BIVEY | Publishing 'W16300 BOEING: THE CASE FOR SUPPLIER DIVERSITY “Leurin Hodge wrote this case under the supervision of Professor Keren L. Provoford solely to provide materia for class alscussion. The author des not intend to ilustrate either effective or ineffective handling of @ managerial stueion. The euthor may have disguised Certain names and other identtying information to protect confident This pubication may not be transmitted, photocopied, digtized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights ‘organization. To order copies or request permission fo reproduce materials, contact Ivey Publishing, vey Business School, Westem University, London, Ontan, Canade, NEG ONT; () 519.661.3208; (e) [email protected]; ww. iveycases.com, Copyright © 2016, Richard ivey School of Business Foundation Version: 2076.08.24 In 2013, Joan Robinson-Berry, vice-president of the Shared Services Group (SSG) Supplier Management organization for The Boeing Company (Boeing), sat at her desk, thinking about a recent interaction, during which the importance of supplier diversity had been questioned. Robinson-Berry asked herself, “Will there ever come a day when these questions aré no longer asked?” More importantly, she wondered, “Did I respond appropriately?” The question regarding the importance of supplier diversity had come up during her presentation at an annual gathering of more than 300 members of Boeing’s SSG. Robinson-Berry had been leading a discussion about the year’s priorities when one of the buyers stood up and posed both a ‘comment and a question: “We're operating now in an environment where we have to do more for less. We have all of these targets we have to meet and yet our customers are driving us to do more. Can we still try to meet these cost reductions and use these diverse suppliers?” Robinson-Berry knew it was an important question, one that many buyers had considered but few would have had the courage to ask. At the same time, she struggled to understand a perspective that compartmentalized diversity from supply chain. She clearly saw the link between the two aspects of the business, and diversity was an integral part of Boeing’s corporate responsibility initiatives." Furthermore, supplier diversity was in alignment with real business priorities focused on accelerating productivity, reducing the cost struéture, growing aggressively internationally, and executing flawlessly to satisfy customers.’ For example, Robinson-Berry knew that not one small or diverse business was on Bocing’s “no-fly” suppliers list — the group of suppliers that charged excessive margins, were non-responsive in terms of quality, and were not adept at managing risk. By contrast, Boeing had large-scale suppliers on the list. Even large, established businesses presented risks to Boeing, but few people outside the supply chain ‘management organization recognized this. * Boeing, "Our Principles,” Boeing, accessed March 20, 2016, worw boeing.comipriniples!. 2 Joan Robinson-Berty, “Shaping Our Success — Creating a Shared Vision," presentation (Boeing, June 11, 2011). “This document auhorzed for educator review use ony by Murra Sarwar, UnwerlyofWellongong unl Jul 2024. Copying ar psting tan iningement of copyght Permissons@nbep harvard © 617 783.785095 9B16C015 BACKGROUND Joan Robinson-Berry was one of four functional leaders who shared responsibility for the company’s entire portfolio of supplier partners. She led the overall strategy, contracting, daily management, and development of the non-production goods and services supply chain for Boeing. Her role included developing, ‘maintaining, and improving relationships between Boeing, the U.S. federal government, and small business subcontractors. Her task was to build bridges with partners in order to mect the ever-changing demands of the aerospace industry. Robinson-Berry was well positioned for this task: she held degrees in engineering, ‘math, and business. In addition, as an African American woman, she had an understanding of the ways in which diversity influenced key areas, such as supplier diversity. It was no surprise then that Boeing, under Robinson-Berry’s guidance, was a national leader in supplier diversity: From Robinson-Berry’s informed perspective, supplier diversity had saved the company a great deal of money. In her answer to the question posed during the meeting, she had cited an example: “Our office ‘supplies were being handled by a majority vendor, but we ended up giving the business to a minority vendor. Not only did we realize a cost reduction but that vendor is also flexible and able to adapt quickly to changing demands. As a result, we've expanded their portfolio.” To emphasize that Boeing’s work on diversity in the supply chain was an enduring facet of its business, she had continued: Not only is supplier diversity