The word "partners" gets tossed around a lot in purchasing circles, and has more meaning for some than for others. For Boeing Commercial Airplanes (BCA), the word partners, or, in this case, "global partners," describes so accurately the company's new working relationships with its suppliers that the company made it the name of its supply management and procurement organization. Steve Schaffer, the company's vice president of Global Partners, tells why:

"The renaming of our supplier organization to Global Partners does a far better job at showing the world that Boeing considers its suppliers an extension of its internal processes," he says. "We wanted something more inclusive."

BCA recently brought together such internal organizations as fabrication, propulsion, global partners, the airplane programs and final assembly under Carolyn Corvi, vice president and general manager of Airplane Production. Schaffer, who assumed his current role in 2004, reports to Corvi and is responsible for managing the company's global partners—suppliers of such direct materials as structures, systems, propulsion, interiors, raw materials and the like. Global Partners supports BCA's 737, 747, 767 and 777 programs, as well as the new 787 Dreamliner and recently announced Boeing 747-8.

Management made these changes—integrating the supply chain—to help reduce complexity in the company's production processes, says Schaffer. "Think of pull production," he says. "We've assembled all the necessary components of the value chain so we can pass information and parts in the most efficient manner." Everyone is aligned and focused on building a Lean and efficient Boeing production system, he says.

Lean initiatives focus on shortening leadtime, reducing assets and improving flexibility and customer responsiveness by eliminating waste. Boeing embarked on Lean in the mid-1990s.

Schaffer points to production of the 737 as an example of one way the integrated organization and supplier partnering have rid the process of waste: Employees assemble the airplane on a moving line that has reduced manufacturing time by 50%. The line signals suppliers when employees are ready for parts, which in many cases arrive at the plant in subassemblies or kits.

To get to this point, Schaffer and his team have worked with BCA's global partners and made some significant changes in flow time, reducing waste and stabilizing production processes.

In its latest financial report, Boeing reported that BCA generated $16.7 billion in revenue for the first nine months of 2005, up 7% from the same period one year ago. During that period, BCA received orders for 641 airplanes, bringing its backlog to $98 billion. Looking ahead to 2006, the company's forecast continues bright due in part to contribution of its value chain.

"Our goal in Global Partners is to take 'real costs' out of the value chain and take the savings to the market in the form of more competitive airplane pricing," says Schaffer.

The equation One way they're doing this is by putting more responsibility into the hands of suppliers, who are no strangers to Lean manufacturing techniques—they've learned right along with Boeing.

In a Lean and efficient production system (with a moving line), suppliers are delivering higher level subassemblies and systems solutions to the plant floor. That means that BCA is using fewer suppliers. Schaffer and his team have worked to trim back BCA's supplier base from 3,800 key suppliers to 1,200 today.

Boeing began reshaping the value chain by aligning with its key suppliers, says Schaffer. "Today the alignment continues deeper into the value chain as these key suppliers work with their own subtier suppliers, who previously may have had a direct relationship with us," he says. "This is eliminating transaction costs, promoting efficiency through the value chain and helping all our suppliers expand their work base to become more competitive."

BCA has long-term strategic relationships with a core supplier base made up of companies that provide it with structures, systems, propulsion, interiors and raw materials. These global partners, Schaffer says, are a competitive strength and reinforce the company's value equation. That is, they exceed rigorous performance requirements, including: demonstrated performance on first-time quality, timely delivery and competitive prices—what Schaffer's organization refers to as Quality, Cost and Delivery (QCD)—around the world technical capability and capacity, access to capital, and enabling technology and strategic positioning. If there's a problem, the partners work through it together rather than Boeing having to deal with each supplier individually. "We help each other through the tough times and are always there to meet the next challenge," he says. "Through supplier councils, we actually become accountable to each other, with success as a team the ultimate goal."

Schaffer and his team are more than satisfied with performance of BCA's partners, which they measure using a balanced scorecard process. "We measure ourselves by meeting our business plan that supports our stakeholders—our customers, suppliers, investors and Boeing employees," he says. "Our performance shows that deliveries and revenues are increasing as the market recovers. And, we continue to increase our margins, which is a sign of productivity throughout the whole value chain. Of course, healthy margins earn you the right to invest in new products and remain competitive in the marketplace."

Now, suppliers are involved earlier than ever before in the Boeing Production System—and have taken on more risk in doing so. Case in point is the 787 program. Rather than provide suppliers with detailed specifications for the 787 that never took into account the capabilities of BCA's global partners, Schaffer and his team asked them for solutions.

Looking ahead, he sees subtier suppliers becoming even more aligned with specific Boeing programs.