1. Supply Chain Oversight in Unprecedented Times Wayne Brown Director, Boeing Commercial Airplanes Supplier Quality The Boeing Company March 14, 2011

2. Presentation Content ► Unprecedented Times  Upside  Downside ► Areas of Focus ► Strategies For Success

3. Presentation Content ► Unprecedented Times  Upside  Downside ► Areas of Focus ► Strategies For Success

4. Unprecedented Times – Upside Today’s Aerospace Environment News Headlines US airline shares up on better economic outlook Reuters News 07/26/2010 Boeing, Airbus score $29 billion at air show Everett Herald 07/25/2010 Boeing predicts a greater need for new passenger jets Everett Herald 07/21/2010 American Airlines orders 35 Boeing jets to upgrade its fleet and phase out gas-guzzling planes Associated Press Newswires 07/21/2010 Dreamliner lands at Farnborough BBC News 07/18/2010 FedEX looks to 777s to deliver an edge Wall Street Journal 07/14/2010 Boeing 747-8s endure hot weather, top 500 flight hours Seattle Post-Intelligencer 06/29/2010 Boeing to make even more 737s Wichita Eagle 06/16/2010

5. Unprecedented Times – Upside

6. Unprecedented Times – Upside Strong long-term growth

7. Challenges

8. Challenges

9. Unprecedented Times – Downside Pressures Affecting the Supply Chain Production delays have impacted suppliers financially and earnings landscape is mixed Dollar depreciation is increasing pressure on revenues for foreign suppliers Production rate increases on existing programs and the development of new airplanes have challenged the supply chain Quality and performance issues from Partners and major suppliers have been on the rise

10. Production delays have impacted suppliers financially and earnings landscape is mixed Dollar depreciation is increasing pressure on revenues for foreign suppliers Production rate increases on existing programs and the development of new airplanes have challenged the supply chain Quality and performance issues from Partners and major suppliers have been on the rise Unprecedented Times – Downside Pressures Affecting the Supply Chain

11. Production delays have impacted suppliers financially and earnings landscape is mixed Dollar depreciation is increasing pressure on revenues for foreign suppliers Production rate increases on existing programs and the development of new airplanes have challenged the supply chain Quality and performance issues from Partners and major suppliers have been on the rise Unprecedented Times – Downside Pressures Affecting the Supply Chain

12. Production delays have impacted suppliers financially and earnings landscape is mixed Dollar depreciation is increasing pressure on revenues for foreign suppliers Production rate increases on existing programs and the development of new airplanes have challenged the supply chain Quality and performance issues from Partners and major suppliers have been on the rise Unprecedented Times – Downside Pressures Affecting the Supply Chain

13. Presentation Content ► Unprecedented Times  Upside  Downside ► Areas of Focus ► Strategies For Success

14. Areas of Focus First Article Inspections (FAI) Ensure partial (i.e. delta) FAIs are performed for any process changes affecting fit, form or function.Ensure partial (i.e. delta) FAIs are performed for any process changes affecting fit, form or function. Conduct thorough on-site checks of the FAI process at critical sub-tier suppliers.Conduct thorough on-site checks of the FAI process at critical sub-tier suppliers. Specification Changes Ensure a strong process of frequent checks for specification changes.Ensure a strong process of frequent checks for specification changes. Foreign Object Debris Incorporate both “FOD prevention” and a “clean as you go “ approach to FOD.Incorporate both “FOD prevention” and a “clean as you go “ approach to FOD.

15. Areas of Focus Planning Ensure any products with customer controlled planning (such as Process Control Documents) are clearly identified in the manufacturing planning so that changes are not made without customer approvalEnsure any products with customer controlled planning (such as Process Control Documents) are clearly identified in the manufacturing planning so that changes are not made without customer approval Mistake Proofing Look for opportunities to mistake-proof operations. For nearly symmetrical parts, pursue a “mistake proofing” approach to product design/marking to ensure correct application and installation.Look for opportunities to mistake-proof operations. For nearly symmetrical parts, pursue a “mistake proofing” approach to product design/marking to ensure correct application and installation. Quality Controls Ensure strong Quality controls over any operator verification programs (i.e., manufacturing self- inspection).Ensure strong Quality controls over any operator verification programs (i.e., manufacturing self- inspection).

16. Areas of Focus Special Processors Verify processes are in place to ensure work coming in from special processors is to the correct specification and that the processor is in good standing.Verify processes are in place to ensure work coming in from special processors is to the correct specification and that the processor is in good standing.Contracting Check that thorough contract reviews with sub-tier suppliers to ensure that they understand requirements. Consider contract language requiring sub-tier suppliers to notify you when any of their sources are changed. Check that there is complete understanding of contract language, both internally and externally.Check that thorough contract reviews with sub-tier suppliers to ensure that they understand requirements. Consider contract language requiring sub-tier suppliers to notify you when any of their sources are changed. Check that there is complete understanding of contract language, both internally and externally.Training Ensure new employees, or employees doing new work, receive all the training needed to perform their work flawlessly – the first timeEnsure new employees, or employees doing new work, receive all the training needed to perform their work flawlessly – the first time

17. Presentation Content ► Unprecedented Times  Upside  Downside ► Areas of Focus ► Strategies For Success

18. Strategies For Success Strategies For Success ► Back to basics ► Evaluate new techniques ► Work with industry ► Company focus on quality

19. Back to Basics ► Enhanced communication  Take ownership for our contributions to supply chain quality failures ► Focus on training and skills  Root cause analysis  Inspection techniques: the fundamentals and beyond ► Increased attention on sub- tier supply chain ► Strengthen oversight  Delegation vs In House Inspection R/I Supplier Boeing Delegated Inspection S/I

20. New Techniques ► Component reliability ► Systemic improvement  Root cause -vs- reactive ► Predictive Indicators ► Risk-based oversight assessments ► Supplier Oversight Technical Assessments SOTA

21. Continue Working With Industry

22. Ensure supply chain compliance Mission: Ensure supply chain compliance and conformance of purchased products and services products and services throughout the product life cycle throughout the product life cycle Renewed Company Focus on Quality

23. Ensure supply chain compliance Mission: Ensure supply chain compliance and conformance of purchased products and services products and services throughout the product life cycle throughout the product life cycle Renewed Company Focus on Quality