Next-Generation Quality: Choices at the Inflection Point

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& CEO, Boeing Defense, Space & Security 16 March 2010 Copyright

1 Next-Generation Quality: Choices at the Inflection Point Dennis Muilenburg Executive Vice President, The Boeing Company President & CEO, Boeing Defense, Space & Security 16 March 2010 Copyright 2010 Boeing. All rights reserved. NASA Image CQSDIConference_Muilenburg 1

Rapidly Changing, Complex World Shifting

Global economic pressures Industry challenges

and North Korea Global Economy Terrorists

Simultaneous, Significant Change Copyright

3 Rapidly Changing, Complex World Shifting priorities Evolving threats / technology Global economic pressures Industry challenges Iraq AFGHANISTAN Afghanistan India China Iran and North Korea Global Economy Terrorists Strained Russia relations Unprecedented, Simultaneous, Significant Change Copyright 2010 Boeing. All rights reserved. CQSDIConference_Muilenburg 3

Evolving Pressures on Quality: Customers

4 Evolving Pressures on Quality: Customers Increased oversight across supply chain Quality built-in throughout the value stream Move toward fixed-price New Space sector business model Copyright 2010 Boeing. All rights reserved. CQSDIConference_Muilenburg 4

6 Evolving Pressures on Quality: Industry Non-traditional markets; quality less tangible Others assuming role of Quality professionals Technical challenges, i.e., tin whiskers, counterfeit parts Loss of experienced workforce Tin whiskers NASA Photo Copyright 2010 Boeing. All rights reserved. CQSDIConference_Muilenburg 6

7 If We Make the Wrong Choices Yesterday Tomorrow 0 Inflection Unmanageable Point Supply Chain Loss of Experienced Workforce Increased Oversight Raises Costs Unsuccessful Missions: Industry unable to deliver quality 0 in the new capabilities customers will need Copyright 2010 Boeing. All rights reserved. CQSDIConference_Muilenburg 7

8 If We Make the Right Choices Next-Generation Quality: Mission assurance for new, rapidly changing needs Yesterday Customer-Industry Collaboration Minimizes Costs 0 Inflection Point Renewed Talent Pipeline Quality Built-in Across Supply Chain 0 Copyright 2010 Boeing. All rights reserved. CQSDIConference_Muilenburg 8

10 Our Choices Will Decide the Future Four Critical Areas 1. Approach to Quality 2. Talent Pipeline 3. Customer Connection 4. Government-Industry Partnership Copyright 2010 Boeing. All rights reserved. CQSDIConference_Muilenburg 10

11 1. Evolving Our Approach to Quality What s Out: Design as you go: adverse impact to cost, schedule What s In: Early Quality involvement Adequate schedule and funding, complete work statements Same discipline whether we make or buy a part Continue instilling: Quality is everyone s job Copyright 2010 Boeing. All rights reserved. CQSDIConference_Muilenburg 11

12 But Don t Throw Out What We ve Learned Enduring quality lessons: Pay attention to detail Caused some recent failures Test incrementally In a real-world setting Ensure clear expectations Customers and suppliers Apply robust Root Cause Corrective Action Rely on personal integrity Copyright 2010 Boeing. All rights reserved. CQSDIConference_Muilenburg 12

Boeing s Efforts To Evolve Quality Industrywide

Aerospace Quality Group Kristy Heffernan leads Americas

international standards, i.e., composites, AS9100 One

13 Boeing s Efforts To Evolve Quality Industrywide Leadership positions Wayne Brown leads International Aerospace Quality Group Kristy Heffernan leads Americas Aerospace Quality Standards Committee Driving international standards, i.e., composites, AS9100 One Boeing Copyright 2010 Boeing. All rights reserved. CQSDIConference_Muilenburg 13

14 2. Talent Pipeline Half of workforce eligible to retire in 10 years Poor retention at 4-5 year point Other industries more attractive Our industry needs more time to ramp up A national security challenge Copyright 2010 Boeing. All rights reserved. CQSDIConference_Muilenburg 14

15 Boeing s Efforts to Expand the Talent Pipeline Mentoring and leadership development Rotational Program (Operations & Supplier Management) Investments in Science, Technology, Engineering and Math University, community college programs attract next-generation talent Copyright 2010 Boeing. All rights reserved. CQSDIConference_Muilenburg 15

17 Strengthening the Customer Connection Build collaboration Tell the hard truth Move toward detailed requirements Strengthen customer intimacy Copyright 2010 Boeing. All rights reserved. CQSDIConference_Muilenburg 17

4. Government - Industry Partnership Rules

acquisition process We endorse acquisition

Multiple partnership models being considered

18 4. Government - Industry Partnership Rules and regulations: The right mix Listening to one another, especially on evolving technologies More flexible, nimble acquisition process We endorse acquisition reform Number of ideas being discussed Multiple partnership models being considered Copyright 2010 Boeing. All rights reserved. CQSDIConference_Muilenburg 18

19 If We Make the Right Choices Next-Generation Quality: Mission assurance for new, rapidly changing needs Yesterday Customer-Industry Collaboration Minimizes Costs 0 Inflection Point Renewed Talent Pipeline Quality Built-in Across Supply Chain 0 Copyright 2010 Boeing. All rights reserved. CQSDIConference_Muilenburg 19