a competitive advantage for the company, it is the law when you're working on Department of Defense projects. Even on commercial programs, supplier diversity is a business imperative because corporate customers want to see who we're doing business with. they are interested in our global footprint as well — the ways in which we tie strategic work placement when trying to open new markets, ‘THE AEROSPACE INDUSTRY ‘The aerospace industry included a diverse arrangement of companies and public agencies involved in the research, design, manufacturing, operating, and/or maintenance of vehicles moving through space and air. Organizations such asthe federally funded National Aeronautics and Space Administration (NASA), Lockheed Martin, Northrop Grumman, and Boeing formed some of the major pillars of the American aerospace industry. Within the acrospace industry, a landscape of challenges had been created by a labour shortage of workers prepared to fill highly technical jobs, aging employees, volatile changes in economic markets, flat or declining customer budgets, and increasing regulation. To mitigate risk and meet both domestic and international demand, a targeted business approach was required. Specifically, Robinson-Berry and her colleagues at Boeing were striving to fill a very clear commercial market need, projected over the next 20 years to have the revenue potential of US$5.2 trillion,’ with airlines needing 36,700 new airplanes.’ Where there was potential reward, there was also potential risk, Driving progress in aerospace meant working within a dynamic industry. Political and economic power was shifting as economies were recovering from financial crisis, and the rise of both competing and partnering countries, such as China and India, presented interesting opportunities to reshape the industry globally. * USS1 = CAS0.978 (average during week of June 6-June 12, 2011). All currency denominated amounts are in U.S. dollars unless otherwise specified * Boeing, “Current Market Outlook, 2014-2033,” 3, accessed December 17, 2015, ww.boeing.con/assetsipdiicommercial! ‘emo‘patiBoeing_Current_Market_ Outlook 2014 pa. “This document auhorzed for educator review use ony by Murra Sarwar, UnwerlyofWellongong unl Jul 2024. Copying ar psting tan iningement of copyght Permissons@nbep harvard © 617 783.785095 9B16C015 China planned to build over 305,000 kilometres of rail Lines, 218,000 kilometres of expressways, and 60 airports within the next 20 years. Likewise, the Chinese populace had become the world’s largest online population; the United States was 15th per capita in broadband penetration. India and China produced 12 times more engineers at the undergraduate level than U.S. colleges and universities.* The aerospace industry, which relied on access to partners, customers, and infrastructure (see Exhibit.1), needed to recalibrate according to the growth of emerging markets, shifting power, and great uncertainty. Worldwide, $1.7 trillion was spent on research and development (R&D), but, globally, R&D expenses were expected to grow only 3.5 per cent (2011), which could translate into $1.2 trillion in new revenues for firms prepared to capitalize on the opportunity. Yet, any aerospace firm needed to work at diversifying its strategy as a means to remain competitive, especially given that China had overtaken Japan (and now trailed only the United States) in spending on R&D.° ‘THE BOEING COMPANY Bocing, the world’s largest aerospace company, had established a strong business presence domestically and internationally since its inception in 1916. Boeing had supplied Model Cs’ to the U.S. Navy throughout World War |, had manufactured B-17s and B-29 bombers for World War II, and had been a trusted supplier during both the Cold War and the Vietnam War At the time of Robinson-Berry’s presentation, Boeing was aligning its four major units — Boeing Commercial Airplanes; Bocing Defense, Space, and Security; Bocing Engineering, Operations, and Technology; and Boeing Shared Services Group — to work as one unified organization in order to face the challenges and create opportunities in the aerospace industry. The motto of “One Boeing” spoke to a corporate initiative that emphasized technology development and market presence across its entire product line, competitive market pricing, and continuous attention to performance. With 21,000 suppliers around the world and a majority of its commercial airplane revenues coming from customers outside of the United States, Boeing was truly a global company. Realizing the company’s goal of mutual growth and prosperity required the meticulous management of manufacturing, service, and technology partnerships and the dedication of nearly 168,000 employees in more than 65 countries. Notwithstanding Bocing’s established positioning in the aerospace industry, strategic