Boeing takes the initiative

Aerospace leader spices up 'best practices' with better minority-owned-supplier awareness.

By -- Purchasing, 2/8/2001

Boeing Commercial Airplanes Group is holding its purchasing managers' feet to the fire by launching an in-house accountability program that forces them to work with minority- or women-owned suppliers.

When it gets too hot-when the manager is rated as "red,"-then Russ Bunio, vice president and general manager, Supply Management & Procurement, or Saundra Cope, deputy to the vice president and general manager, sit down with that procurement manager to discuss how they can better include minority- and women-owned suppliers into their fold.

Reginald Williams, consultant of supplier diversity, Procurement Resources Inc., based in Atlanta, Ga., and 28-year veteran in the industry, calls the program "cutting edge."

How it works: A Balanced Scorecard, which is handed out to all procurement directors, contains 26 line items broken down under five categories. The categories are business direction, quality, cost, delivery, and people, safety and morale. Under business direction are two items. One asks the percentage subcontracting dollars to small business, small minority-owned business and women-owned small business; the other line asks for increased number of small minority- and women-owned small business suppliers.

Each line item is graded with a color. Green means that procurement director is meeting the plan; yellow means caution, he or she is not performing to plan; and red means the plan is failing-or there is no plan in place. If a director hits yellow or red, Cope or Bunio will sit down with that director and discuss what happened and how they can move forward and get back on track.

"It is daily management to ensure on a consistent basis we're hitting our targets and putting in new plans as required to make sure we reach our goals," says Cope.

While the initiative is fairly new (implemented in 1999), Boeing's goal for this year, in the commercial airplanes group, is to spend about 2% with minority-owned suppliers (known as small, disadvantaged businesses), another 2% with women-owned small businesses, and 20% with small businesses.

"It is an accountability measure that asks managers to evaluate their own performances as they go along," says Williams, who likes the idea not only because of its accountability, but because it allows directors to see where they stand. "In this way, you don't need a supplier-diversity manager peering over their shoulder and, in fact, they will be much more responsive when they self-identify areas of under-utilization."

Tom Armijo, Boeing's director of spares procurement, is one of the six procurement directors in the group who grades itself accordingly. He is not hotfooted about the accountability initiative; he calls it fair.

"I think anything that generates consistency across our business unit and provides data to help manage our business is a good thing," says Armijo, who oversees about 240 employees in his division. One of the benefits to the program is it helps flag high-performing minority-owned suppliers when they come along.

Thanks to the Balanced Scorecard, Armijo was made aware of GPR Aviation Interiors Inc. in Atlanta, Ga., a 35-employee company that supplies Boeing with Delta carpet kits and insulation blankets. GPR, owned by two African Americans-H. Gerome Russell, Jr., and Stefan L. Gresham-along with Brett Pavel, a Caucasian, has been engaged in another Boeing initiative, a mentorship program, for two and a half years.

Boeing assessed GPR's capabilities and competency, and matched what they found with an available work statement. "We found we have an interest in growing the business we do with them, because they are high-performance suppliers," Armijo says of GPR. "We're in the process of defining what that work statement is."

Bunio created the Balanced Scorecard simply to establish guidelines among his staff. Prior to its existence, there was no common set of metrics to which procurement directors could gauge their progress.

"As a measure of accountability, it's very astute," Williams says.

Bunio joined Boeing in 1998 and oversees $15 billion in annual contracts with 3,000 suppliers. Since then, Bunio and Cope have implemented and plan to implement several initiatives, along with the scorecard, that are meant to increase and monitor minority-owned-supplier activity.

Among the other initiatives are the aforementioned mentoring program; the creation of a Supplier Management Process Council; an appointment of a diversity procurement team member to a strategic sourcing seam; and a checks-and-balances Procurement Board.

In addition, Boeing is working with its peers in the aerospace industry to develop EXOSTAR , an e-commerce- and e-procurement-based template that will be easy for minority-owned suppliers to tap into. A rollout is expected for fall/winter 2001.

"We believe this will enhance the ability of minority-owned suppliers to work with and get additional business with Boeing," says Bunio of EXOSTAR .

In the mentoring program Boeing coaches minority-owned suppliers-with the potential to be part of the Boeing family-in what it means to be certified in lean manufacturing practices: "The target is the lowest cost, highest value operation," says Cope.

Still a part of this program, GPR plans to attend a Boeing-sponsored "Lean Training" in Seattle, Wash., early this year.

