and performance issues Quality and performance issues from Partners and major suppliers from Partners and major suppliers have been on the risehave been on the rise

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Unprecedented Times – DownsideUnprecedented Times – DownsidePressures Affecting the Supply Pressures Affecting the Supply

ChainChain

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A380 delay 787 delayProduction delays have impacted Production delays have impacted suppliers financially and suppliers financially and earningsearnings landscape is mixed landscape is mixed

Dollar depreciation is increasing Dollar depreciation is increasing pressure on revenues for foreign pressure on revenues for foreign supplierssuppliers

Production rate increases on Production rate increases on existing programs and the existing programs and the development of new airplanes development of new airplanes have challenged the supply chainhave challenged the supply chain

Quality and performance issues Quality and performance issues from Partners and major suppliers from Partners and major suppliers have been on the risehave been on the rise

Unprecedented Times – DownsideUnprecedented Times – DownsidePressures Affecting the Supply Pressures Affecting the Supply

ChainChain

Presentation ContentPresentation Content

► Unprecedented TimesUnprecedented Times UpsideUpside DownsideDownside

► Areas of FocusAreas of Focus► Strategies For SuccessStrategies For Success

Areas of FocusAreas of Focus

First Article Inspections (FAI)First Article Inspections (FAI)• Ensure partial (i.e. delta) FAIs are performed for Ensure partial (i.e. delta) FAIs are performed for

any process changes affecting fit, form or any process changes affecting fit, form or function. function.

• Conduct thorough on-site checks of the FAI Conduct thorough on-site checks of the FAI process at critical sub-tier suppliers.process at critical sub-tier suppliers.

Specification ChangesSpecification Changes• Ensure a strong process of frequent checks for Ensure a strong process of frequent checks for

specification changes.specification changes.

Foreign Object DebrisForeign Object Debris• Incorporate both “FOD prevention” and a “clean Incorporate both “FOD prevention” and a “clean

as you go “ approach to FOD. as you go “ approach to FOD.

Areas of FocusAreas of Focus

PlanningPlanning• Ensure any products with customer controlled Ensure any products with customer controlled

planning (such as Process Control Documents) planning (such as Process Control Documents) are clearly identified in the manufacturing are clearly identified in the manufacturing planning so that changes are not made without planning so that changes are not made without customer approvalcustomer approval

Mistake ProofingMistake Proofing• Look for opportunities to mistake-proof Look for opportunities to mistake-proof

operations. For nearly symmetrical parts, pursue operations. For nearly symmetrical parts, pursue a “mistake proofing” approach to product a “mistake proofing” approach to product design/marking to ensure correct application and design/marking to ensure correct application and installation.installation.

Quality ControlsQuality Controls• Ensure strong Quality controls over any operator Ensure strong Quality controls over any operator

verification programs (i.e., manufacturing self-verification programs (i.e., manufacturing self-inspection).inspection).

Areas of FocusAreas of Focus

Special ProcessorsSpecial Processors• Verify processes are in place to ensure work Verify processes are in place to ensure work

coming in from special processors is to the coming in from special processors is to the correct specification and that the processor is in correct specification and that the processor is in good standing.good standing.

ContractingContracting• Check that thorough contract reviews with sub-Check that thorough contract reviews with sub-

tier suppliers to ensure that they understand tier suppliers to ensure that they understand requirements. Consider contract language requirements. Consider contract language requiring sub-tier suppliers to notify you when requiring sub-tier suppliers to notify you when any of their sources are changed. Check that any of their sources are changed. Check that there is complete understanding of contract there is complete understanding of contract language, both internally and externally.language, both internally and externally.

TrainingTraining• Ensure new employees, or employees doing new Ensure new employees, or employees doing new

work, receive all the training needed to perform work, receive all the training needed to perform their work flawlessly – the first timetheir work flawlessly – the first time

Presentation ContentPresentation Content

► Unprecedented TimesUnprecedented Times UpsideUpside DownsideDownside

► Areas of FocusAreas of Focus► Strategies For SuccessStrategies For Success

Strategies For SuccessStrategies For Success

► Back to basicsBack to basics

► Evaluate new techniquesEvaluate new techniques

► Work with industryWork with industry

► Company focus on qualityCompany focus on quality

Back to BasicsBack to Basics

► Enhanced communicationEnhanced communication Take ownership for our Take ownership for our

contributions to supply contributions to supply chain quality failureschain quality failures

► Focus on training and Focus on training and skillsskills Root cause analysisRoot cause analysis Inspection techniques: the Inspection techniques: the

fundamentals and beyondfundamentals and beyond

► Increased attention on Increased attention on sub-tier supply chainsub-tier supply chain

► Strengthen oversightStrengthen oversight Delegation vs In House Delegation vs In House

InspectionInspection R/ISupplier Boeing

Delegated

InspectionS/I

New TechniquesNew Techniques

► Component reliabilityComponent reliability

► Systemic improvementSystemic improvement Root cause -vs- reactiveRoot cause -vs- reactive

► Predictive IndicatorsPredictive Indicators

► Risk-based oversight Risk-based oversight assessmentsassessments

► Supplier Oversight Supplier Oversight Technical AssessmentsTechnical Assessments

SOTA

Continue Working With IndustryContinue Working With Industry

Mission: Ensure supply chain compliance Ensure supply chain compliance

and conformance of purchasedand conformance of purchased products and servicesproducts and services

throughout the product life cyclethroughout the product life cycle

Renewed Company Focus on QualityRenewed Company Focus on Quality

Mission: Ensure supply chain compliance Ensure supply chain compliance

and conformance of purchasedand conformance of purchased products and servicesproducts and services

throughout the product life cyclethroughout the product life cycle

Renewed Company Focus on QualityRenewed Company Focus on Quality