investments continued to be required to secure future leadership. The company’s supplier spend was approximately $60 billion, with an. estimated $2 billion committed to more than 2,000 small and/or diverse businesses. This commitment to diversity in sourcing and partnerships was the result of Boeing’s leadership, including the dedicated efforts of Robinson-Berry. She constantly defined and redefined the supply chain architecture to maintain a focus on the global environment, while ensuring American businesses were afforded the ‘opportunity to participate in domestic sourcing, ® Vivek Wadhwa, Gary Gereffi, Ben Rissing, and Ryan Ong, “Where the Engineers Ave," Issues in Science and Technology 23, no.3 (Spring 2007), accessed May 16, 2016, htp:issues.org/23-3iwadhwal, F Adapted from Robinson-Berry, op. cl. " The Boeing Model C was a fixed-wing aircraft, also called a seaplane or hydroplane. The Model C, which could take off and land on water, was the company’s fist commercial and financial success, “This document auhorzed for educator review use ony by Murra Sarwar, UnwerlyofWellongong unl Jul 2024. Copying ar psting tan iningement of copyght Permissons@nbep harvard © 617 783.785095 9B16C015 BOEING'S SUPPLY CHAIN MANAGEMENT STRATEGY The practice of supply chain management had evolved over five decades. In the mid-1960s, American companies began “slicing up their supply chains in search of low-cost and capable suppliers offshore,” and uring this time it became common practice to have “twin plants for production-sharing”; during the 1970s and 1980s, the American economy shifted from “‘producer-driven’ supply chains to ‘buyer-deiven’ chains. ‘The geography of these chains expanded from regional production-sharing arrangements to full-fledged global supply chains, with a growing emphasis on East Asia.” As the global economy continued to expand, multinational corporations and small businesses alike began building international relationships for finished goods, services, and R&D.’ The original shifts to global supply chains were often made for economic impact and as competitive differentiators. Using specialized supplier selection, development, and evaluation processes to properly manage internal and external chains, many corporations found greater potential for lean enterprises. While the need for greater integration required new and perhaps greater effort, the benefit was increased operational and financial performance. ‘As Bocing considered the aerospace landscape of global Strategic sourcing, Robinson-Berry was tasked with finding the right balance of efficiency, responsiveness, and reliability to lead her team toward meeting its defined corporate goals and 2016 vision. The theory behind her work was that “efficiency, responsiveness and reliability of supply chains are seen as key drivers of a firm’s profitability... . Hence their supply chains must perform according to four competitive priorities: speed, cost, quality and flexibility.”"' Accordingly, Boeing’s supply chain strategy ‘was built on these principles: ‘+ Supply chain and supplier strategies leveraged the buying power of Boeing, ensuring industry-best costs, prices, operational performance, and access to key technologies and markets. ‘+ Suppliers, as a condition of participation, needed to provide consistent superior performance across Boeing and visibility into their extended supply chain’s capabilities and performance. An enterprise’s past performance was a key criterion in future source selections. ‘+ Competition would be used wherever possible, driving relative supplier margins to reflect risk and commercial value ‘These principles drove @ Strategy that recognized the importance of interdependen and a thorough assessment of risk (see Exhibit 2). , skilled negotiation, CORE ISSUES AND KEY OBSTACLES As multinationals grew, diverse supply chain opportunities flourished and new obstacles arose. The dynamic nature of partnerships, markets, and infrastructure undoubtedly created new challenges with greater reliance on suppliers, ® Gary Gereffi and Joonkoo Lee, “Why the World Suddenly Cares About Global Supply Chains,” Journal of Supply Chain ‘Management 48, no, 3 (2012) 25. "bid *® Gwendolyn Whitfield and Robert Landeros, “Supplier Diversity Effectiveness: Does Organizational Culture Really Matter?,” Journal of Supply Chain Management 42, no. 4 (2008): 16-28. © Bertie M. Greer and Peter Theur, “Linking Supply Chain Management Superiority to Multfaceted Firm Financial Performance," Journal of Supply Chain Management 48, no. 2 (2012): 99, “This document auhorzed for educator review use ony by Murra Sarwar, UnwerlyofWellongong unl Jul 2024. Copying ar psting tan iningement of copyght Permissons@nbep harvard © 617 783.785095 9B16C015 While organizations with strong supply chains outperformed their competitors, there were key obstacles that had to be managed if firms were to realize improvements in earnings per share, return on assets, and profit margins. One such obstacle was the recurring question of sustainability. Where could Boeing continue to find new frontiers in purchasing and supply management? Wester firms were ineteasingly looking to source materials from emerging markets, yet “to avoid the risk of reputational. damage to the buying company, [firms] must ensure that their international suppliers comply with their corporate codes of conduct and that environmental and social misconduct at supplier premises does not occur.”"