Airbus, Boeing, and CAT Discover Supplier Integration Comes Down to Hard Work

The article in today’s WSJ refers to the new approach being used by Airbus and Boeing to “integrate” suppliers.  Supplier integration and collaboration are terms that are thrown around a bit too much for my liking, primarily because they don’t reflect the true hard work that underlies this term.

Boeing discovered this in 2007 according to the article, when they decided to outsource design of components that had always been done in-house to suppliers.  The article quotes Boeing Executive Jim Albaugh, as noting that “We gave away a lot of elements of work that we’d always done in the past, and then didn’t provide the kind of oversight necessary for some of the people that were doing work that they’d never done before,”

Coming back to this required a lot of hard work.  Specifically, Boeing mobilized hundreds of engineers specialized in manufacturing and industrial issues, who have pored over every element of the program, including at suppliers. At its factory near Seattle, Boeing built a control room with video links to overseas suppliers, allowing its engineers to examine parts live on shop floors in Japan or Italy.  “We’ve got to know more about the airplane than our suppliers do, so if they get in trouble we can help,” Mr. Albaugh said recently.

Interestingly enough, (according to the WSJ), Airbus made many of the same mistakes when it came to managing the details of their supplier operations as well.  Evraud, an Airbus executive, brought suppliers’ engineers to Airbus so they could design parts together. The teams strove to ensure that contractors could actually build the parts and Airbus knew how they all fit together. Mr. Evrard for the first time plugged suppliers into Airbus’ networks and required all participants to use identical software, so everyone could access one pool of information.

Today we met with Frank Crespo, Chief Procurement Officer at Caterpillar.  Frank worked under Gene Richter from IBM for many years, and has held senior procurement roles at Praxair, EDS, and Honeywell.    He noted that “ Collaboration is not about a photoshoot of people with their arms around one another.  My definition is about the right quality, right time, right supplier, right plan, and right total cost.  And if I am not hitting on all of those cylinders, it may be because I am not providing the right information on what we need, or we have great clarity, but they are not interpreting it properly.  We are asking them to run the 100 yard dash, and next week, do it with a blindfold on, and then do it hopping on one leg, to get across the finish line.  We need to understand what is going on with their world, their signals, and flows and interpretations of what we are asking them to do.”

In the end, collaboration, integration, and supply base management comes down to hard work and communication.