Boeing 2006 Annual Report Download - page 15

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Our Internal Services Productivity
(ISP) initiative targets significantly
improving productivity and reduc-
ing business support costs year
over year.
With Boeing, as with any large company,
the costs of running our businesses
consume a significant proportion of our
annual revenues. Our ISP initiative seeks
to aggressively manage and reduce such
costs associated with our centrally
administrated functions, nonproduction
procurement, and common business
support functions such as finance, legal,
information technology, human resources
and other shared services.
While we always pay attention to running
Boeing businesses efficiently, we’re
focusing on being even more efficient
by driving continuous improvement
through all aspects of the business.
Whether simplifying business processes
and systems, eliminating excess infra-
structure, consolidating nonproduction
procurement or streamlining back office
support, Boeing people are bringing
Lean principles into our office environ-
ments in a big way.
In 2006 alone, we captured more
than $500 million in savings in business
support costs through innovative sourc-
ing, systems reduction and process
simplification. For example,
RBoeing Shared Services Supplier
Management partnered with the 787
Dreamliner team to consolidate and
competitively bid a logistics contract for
final assembly and delivery of certain
parts and materials. Doing so reduced
costs by 65 percent for a projected
10-year savings of nearly $200 million.
RSimilar integrated approaches were
applied to companywide desktop and
laptop computer purchasing; printer, fax
and imaging device maintenance; and
voice telephony services yielding addi-
tional projected savings of more than
$200 million over the next several years.
RAdopting common finance systems
helped reduce cycle time to close our
books 75 percent sooner, with accuracy
sustained, and promises to provide
significant savings.
RCompanywide, we’re aiming to
reduce the number of information tech-
nology systems by two-thirds. And that’s
only part of the opportunity, because
we’ll also be trimming upstream
processes that feed those systems.
We are challenging every individual
at Boeing to be committed to run-
ning our business better tomorrow
than we did today — and even
better the next day.
While smaller in scope, grassroots
productivity improvements promise
significant opportunities for savings.
Successes indicate that we’re gaining
traction at all levels of the enterprise.
Boeing people successfully applied Lean
processes to cut costs and cycle time
on everything from our annual report
and employee-benefits publications to
charitable grant-making and Treasury
cash-management processes.
Looking ahead, we are focused on lever-
aging identified opportunities to continue
significant cost reductions over the next
few years. We have established a formal
mechanism to track progress, share best
practices and replicate successes across
Boeing. Managed aggressively, the initia-
tive will continue to provide fertile ground
for improving margins, investing for
future growth and responding flexibly to
unanticipated market and technical risks.
We have identified hundreds of opportunities to reduce operating costs and are
sharing them across the enterprise. For example, our Shared Services Lean Office
initiative, which reduced office space by 43 percent, is saving $1 million in overhead
annually and has become a model for similar programs elsewhere.