* As supply chains became more complex, Boeing and its competitors reassessed the level of risk in the global environment, which included the need for system-level security to protect information and communication networks, the potential for significant failures in infrastructure, the need to address the high level of reliance ‘on oil, and the inconsistent regulatory and legislative priorities around the world. The scale of these challenges required collaboration and a coordinated response from businesses and governments worldwide." Learning to “do more with less” provided new layers of uncertainty, giving greater rise to pre-emptive planning. Yet, how should companies plan for the future? One common idea was for multinationals such as Bocing to employ “strategies [that] help companies to proactively address the critical vulnerabilities that expose the organisation to risks that exceed its tolerance.” Resilience in the business model extended to areas of risk tolerance, corporate responsibility, socio-political influences, and technological infrastructure. For some firms, voluntary codes of conduct were one option for ensuring that suppliers — especially those that might work outside of the United States and have different norms for conducting business — were complying with corporate standards. In addition, as new standards evolved, there was often a short lead time, Internal compliance officers could be helpful in ensuring that changes were implemented rapidly across the entire supply chain. Corporate responsibility produced a stronger reliance on identifying suppliers who were “green” and socially compatible.'* Boeing’s commitment to providing a fuel-efficient family of airplanes and services to customers was the centrepiece of its environmental strategy."® Accordingly, innovative solutions for reaching this goal extended to sourcing. New contracting provisions placed a greater emphasis on the impact on environmental ecosystems, and Boeing began to conduct regular environmental performance assessments of key suppliers, site visits, and Lean+ supplier sessions focused on improvements to the triple bottom line."” Politically, Boeing’s supply chain needed to quickly adapt to the evolving industry governance impacting various stages of the supply chain." Conducting business within the aerospace industry required the ability to incorporate ntew standards into sourcing and supplier management processes so Boeing remained legally and socially responsible. This enormous challenge was based on “the frequent changes in the plethora of environmental and social standards issued by regulatory bodies and nongovemmental organizations ial Foerst, Evi Harman, and Constantin Biome, “Sustainable Global Supplier Management: The Role of Dynamic Capabives in Achieving Compettive Advantage” voumel of Supply GRain Management 4, no. 2 (2010): 45-63. ‘onahan Wight and Dania Datsovaka, "New Perspectives on Global Rick; Logistes Management 51, no. 5 (2012) 42-44 ** Deloitte, Supply Chain & Operations: Leveraging the Backbone of Your Business as @ Source of Competitive Advantage, 11, accessed Apr 1, 2016 v2 debt coneontentdan/Delottabe/Documentsperatons20"4t1 SupplychanOperatons. 2014p “®Reuteret al., op. cit. ‘© Bosing, 2014 Envronment Report Build @ Bette Panet, December 17, 2015, wintbosing.comiaboutusienvionment! environment repor_tafindex hi TLeans was a Boeing intatve aimed at eliminating inefciencies in order to boost performance in Key areas across the compary, See. Jennifer Cram, "the Power of Lean. How Process Improvements Also Create Better Ervronmental and Workplace Safely Perfomance,” Boeing Frontiers (September 2008) accessed Apr 9, 2016, ‘nin boeing cominewsironterslarciver2008!septembers fp. Gerelt and Lee, op. ct “This documsenl is auhorzed for educator review use ony by Muhorrmad Sarwar, UnweryofWallongong unl Jul 2024. Copying ar posting tan iningoment of copght Permissons@nbep harvard © 617 783.785095 9B16C015 (NGOs) [which caused] dynamic swings of stakeholder interests and continuous alterations in the type of pressure exerted. ...""” As if navigating these key obstacles was not challenging enough, Bocing could never lose sight of the technical aspect of