Supplier DiversityOpportunity for Both Large and Small Suppliers

Carrie HillDirector, Boeing Supplier Diversity

Global Supplier ConferenceSeptember 16, 2004

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Supplier DiversityWorkshop Agenda

• Introductions• Boeing Supplier Diversity

• Overview• Our challenge, our commitment, our performance• Supply chain responsibility and opportunity

• Shared Services Group (SSG)• Results• Best practices• Supplier comments

• Export-Import Bank• Q&A / Dialog / Feedback

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Supplier Diversity Workshop Purpose

• Purpose:

• Highlight Boeing’s commitment to small and diverse subcontracting

• Share progress made to-date

• Articulate the challenge ahead and the expectations for all suppliers

• Share and discuss best practices

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The Boeing CompanySupplier Diversity Bonnie Soodik

SMPC Sponsor and Socioeconomic Executive

BoeingSupplierDiversity

Carrie HillDirector

Supplier Management Process Council (SMPC)

Jim Morris, BCANorma Clayton, IDS

Vernell Jackson, SSGPaul Pasquier, PW

Vernell JacksonVP, SSG Supply Chain

Services

IntegratedDefense Systems/ Phantom Works

Liz Riede

CommercialAirplanes

Janice Greene

Enterprise

John Blacknall

Shared Services

John Blacknall

Air Force, Navy, Aerospace Support

Anna Johnson

Army, GP, HS&S, NASA, PW, S&IS

Barbara Taylor

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Boeing Supplier DiversityBackground

• Small business program established 1951• Annual targets… enterprise and business unit• Progress reviewed monthly• Active member of National Minority Supplier

Development Council• Business outreach events: NMSDC, NCAIED, WBENC,

SBA, DOD, NASA, Rainbow/PUSH • Numerous awards, including: Nunn-Perry, HBCU/MI

Millionaire’s Club, Eisenhower SBA, NMSDC

Strong support throughout the corporation

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Boeing Supplier Management Process Council Supplier Diversity Focus

• Increase the number of diverse suppliers• Increase the dollars spent with diverse suppliers• Increase participation in key commodities• Increase participation in strategic agreements• Include in electronic business initiatives

Succeeded at all these in 2003, despite reduced sales and overall procurements

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$2.3 $2.6

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$3

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SB Dollars SB Percent

Boeing DOD CSPSmall Business Sub-Contracting

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Boeing Supplier DiversityOur Challenge

• Increasing Lead Systems Integrator (LSI) role and reducing in-house manufacturing

• Increases subcontracting opportunity throughout the Boeing Supply Chain

• Reduces small business opportunity at the first tier• Federal Government side of Boeing only gets “credit” for

1st tier small business subcontracting• Customer wants increased small business

subcontracting

Opportunity and responsibilityfor all supplier partners

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Supplier DiversityKeys to Success

• Strong leadership and commitment throughout the Boeing supply chain

• Creative and collaborative approaches to first tier subcontracting

• Continue to seek out and implement best practices

Working Together

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Boeing Shared Services GroupSupplier Diversity

Small Business

Supplier DiversitySmall Woman-Owned Business

0%

10%

20%

30%

40%

50%

1998 1999 2000 2001 2002 2003 2004YTD

2004Plan

0%

2%

4%

6%

8%

10%

12%

1998 1999 2000 2001 2002 2003 2004YTD

2004Plan

Supplier DiversitySmall Minority Business

0%

5%

10%

15%

20%

1998 1999 2000 2001 2002 2003 2004YTD

2004Plan

Supply Base Optimization

0

2000

4000

6000

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10000

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Supply Base 15817 8343 6557 5156 2393

1999 2000 2001 2002 20030

5,000

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1999 2000 2001 2002 2003 2004 YTD 2004Plan

Supply Base Optimization

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Supplier DiversitySSG Best Practice Themes

• Collaborate with large suppliers to enable S/W/MBE*partnering

• Clearly define statement of work• Seek out new and innovative ideas• Thoroughly understand customer requirements and

supplier capabilities• Expand existing relationships to grow the business• Challenges should be expected, but can be overcome

*S/W/MBE: Small, Woman-Owned or Minority-Owned Business Enterprise

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Boeing Supplier DiversityCase Studies

• Carrillo Business Technologies

• World Wide Technology

• Guy Brown

• Software House International

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Carrillo Business Technologies (CBT)

• Boeing traditionally purchased Compaq NT Servers from a large distributor

• CBT formed in late 1990’s – we saw the opportunity to partner for distribution of Compaq Servers

• Acquisition of Compaq by HP provided opportunity to procure HP Unix Servers via CBT

• Challenges were in managing the high dollar volume but Compaq/HP/CBT worked with banking institutions on solution

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Boeing Supplier DiversityCBT Lessons Learned

• Don’t let the multi-million dollar volumes be a show stopper• Collaborate• Look for innovative solutions• Together, we devised a workable solution which

allows banking reconciliation on a weekly basis

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World Wide TechnologyStrategy• Purchase Dell and Cisco products and services

through a value-added S/W/MBE*• Place responsibility on 1st Tier to find and partner

with a certified SBE that would add value to both companies processes and relationships

• Require same service levels and pricing at a minimum – ideally better, faster, cheaper

• Maintain existing technical and business relationships

*S/W/MBE: Small, Woman-Owned or Minority-Owned Business Enterprise

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Boeing Supplier DiversityWWT Lessons Learned

• Think broader than the immediate requirement

• Look for additional opportunities to grow the business

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OfficeMax (a Boise Company) / Guy Brown

• Boise is Boeing’s prime supplier of office products• Boise developed a relationship with Guy Brown to

support key customers’ supplier diversity objectives • Guy Brown, formed in 1997, manufacturer and distributor

of remanufactured toner cartridges• SBA certified Small Disadvantaged Business

• New contract structure: Boeing and Boise collaborated to implement a distribution structure where Boeing receives 1st tier SDB credit

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Boeing Supplier DiversityGuy Brown Lessons Learned

• Don’t underestimate a small business

• Have a plan of action and know your next steps

• Know your risk and manage the plan accordingly

• Involve all stakeholders

• Communication is essential

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Software House International (SHI)

Strategy• Find a S/W/MBE* that is:

• An authorized Microsoft Large Account Reseller and reseller of other major 3rd party software products– Must demonstrate value through enhancing

acquisition processes and supplier relationships– Maintain technical and business relationships with

Microsoft and 3rd party software suppliers– Expand resellers’ opportunities as they demonstrate

proficiency

*S/W/MBE: Small, Woman-Owned or Minority-Owned Business Enterprise

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Boeing Supplier DiversitySHI Lessons Learned

• These types of large deals take time and require support by all stakeholders

• Statement of work that allows for all aspects of technical and business requirements to be met through third party is key

• Communication across the entire enterprise is vital

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Boeing Supplier DiversityOur Message Today

• Small and diverse subcontracting is a shared responsibility – Boeing and its partners

• Best Practices demonstrated by Boeing Shared Services and key large suppliers are transferable

• First tier collaborative relationships can be win-win for all participants

Working Together is Key

Workshop AgendaThursday, September 16, 2004

5:30 - 6:30 pm Reception (International Terrace)

6:20 - 6:30 pm Seating for Dinner

6:30 - 8:30 pm Dinner (International Ballroom)