Boeing reins in spending; Education; Sustainability and Hurricane Beryl

From the July-August 2024 edition of Supply Chain Management Review.

July-August 2024

Artificial intelligence is everywhere these days. But what if it isn’t? I would guess that at least 50%, and probably closer to 70%, of the article pitches I receive these days involve AI. Most conversations I’ve…

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Earlier this year, Boeing’s Tiffany Andrews joined Fairmarkit’s Erin McFarlane on stage at the ISM World Conference to discuss how the aircraft giant has leaned into artificial intelligence to get better control of its tail spend and land its out-of-control spending.

“What we didn’t have was a good handle on our transactional procurements that we’re going through,” explained Andrews, senior manager at Boeing’s Indirect Procurement Center of Excellence. “We had catalogs in our systems, but anything that wasn’t on a catalog that was strategically placed was considered a SPO or a one-time and we didn’t have a great handle on that.”

Fairmarkit is a global autonomous sourcing platform, and proved the right choice for Boeing, Andrews said. “What it would do is pull all of our trends from our old work system and our current system and [perform] an evaluation of all of our data, of our spending trends. How we like to spend our money and what suppliers that is with,” Andrews said.

‘Automate the boring stuff’

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In a conversation with Supply Chain Management Review following the presentation, McFarlane, Fairmarkit’s vice president of operations, noted how generative AI technology is allowing companies to “automate the boring stuff.”

“There’s a whole bunch of work that happens in procurement and supply chain that is rote where you’re picking up something from column A and you’re putting it in column B—you are copying something from one space to another,” McFarlane said. “It doesn’t require a lot of human thought. You go by the rules and the rules are pretty clear. You can have almost anybody do it. That’s the stuff you automate. And whether it’s automating on the supplier side, the buyer side or automating on the requester side, it doesn’t matter because nobody wants to be doing it.”

McFarlane said the use of AI allows companies to better allocate human resources. “I think the expectations, especially of younger workers in procurement and in supply chain, are that they want to be doing meaningful, interesting work more quickly,” she said. “Maybe my grandfather was perfectly okay working as a welder at the factory his whole career. We see different expectations. And so being able to be involved in a project like this is is good career movement.”

Boeing’s global spend

Andrews noted that Boeing has been able to roll out the Fairmarkit platform globally, helping it gain more insight and control of its spending in distant locales. “On the international side of the house, after reviewing their end-to-end processing, we realized that there wasn’t one consistent system pushing them through and they were doing a lot of offline RFQs, offline sourcing,” she said. “We couldn’t even keep track of their supply base per commodity because there was so much of that disconnect through email and through other methodologies.

Andrews said the system has worked so well that when it was rolled out in South Africa that Boeing is rolling it out in India with plans to roll it out globally. “That way we can get a full picture of what we’re spending globally,” Andrew said.

The value of education

There has been some pushback on education in the U.S. over the past few years. Some are questioning whether the benefits of a college education justify the costs. Another debate being held, albeit not quite as loud, is whether ongoing education once you enter the supply chain workforce is justified.

In our July issue (subscription required), we tackled that question. And the answer is: it really depends. According to research, just 18% of certifications are actually sought by employers. ASCM reports that those with a degree earn $25,000 more than the national average, and those with certifications earn 10% more (17% for two or more credentials) than a non-credentialed colleague. Others, though, say companies are less interested in certifications and more interested in upskilling their workforce. Ultimately, whether it is a formal certification program or simply an opportunity to upskill, the value of education keeps growing. For SCMR subscribers, you can read the full story here. If you are interested in subscribing, click here .

Leaders maintain their lead

New research from Accenture found that companies with next-generation supply chain capabilities achieve 23% greater profitability than those without. They are also six times as likely to use artificial intelligence and Gen AI in their supply chains. Accenture’s research aligns with other insights on this topic.

Research from The Hackett Group found that “digital world class” organizations operate at a 21% lower cost than their peers and have 32% less staff as a result—a potentially significant cost advantage. According to Gartner’s research, top-performing supply chains are investing in artificial intelligence and machine learning at twice the rate of their lower-performing peers. Leaders continue to lead the way.

What I liked this week

Supply chains faced added pressure last week as Hurricane Beryl made landfall in Texas, disrupting ports, rail and shipping operations. … More keynote addresses have been announced for the NextGen Supply Chain Conference, the latest being Jennifer Springer of Whirlpool. … Every leader has the ability to influence others, but it must be used wisely for the betterment of the organization. … A DP World survey said that 82% of respondents agree that organizations adopting sustainable practices will see enhanced financial performance. … Amazon has launched the Amazon Sustainability Exchange to offer guidance and information for companies looking to decarbonize their operations. … Diesel fuel prices are on an upward climb, jumping 5.2 cents last week to $3.865 a gallon. Fuel prices are up almost 20 cents in the past four weeks.

Thank you for reading, Brian

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