Boeing executive Steven Schaffer is named supply chain manager of the year for the 787 Dreamliner project
Boeing has taken the concept of supplier collaboration to new heights in development of the 787 Dreamliner. The trust that underlies that collaboration is helping the company and its suppliers cope with some pesky parts shortages. Driving the collaboration is Steven Schaffer, Purchasing's Supply Chain Manager of the Year.
By Susan Avery -- Purchasing, 10/18/2007 2:00:00 AM
Steven Schaffer, vice president and general manager of global partners at Boeing Commercial Airplanes, has an interesting weekend hobby. He's rebuilding a 1965 Ford Mustang, all by himself. It's painstaking, complex, hands-on work, and those who know him say the engineer-turned-supply chain professional has been at it for a long time. "He understands complexities in projects like that and knows what it takes to get things done," says Carolyn Corvi, vice president and general manager of airplane programs at Boeing and one of Schaffer's bosses. "He has the patience to work through things."
He has needed that patience lately. In the early summer, Boeing learned that there was a shortage of fasteners for the new 787 Dreamliner that will delay flight testing for the plane until mid November. But, rather than panic and point fingers, Schaffer, who manages the activities of the 70 supplier/partners developing the 787, emphasized more communication and collaboration with fastener manufacturers to solve the problem.
"We believe strongly in our suppliers," he says. "The precautions we're taking, such as re-sequencing the airplanes, will help us down the road in getting an efficient and Lean production system going to support our delivery commitments."
For his keen insight into supplier-relationship management, his achievements on the 787 program so far, and for his success in revamping the whole supplier-relationship process at Boeing, Purchasing names Steven Schaffer our Supply Chain Manager of the Year.
Bigger role for suppliers
The 787 Dreamliner is the world's first mostly composite commercial airplane. Boeing debuted it July 8, 2007 to one of the largest corporate television and Internet audiences in history. The company has orders from 50 customers for 710 of the airplanes, worth more than $118.4 billion. This makes the Dreamliner the most successful commercial airplane launch ever.
Critical to the plane has been the work of the 70 companies supplying the systems and components. Schaffer's job since 2005 has been to turn them into partners rather than suppliers providing nothing more than parts.
As partners, they've taken on more responsibility for this and other Boeing planes, including more responsibility for managing the extended supply chain. Those changes are reflected in the name "global partners," which replaced Boeing's former supply management and procurement organization.
"Outside suppliers have always been an important part of what we do and how we build airplanes, and they are becoming more so," says Mike Bair, who as leader of the team developing the 787 works closely with Schaffer and his team. "For our other airplanes, outside suppliers provide 55% to 60% of procured content with the rest built in-house. For the 787, we are pushing 70%."
And, it's not just the amount of content, it's the level of content, he explains. Boeing is putting more of the responsibility on the supply base, counting on them to do detailed engineering. "They are really becoming a true extension of our engineering and manufacturing system," Bair says.
Which means that the executive managing their efforts needs to be able to think like a manufacturing person as well as like a supply-chain executive. Schaffer fit the bill. "If I were to look at the roles in the old business model, I'd say Steve is almost like a factory manager to us today," says Bair.
In fact, he once was.
Preparing for the assignment
An engineer by trade, the 33-year Boeing veteran worked in manufacturing and operations. He had been vice president and general manager of Boeing Commercial Airplanes Group's Tulsa division. The Tulsa Division, before being sold to Onex Corp. of Toronto in 2005, was a big internal supplier of fuselage and other structural components for the airplane programs, including the 787 Dreamliner. Onex is still today a big external supplier, or partner, to Boeing.
His first job in purchasing came in 2001 when he was asked to lead a team of supply management professionals developing new partnerships and strategies with internal and external suppliers for the 787 program.
In that role, he helped trim the supply base for all planes from 3,800 to 1,200 suppliers. Suppliers selected for the 787 program are asked to take responsibility for providing a higher level of systems and structures and bringing in their own suppliers. They share in risks and benefits of building a new airplane, paying their own up-front costs related to engineering, facilities, equipment and tooling. And they have considerable experience in Lean manufacturing.