conducting business in the modem environment. Domestic partnerships provided a common understanding of infrastructure, while conducting business in emerging markets often led to challenges with technology. As a competitive differentiator, Bocing had to acknowledge that To participate in just-in-time and fragmented international supply chains, firms must be able to communicate and engage in cross-border financial transactions with supply-chain partners in a timely manner, usually via the Internet. Therefore, information and communications technology (ICT) networks and globally linked financial institutions are integral to today’s trade-facilitation research and policy analysis.” Robinson-Berry and her team identified six cautionary tension points as a means to address the core issues of managing Boeing’s complex supply chain (see Exhibit 3). Boeing's Supplier Diversity Strategy ‘The Boeing supplier diversity strategy existed within a market and company context that shaped its success. ‘The company’s global footprint was extensive: Europe: 450 suppliers; $5 billion India, Middle East, and Africa: 50 suppliers; $200 million North Asia: 90 suppliers; $5.7 billion Southeast Asia and Australia: 925 suppliers; $290 million North America (Non-U.S.)?! 625 suppliers; $1.8 billion Historically, Boeing had relied on three focus areas in building this footprint: major initiatives procurement, implementation of supply chain strategy, and concentrated focus on distribution networks/logistics ‘management. For the future, Boeing needed to address internal and external constraints (see Exhibit 4). As a result, the company took a tore nuanced approach to its current focus. The most successful multinational firms had innovative supplier diversity programs and a world-class supply base that reflected their customer base. With a vision of an integrated team utilizing small and diverse suppliers providing innovative products, services, and solutions enriching the value chain, customers, and communities, Robinson-Berry and her team were working to maximize potential for all partners. While it might be easier professionally to work with the same trusted suppliers, Bocing acknowledged the intrinsic value of diversity (see Exhibit 5) ‘The supply chain architecture was built on a corporate belief in the value of a vibrant, small, and diverse supplier community. Boeing’s diversity efforts were measured against five benchmarks: the identification and development of opportunities for each of the unique small business communities; assisting small businesses in becoming high-performance suppliers; educating and training the Boeing community about the benefits of diversity; participating in community outreach activities to generate the appropriate leads; ‘® Reuter etal. op. cit, 46, ® Catherine Mann, “Supply Chain Logistic, Trade Facilitation and International Trade: A Macroeconomic Policy View," Joumal ‘of Supply Chain Management 48, no. 3 (2012) & ® Non-US. North America referred to Canada and Mexico, “This document auhorzed for educator row use ony by Muhorrmad Sarwar, Unwerly of Wellongong unl Ju 2024. Copying ar posting tan iningement of copa Permissons@nbep harvard © 617 783785095 9B16C015 and supporting the mentor/protégé program because, through mentoring, resources and ideas were shared that strengthened the value chain, ensuring a pipeline for the future (see Exhibit 6). Domestically, successful firms understood that it was vital to develop inroads into communities that had limited representation. The business world realized the momentum of diversity, as minority-owned businesses became a fast-growing segment of the U.S. economy, growing from less than 7 per cent to 15 per cent in five years. In fact, 4 million minority-owned businesses in the United States generated $637 billion in sales revenue and employed 4.5 million people. When it came to sourcing for global supply chains, the changing demographics sparked specific supplier diversity initiatives because partnering with a diverse supply base provided access to new markets and innovative ideas — and with the growing number of ‘minority- and women-owned businesses, it made “good business sense.” Boeing, like many multinational organizations, identified the need to. adopt and implement diversity initiatives that were integrated throughout the organization. As a result, Boeing’s focus areas (see Exhibit 6) aligned with the ultimate aim of working with small businesses a8 a competitive differentiator. This integrated commitment to maintaining a diverse supply chain domestically positioned Boeing as an industry leader, with a spending level of more than $3.5 billion with Money Management Minority Business Enterprises and insurance agencies. Additionally, $89 million was committed to relevant U.S. non-profit organizations, with employees contributing $51 million to the Employee Community Fund. Although those recognitions were important, the true measure of an impactful supplier diversity program ‘was the long-standing success of its supplier partners, Many former small businesses that had partnered with Boeing became large businesses. Of the 1 businesses designated by Boeing as “Suppliers of the Year” in 2006, five were small businesses. Boeing had also been inducted into the Billion Dollar Roundtable as a result of its $2 billion spend with Minority and Women Business Enterprises. Robinson-Berry was responsible for Boeing’s relationships with the U.S. federal government and small business subcontractors. She knew that many Boeing employees might still question whether the company’s diversity goals were in conflict with its business priorities. However, she did not understand compartmentalizing diversity from the supply chain. The connection to cost reduction was very clear to her. Obviously, supplier diversity fit with Boeing’s corporate responsibility initiatives, but it also supported real business priorities. \No small or diverse businesses appeared among those suppliers who were damaging Boeing with excessive margins, poor quality, and bad risk management. By contrast, Boeing needed to pull product from a major avionics supplier because the company could not meet its requirements. The risks of ‘working with large suppliers were not often recognized outside the supply chain management organization, Robinson-Berry knew that supplier diversity had reduced costs for the company. In one case, Boeing had saved money by shifting office supplies from a majority vendor to a more flexible minority vendor. Furthermore, supplier diversity was required to deal with the Department of Defense, and served as an advantage with corporate customers. THE ROAD AHEAD Bocing was committed to redefining its supply chain architecture in order to focus on the global environment, and to growing its international business. There were great opportunities for what authors %2 Whitield and Landeros, op. ct, 17 “This document auhorzed for educator review use ony by Murra Sarwar, UnwerlyofWellongong unl Jul 2024. Copying ar psting tan iningement of copyght Permissons@nbep harvard © 617 783.785095 9B16C015 Bertie M. Greer and Peter Theuri called “strategic improvements” that happened “upstream and/or downstream as products, services, capital, and information [flowed] through the supply chain.” Indeed, intensified competition and increasingly demanding customers would require integrated services and advanced capabilities. The corporate advantage of creating links between purchasing and Bocing’s long-term objectives was undeniable, as the potential gain in market size ranged into trillions of dollars. Robinson-Berry could not afford to lose sight of the risks that were fundamental to outsourcing vital components of the organization’s business. The reputational risk for Boeing was significant; risk management and change management needed to be built into her supply chain design. Collaboration would bbe essential on the road ahead. Robinson-Berry had been effective at building alliances with the next generation of small and businesses. She and her team viewed “commitment, communication and process integration (coordinating activities that relate to supplier diversity across functional areas) as key elements to supplier diversity. Continued growth in the minority population in the coming years will likely keep practitioner interest in supplier diversity high.” The diversity imperative ran parallel with Robinson-Berry’s business priority — to make Boeing competitive by providing effective services at an affordable cost (see Exhibit 7). Robinson-Berry once again thought about the question posed during her presentation, remembering how difficult it had been to capture all she had leamed about supply chain and diversity in one brief answer. ® Greer and Theuri, op. cit, 98. 2 Whitfield and Landeros, op. ct, 19. “This documsenl is auhorzed for educator review use ony by Muhorrmad Sarwar, UnweryofWallongong unl Jul 2024. Copying ar posting tan iningoment of copght Permissons@nbep harvard © 617 783.785090 9 9B16C015 EXHIBIT 1: SUSTAINING COMPETITIVE ADVANTAGE THROUGH PREFERRED PARTNERSHIPS Customers Access to the slobal market ‘Source: Adapted from Joan Robinson-Berry, "Shaping Our Success — Creating a Shared Vision” presentation (Boeing, June 11, 2011) EXHIBIT 2: BOEING'S SUPPLIER MANAGEMENT STRATEGY Beginning with the market, value proposition, and eontrol points Architecting the supply chain and sourcing strategy early. ‘Competing and preserving options to compete Negotiating from the levels position first —team later. Understanding interdependencies inthe supply chain. Establishing clear, complete and accurate requirements the first time and every