11 October 2006 | Geraint John
Strategic supplier partnerships may form the backbone of Boeing's success over the next five years, according to a senior company executive.
Norma Clayton, vice-president of global sourcing effectiveness at the US defence and aerospace giant, said collaboration with suppliers could be "the single biggest differentiator in competitive advantage", as it seeks to extend its lead over crisis-hit European rival Airbus and other big players in the industry.
Boeing's strategy of focusing on design and systems integration meant that more than 60 per cent of the value contained in its commercial and military aircraft, satellites and missile systems now came from external suppliers.
But Clayton acknowledged that partnering marked a major shift in approach for the Chicago-based firm, which will spend $36 billion (£19.4 billion) with 15,000 suppliers this year.
Speaking at the ProcureCon event in Scottsdale, Arizona, she admitted: "Boeing at times can be very arrogant and difficult to do business with, because of our size and leverage.
"We took a hard look in the mirror. That's tough because you're bound to see something you don't like."
With growing complexity and a greater need for flexibility, traditional supply chains and supplier relationships "are no longer going to work", she said.
Successful collaboration required a shared long-term vision; common goals and objectives; aligned and integrated strategies; excellent communications; and high levels of integrity and trust.
Boeing had made some progress in changing the way it thinks about and interacts with key suppliers, but there was still a lot of work to do. "It's going to take courage and tenacity to make radical changes," she said.
Next month Clayton will present a detailed partnership vision and how it can support the company's overall business strategy to Boeing's board of directors.
She credited chief executive James McNerney, formerly of 3M and GE, with driving change from the top. Global sourcing was one of four cross-enterprise corporate initiatives he had instigated, she said, along with indirect cost reduction, applying lean and Six Sigma principles to office work - a management practice to improve quality - and investing more effectively in research and development.