"Looking back, I couldn't be better prepared for such a challenging assignment," Schaffer says.
Global Partners
And challenging it is. Greg Irmen, senior director of Boeing programs at Rockwell Collins in Cedar Rapids, Iowa, says that Schaffer "has done a great job at taking the company to a new level." Rockwell Collins provides major avionics systems—displays, communications, surveillance and more—to Boeing for the 787 and other airplane programs.
Irmen has worked for Rockwell Collins for 10 years, after spending some time at McDonnell Douglas (which merged with Boeing) so he's familiar with how Boeing manages its supply chain. He sees Schaffer's role in bringing suppliers into the Boeing Production System, which is based on the Toyota Production System, as a huge change in culture for the aircraft manufacturer.
"Boeing is more open to listening to their supply chain than ever before," he says. "Their supply chain now has a voice in business decisions that Boeing is making for the customer."
In fact, says David Hess, president of Hamilton Sundstrand, "Steve Schaffer has taken Boeing from supply chain management to [a] partnership [model]. He is a pioneer in the industry." The division of United Technologies is providing nine different systems to Boeing for the 787.
"We've always managed suppliers, but under the new Boeing system we are managing larger suppliers and we're doing some of the work Boeing would formerly have done to integrate suppliers' work," Hess says.
Hamilton Sundstrand's involvement in the 787 typifies the new relationship that Schaffer has helped forge with supplier/partners. The company's new Airplane Power System Integration Facility in Rockford, Ill., is playing a pivotal role in developing and testing multiple systems for the Dreamliner. Among other things, engineers at the facility test and verify systems in a real-time collaborative environment. Hamilton Sundstrand has completed more than 1,800 hours of integration testing in that facility.
Regular meetings
Schaffer meets every Monday morning with his leadership team to talk about supplier development and supplier performance for current airplane programs. They use a simple stoplight graphic for "on plan" or "off plan." They discuss suppliers for new programs, new technologies and new entrants to the market. Team members say he is particularly good at articulating a vision for the organization.
"We take the point of view of how to move our current supply base to our future supply base, by creating a platform for longer term planning as well as commodity and negotiation strategies for the next year or two," he says. "Because we plan our extensions so far out, we try to get that more into our daily management, so we don't have a sourcing event every two or three years. We're working more toward year after year, with suppliers being more linked to where we are headed."
When Schaffer first took the job in supply management and procurement, individuals were responsible for managing specific commodities such as airplane structures, systems, propulsion, and the like, but they didn't really have any program focus. In his new post, he created new roles that encourage individuals to work more closely with the airplane programs.
His thinking on the move is that the team's success is measured in terms of whether the airplane programs succeed in the marketplace. "It's amazing," he says. "Once people realize that we're here not to manage contracts, but to make these programs successful, all of a sudden, a lot of alignment and shift of focus starts to take place. We've taken this to a whole new level."
Aligning his team with airplane programs has opened up conversation with engineering, operations, research and development, and quality. "That's the beauty of how we're organized," he says. "It gives us more face to face with people and we aren't just a department anymore. I couldn't ask for a more talented group of people willing to step outside their comfort zones to take on these challenges."
Schaffer aligned the structure so that activities such as contracting and negotiating are now in one organization. He and his team also spend time every Monday—at lunch—working on the group's plans for professional development.
"He really helped guide us through the process in a very structured way," says George Maffeo, vice president, airplane programs, global partners, and a member of Schaffer's leadership team. He sees Schaffer's efforts at realigning the organization as one of his biggest accomplishments.
"In the end, what could have been a very de-motivating, morale-busting effort, was the exact opposite because of the plan and process we used," Maffeo says. "Everyone came out of it very energized and excited about what we were going to do. It was a huge contribution on his part."
Not only has Schaffer made big changes in the way his organization interacts internally at Boeing, he's also made huge strides in the way the company works with suppliers.