time thereafter. Managing the four comers ofthe contract: terms, price, risk, requirements. Remembering suppliers did not geta better deal than the corporation could get from the customers. ‘Source: Adapted from Joan Robinson-Berry, "Shaping Our Success — Creating a Shared Vision,” presentation (Boeing, June 11, 2011) “This document auhorzed for educator row use ony by Murra Sarwar, Unwerly of Wellongong unl Jul 2024. Copying ar psting tan iningement of copa Permissons@nbep harvard © 617 783.7850Page 10 9B16C015 EXHIBIT 3: INTERNAL AND EXTERNAL TENSIONS Schedule pressure versus requirements quality ‘Skip over supply chain architecture: lose strategic control Increasing Boeing's risk exposure due to poor contract, terms, flow downs Supplier oversight versus insight: Single/sole source boarding parties, versus open work arounds competitions Teaming then negotating: de facto source solutions ‘Source: Adapted from Joan Robinson-Berry, “Supply Chain Management and University Relations.” presentation (Tuskegee, ‘AL: Tuskegee University, November 30, 2011) EXHIBIT 4: INTERNAL AND EXTERNAL CONSTRAINTS ON BOEING INTERNAL CONSTRAINTS Previous strategy focused on domestic market Preparing a workforce to suppor international goals Gelling culture of buyers motivated to work with non-US. suppliers Creating international-friendly buy-to packages ~ EXTERNAL CONSTRAINTS Changes in Middle East market related to local labour requirements ‘Navigating various intemational markets where the supply base might be run by larger entities Shrinking U.S. Department of Defense budgets ‘Commercial versus Department of Defense markets Source: Adapted from Joan Robinson-Berry, “Shaping Our Success — Creating a Shared Vision," presentation (B. 11,2010). ing, June “This document is aunrized for educator review use ony by Muharrned Sarwar, University of Wellongong unl Ju 2024. Copying or posting tanning Permissons@nbep harvard © 617 783.7850ge tt 9B16C015 EXHIBIT 5: WHY IS SUPPLIER DIVERSITY IMPORTANT TO BOEING? ‘New perspectives and ideas are generated by a diverse supply base ~ ‘Small businesses make up a substantial proportion of the overall domestic supply base (Our suppliers may also be our customers; they are diverse in ethnicity and gender ‘The purchasing power of minorities is expected to climb Investing in communities we serve can be a strategic advantage ‘Source: Adapted from Joan Robinson-Berry, "RulestRisks+Rewards: The Changing Outlook fof Aerospace and Defense Contracting," presentation at the Aerospace+Defense Contract Management Conference (Garden Grove, CA: National Contract Management Association, July 26-27, 2007). EXHIBIT 6: BOEING SUPPLIER DIVERSITY FOCUS AREAS HBCU/MI & SBIR Mentor Protégé Supplier Development Technology Roadmap Historically Underutlized Business Zone ‘Small Disadvantaged Business/Minority Business Enterprises ‘Small and Diverse Business Inreach/Outreach Veteran-Owned Small Business/Service Disabled Veterans ‘Women-Owned Businesses Affliations and Boards AbilityOne Note: HECUIMI = Historically Black Colleges and Univefsities & Minonty Insitutions; SBIR = Small Business Innovative Research ‘Source: Adapted from Joan Robinson-Berry, “Supply Chain Management and University Relations,” presentation (Tuskegee, AL: Tuskegee University, November 30, 2011), EXHIBIT 7: EXECUTIVE COMMITMENT TO SUPPLIER DIVERSITY Involve small and diverse suppliers up front in the acquisition process Manage our supplier base fo ensure a sufficient mix of diverse suppliers are qualified to achieve our goals Identify strategic opportunilies where affordabiliy can be Improved through company leveraging contracts with small and diverse suppliers Develop and enhance the capabilties of high-performing small and diverse suppliers through mentoring relationships Source: Adapted from Joan Robinson-Berry, "Rules+Risks+Rewards: The Changing Outlook for Aerospace and Defense Contracting.” presentation at the Aerospace+Defense Contract Management Conference (Garden Grove, CA: National ‘Contract Mariagement Association, July 26-27, 2007). “This document auhorzed for educator row use ony by Murra Sarwar, Unwerly of Wellongong unl Jul 2024. Copying ar psting tan iningement of copa Permissons@nbep harvard © 617 783.7850ASSIGNMENT QUESTIONS. 1. Whats the “business case for diversity”? Why (and how) could diversity impact Boeing's supply chain management process? Is diversity a human resources (HR) issue, a supply chain management issue, or both? What is the link, if any, between domestic supply chain, global supply chain, and diversity? What role would a Boeing leader like Joan Robinson-Berry play in helping employees make the connection between diversity and supply chain management? 5. How could Robinson-Berry respond to valid questions in a way that supports supplier diversity without generating backlash? eR