Imagine there was a major, global company. A company that used to make virtually all of their subassemblies within twenty miles of the final assembly factory. Workers with incredible depth of knowledge and experience. Problems could be managed by taking a quick drive over to a factory, the time it took to deliver parts was measured in minutes, and the workforce could be flexed across multiple nearby facilities.
Then they decided to "improve" by laying off tens of thousands of those experienced workers and move subassembly production to third party suppliers around the globe. Behemoth transportation devices were developed just to move large parts, knowledge was transfered to a factory in a country that was on a hyper evolution curve that would make it a major competitor in a decade or two, and a whole new level of coordination was required to oversee a plethora of new parts management systems operating in different languages and different time zones. This additional complexity, coupled with a shortage of a tiny fastener, led to the delayed launch of the company’s most critical product by three and then another six months.
What would you do?
How about awarding one of the top purchasing folks "Supply Chain Manager of the Year."
No, I’m not kidding. Purchasing magazine just gave Steven Schaffer, Boeing’s Vice President and General Manager of Global Partners, that award.
Yes I know the 787 Dreamliner program is incredibly complex and includes a novel composite technology that required a huge investment. I applaud Boeing for taking that level of risk to change the airliner game, and I truly wish them the best. Supposedly Boeing could not bear that investment alone, and supposedly spreading the work to companies in various countries helped improve sales to those countries. Whether that was worth transfering technology to potential competitors while laying off a few hundred thousand years of knowledge and experience… well, time will tell.
But let’s get back to the article that tries to explain why Mr. Schaffer won the award.
"He understands complexities in projects like that and knows what it takes to get things done," says Carolyn Corvi, vice president and general manager of airplane programs at Boeing and one of Schaffer’s bosses. "He has the patience to work through things."
Presumably that means that the fastener problem just sort of fell through the cracks while his team was focused on whether entire airframe subassemblies were on time. Or perhaps some of the problems were due to apparently having multiple bosses.
Boeing learned that there was a shortage of fasteners for the new 787 Dreamliner that will delay flight testing for the plane until mid November. But, rather than panic and point fingers, Schaffer, who manages the activities of the 70 supplier/partners developing the 787, emphasized more communication and collaboration with fastener manufacturers to solve the problem.
Uh, the problem wasn’t solved. The first Dreamliner had to be basically disassembled after the public unveiling, and the resulting delays helped create an overall program delay.
Critical to the plane has been the work of the 70 companies supplying the systems and components. Schaffer’s job since 2005 has been to turn them into partners rather than suppliers providing nothing more than parts.
Yes, partnership is a great thing. The Detroit Three could learn a thing or two about treating suppliers as partners. But in the end, for all the feel-good kumbaya, they still need to supply parts. On time.
"Outside suppliers have always been an important part of what we do and how we build airplanes, and they are becoming more so," says Mike Bair, who as leader of the team developing the 787 works closely with Schaffer and his team. "For our other airplanes, outside suppliers provide 55% to 60% of procured content with the rest built in-house. For the 787, we are pushing 70%."
And damn proud of it. Even if it meant laying off a bunch of their own folks and spending a few bazillion to create the DreamLifter. Not to mention those pesky fasteners…
Schaffer meets every Monday morning with his leadership team to talk about supplier development and supplier performance for current airplane programs. They use a simple stoplight graphic for "on plan" or "off plan." They discuss suppliers for new programs, new technologies and new entrants to the market. Team members say he is particularly good at articulating a vision for the organization.
I love simple visual indicators. But when the stoplight turns "red" what do they do? Hopefully more than just discuss new programs and new technologies. Hopefully someone around the table says "hey, what are we going to do about those pesky fasteners?"
When Schaffer first took the job in supply management and procurement, individuals were responsible for managing specific commodities such as airplane structures, systems, propulsion, and the like, but they didn’t really have any program focus. In his new post, he created new roles that encourage individuals to work more closely with the airplane programs. His thinking on the move is that the team’s success is measured in terms of whether the airplane programs succeed in the marketplace.
Yes, and to succeed the airplane must actually hit the market. Perhaps someone should still look at certain specific commodities, like…
Schaffer refers to Lean and talks of the importance of having stretch goals and of challenges of finding talented people with the skill sets for new roles in supplier management. He also talks of helping to increase productivity at Boeing and continuing to work to streamline the supply chain, taking efficiencies down to second- and third-tier suppliers.
I could go on, but you get the picture. And I’m intentionally being a little unfair. Mr. Schaffer has done many great things… supplier councils, professional development of his team, and a true partnership relationship with his suppliers. He understands many aspects of Lean, although his company may not quite get the "respect for people" pillar and the importance of shortening cycle times.
But in the end you still have to make the product in order to create value for the customer. And even with incredibly complex products created by incredibly complex (but unnecessary?) supply chains, you still must keep an eye on even the smallest part… like a fastener. Especially when it holds together a mass of metal that somehow carries hundreds of humans through the air.