He, or a member of his team, meets face to face with CEOs of many Boeing supplier companies throughout the year. "We're sharing more data than ever before, so we can make better decisions," he says. For example, he and the team play out production-rate scenarios with the partners, asking what would they do in various situations—something they had never done before. Supply management used to simply tell suppliers what they needed and when.
"We think success is measured too in the relationships we develop because data can only take you so far, Schaffer says. "Eventually you're going to have a problem that's going to take a good solid business relationship to solve. People are going to have to take risks. We're successful when our partners are willing to take risks without data, knowing they can trust our process." He refers to a recent situation when he approached a supplier about implementing technology for winding carbon fiber for the airplane's fuselage, something new for both the supplier and Boeing.
"It's that kind of collaboration that Steve has paved the way for us to do," says Dick Christie, director supplier partner contracts, and a member of Schaffer's leadership team. "His expectations are that we do the same in creating and establishing relationships."
Partner councils
Schaffer and his team work to involve supplier partners in the Boeing Production System through councils. It's not a new idea. The supply management and procurement organization started to use councils in 2001. Then, the supplier councils were regional—for North America, Europe and Asia—and reflected the commodity structure of the organization.
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“Suppliers are really becoming a true extension of our engineering and manufacturing system.” --Steven Schaffer, vice president and general manager, global partners, Boeing Commercial Airplanes |
The 787 Dreamliner is a family of new airplanes that promises to bring big-jet comfort and economics to the mid-size market. The Boeing 787 incorporates advanced materials, systems and engines to provide a 20% improvement in fuel performance on a per-passenger basis. The 787–8 Dreamliner will carry 210 to 250 passengers about 7,650 to 8,200 nautical miles and the 787–9 will carry 250 to 290 passengers about 8,000 to 8,500 nautical miles. The first flight will be in November. Source: Boeing Commercial Airplanes |
"We decided we are not working just in regions of the world, so we refocused the partner councils program," says Schaffer. The partner councils consist of a cross section of suppliers for any program. The first was for the 787. Every eight weeks or so, the suppliers meet with Schaffer and his team in the Puget Sound area, either at Boeing or at one of the supplier companies located nearby, to discuss issues related to the airplane program. One example: working through environmental regulations in Europe.
The 787 council worked so well they decided to create similar councils for the 737, 747, 767 and 777, and they've taken the idea beyond simply information sharing. Now, Schaffer says, the councils are working councils, something he didn't expect. "I think these people miss being junior engineers," he says. "They like to get in and work and solve problems."
Another benefit of the councils: The supplier partners now have access to one another. Suppliers may be partners on one program and competitors on another, but it doesn't really make a difference, Schaffer says, because they all know that the program has to be successful. "It's a whole new dimension of the councils that we didn't see at first, but had we not put them together, we never would have seen the synergy."
Irmen at Rockwell Collins can attest to that. He's on one of the partner councils and says at the meetings the suppliers share their struggles. "Maybe another supplier worked through an issue that they can share with us." He relates a recent experience of giving a presentation on Lean to the council. Afterward, he says he received several requests from other suppliers for more information on the Lean program at Rockwell Collins.
Schaffer refers to Lean and talks of the importance of having stretch goals and of challenges of finding talented people with the skill sets for new roles in supplier management. He also talks of helping to increase productivity at Boeing and continuing to work to streamline the supply chain, taking efficiencies down to second- and third-tier suppliers.
"We can't become complacent," he says. "We need to remember that the more we do, the more we learn. There are always ideas out there. We need to find them."
Related stories:
Design News’ smorgasbord of 787 Dreamliner features and podcasts shows how Boeing is revolutionizing not only large passenger jets, but the way complex machinery is conceived, designed and built. Click here to read about the engineering behind the development of the Boeing 787.
Background on the shortage of aerospace-grade fasteners
Industry comments on the fastener problem and Boeing’s response
Rockwell Collins shares lean lessons
Hamilton Sundstrand applies lean, quality techniques to supply chain
Suppliers are global partners at Boeing
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