Managing a Dynamic Global Supply Chain

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BOEING is a trademark of Boeing Management Company.

Managing a Dynamic

Global Supply Chain

Jenette Ramos

Vice President

Supply Chain Management

Boeing Commercial Airplanes

April 19, 2012

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SCM&O |

Supplier Management

Global Boeing



Customers in more

than 90 countries



Manufacturing, service and technology partnerships with companies

around the world



Research, design and technology-development centers and programs in

multiple countries



More than

172,000 Boeing employees

in 50 states and 70 countries

Shared Services Group Defense, Space &

Security EO&T Boeing Capital Corp. Commercial Airplanes

Corporate

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Supplier Management

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Australia

1,050-1,150 Suppliers

$170 - $190 mil

Africa

15-25 Suppliers

$70 - $80 mil

South America

15-25 Suppliers

$500 - $700K

Europe

625-675 Suppliers

$3,230 - $3,250 mil

Asia

330-350 Suppliers

$4,300 - $4,320 mil

North America

675-725 Suppliers

$1,240 - $1,260 mil

Middle East

80-90 Suppliers

$210 - $230 mil

(Excl. USA)

Enterprise Global Procurement (less U.S.)

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Supplier Management

The Boeing Commercial Airplane

Extended Global Supply Chain

* Boeing Commercial Airplane only

>$24B in purchases annually

5,400 production facilities around the world

Employing 500,000 workers

Supplier parts and assemblies

make up 60% of product cost

High volume, complex business model

• 737 contains < 500K parts

• 747 contains

approximately 6M parts

• >750M components &

assemblies purchased

each year

• Growing to over a billion*

in 2014

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Supplier Management

Mission

Supplier Management leads

the development and

continuous improvement of

an extended supply chain

that creates a sustainable

competitive advantage

Supplier Management

Mission and Strategy

Strategic Objectives



Supply chain is optimized throughout the

lifecycle of our products and services



Continuous improvement is a shared

culture



Supply chain is engaged early in

technology, product and services

development



Common processes and tools used

throughout supply chain



Suppliers prefer Boeing

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Supplier Management

Twin

Aisle

1,630,

45%

RJs

60,

2%

Large

220,

6%

$4.0T

Single

Aisle

1,680,

47%

Twin

Aisle

1,770,

43%

RJs

70,

2%

Large

270,

7%

Single

Aisle

1,950,

48%

Current Market Outlook

Passenger Traffic

Passenger Traffic by Region

Traffic Growing, Resilient and Diversifying

Mike Warner

No material change –

2011 CMO update

2030

RPKs (billions)

4,000 6,000 8,000 10,000 12,000 14,000 2,000

2010

1990

0

54%

72%

Other

China

Asia

(excl. China)

Europe

North

America

39%

Middle East

Traffic expanding . . . long-term growth market

Airplane Deliveries 2011-2030

$ in Billions

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Supplier Management

BCA Production Rate Challenge



48 to >63 airplanes/month



Multiple rate increases in the

production system



Nearly one billion parts/year



Simultaneously designing and

introducing new airplanes

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Supplier Management

Asia

Fuji Mitsubishi Kawasaki KAL-ASD

Canada

Boeing Messier-Dowty

Australia

Boeing

U.S.

Boeing Spirit GE Goodrich

Europe

Messier-Dowty Rolls-Royce Latécoère Alenia Saab Wing tips Seoul, Korea

Moveable trailing edge

Melbourne, Australia

Fixed trailing edge

Nagoya, Japan

Wing

Nagoya, Japan Nacelles Chula Vista, CA

Tail fin

Frederickson, WA

Horizontal stabilizer

Foggia, Italy Aft fuselage _{Charleston, SC}

Passenger entry doors

Toulouse, France

Center fuselage

Grottaglie, Italy

Mid forward fuselage

Nagoya, Japan _{Forward fuselage} Wichita, KS

Cargo access doors

Linköping, Sweden

Wing/body fairing Landing gear doors

Winnipeg, Canada

Engines

GE – Evandale, Ohio

Rolls Royce – Derby, UK

Fixed and moveable leading edge

Tulsa, OK

Landing gear

Gloucester, UK

Center wing box

Nagoya, Japan

Main landing gear wheel well Nagoya, Japan 48 47 46 44 43 41 11 45

Partners Across the Globe are

Bringing the 787 Together

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Supplier Management

Joined

Section 43-46

Charleston, SC to Everett, WA

Joined

Section

47-48

Charleston, SC to Everett, WA

Section 41

Wichita, KS to Everett, WA

Section 46

Grottaglie, Italy to Charleston, SC

Section 44

Grottaglie, Italy to Charleston, SC

Horizontal

Stabilizer

Foggia, Italy to Charleston, SC

Wing

Nagoya, Japan to Everett, WA

Section 43

Nagoya, Japan to Charleston, SC

Section 11/45

Nagoya, Japan to Charleston, SC

Dreamlifter Route Structure

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Supplier Management

International partners providing key 787 structure

787 Structure from Asia

Fuji Heavy Industries

Kawasaki Heavy Industries

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Supplier Management

787 Structure from Europe

Alenia Aeronautica

Latecoere

Messier-Dowty

Saab

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Supplier Management

787 Structure from North America

Spirit

Boeing - Charleston

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Supplier Management

Providing Value throughout the Lifecycle

Maintain &

Modify

Design

Market & Sell

Provide Parts

Fly

Research &

Develop

Support

Produce

Train

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Supplier Management

Global supply chain challenges & risks

Distinct supply chain

architectures

Actively managing supply

chain for all Boeing programs

Managing over

26,000

global suppliers

Developing international

suppliers

Supplier annual spend

exceeding $40B

Effective risk management requires partnerships

Enhancing supply chain

functional excellence

Risk

Business relationships

Consolidation / change of ownership

Supplier performance

Rate increase risk

Financial health

Technology readiness

Business continuity

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Supplier Management

Summary



Innovative talent is global



Industrial cooperation is imperative



Risk management is critical



Opportunities are tremendous

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