The Supplier Management Process Council, in place since 1999, involves all Boeing groups and divisions. The council's job is to make sure that in considering new suppliers, groups take into account minority-owned suppliers, especially where they can increase business with high-performance suppliers.

The other "watch-dog" element involves members of the diversity procurement team as part of the front-and-center strategic sourcing teams throughout Boeing. According to Bunio, the strategic sourcing teams, made up of representatives from each one of Boeing's business groups, set the overall strategies-to get the best suppliers and make sure there is the right number of suppliers in the supply base.

The diversity procurement team member "is 95% focused on inclusiveness of minority-owned suppliers," says Bunio. "So they are members of the team that have been added to make sure diversity is considered in each one of our strategies and each one of our procurements."

To the Procurement Board, a system already in place that monitors changes in suppliers or contracts, Cope added a clause that mandates anyone making a change in supplier or existing contracts must answer the question: Did you involve or take a look at minority-owned suppliers for placement of business?

"That brings it right up to the procurement agents and they know that we're looking at it," says Cope.

Harriet R. Michel, president of the National Minority Supplier Development Council, based in New York City, says all the above initiatives indicate a company-wide strategy to assure inclusion, retention and growth of valued minority-owned businesses, but results need to be measured to determine their level of success. She calls many of Bunio's initiatives "best practices."

"He brought with him a renewed commitment particularly on the commercial side to revitalize, enhance and enlarge their program," she says of Bunio's work at Boeing.

In the interim, a few Boeing minority-owned suppliers seem to be happy with their experiences.

Sun Country Industries, based in Albuquerque, N.M., has been working with the aerospace giant for about eight years. Materials Manager Lee Erickson says SCI was awarded a contract in 1995 in which the company worked with Boeing and NASA for about three years. It was, says Erickson, the first contract of its kind awarded to a minority-owned subcontractor.

SCI received an Award of Excellence from Boeing for their work.

"As a result, we were awarded quite a bit of additional business with Boeing for part numbers we continue to produce today," says Erickson. The company produces milled parts, turning, critical assemblies and structural components used on Boeing 777, 767, and Next Generation 737 models in Puget Sound and Wichita. Erickson estimates the 100-some-employee company owned by Maurice Gonzalez Michelson, a Hispanic woman, does 20% of its business with the aerospace giant.

Boeing's recognition of GPR has been very gratifying for the mid-Atlantic supplier. According to Gresham, Boeing's initiatives have made a difference.

"They take you through a lot of training and presentation on how they want you to do business with them, which is a great foundation for a long-term relationship," he says.

When one of GPR's customer's, Delta, was happy with the company's service, they introduced them to Boeing. In turn, Boeing has opened a door for GPR to do business with Puget Sound. GPR is currently negotiating a deal that would increase their business with Boeing from about 10% of sales to potentially 50%, according to Gresham.

"We're very excited about that opportunity," he says. "They have the potential to become my largest customer."

Though the Economic Census statistics for 1997 will be published any day now (and were not available at press time), figures show women- and minority-owned firms increased 62% between 1987 and 1992. This time around, the NMSDC anticipates a tremendous leap in numbers of minority-owned businesses.

While this is great news, says Michel, there are conditions in the business arena that provide formidable hurdles for the small and/or minority and women business owners. Among those are global competition, reduction of the supplier base, e-commerce, manufacturing moving offshore, mergers and acquisitions and lack of access of capital.

NMSDC 's 3,500-member corporations reported $47.8 billion in purchases of goods and services from minority-owned businesses during 1999, up from the previous year's figure of $41 billion.

"We would like to see the numbers higher, of course," says Michel, who calls the work a partnership. "The obligation is just not on the corporations, but the obligation is also on the minority-owned supplier-that corporations can't give them an excuse not to use them."

In this, the plight of the minority-owned supplier is something with which Gresham at GPR is very familiar.

"I've always had to work twice as hard to stay in the game, stay at the table," says Gresham, reflecting on his work with Boeing. "You have to stay aggressive and you have to stay focused; you have to utilize all your resources to get in the door. But once you're in the door I think it's a beneficial relationship, and anything worthwhile normally doesn't come easy-it probably doesn't matter what color you are.

"I don't think doing business with minorities is a social necessity in 2000," continues Gresham. "I think doing business with minorities is an economic necessity-it's about profitability, it's about efficiency, it's about winning for Boeing and winning for the suppliers."

During the past few years Boeing has made new strides in its minority-owned supplier initiatives.

Here are a few that show how the company has expanded its program:

P & G, Coke boost minority suppliers