August 24th 2012
Boeing is an Aerospace science company and is the world's most leading aerospace science company and is the largest manufacturer and producer of commercial and military aircrafts. Boeing creates and produces rotorcraft, electronic and defense systems, missiles, satellites, launch vehicles and advanced information and communication systems. A little known fact about Boeing is that they are a major services supply to NASA and Boeing helps to operate the International Space station. Boeings main corporate office is located in Chicago, Illinois and employs over 158,000 individuals throughout countries all over the world. Boeing also outsources some its manufacturing business to national and foreign countries. The main assembly hub is located in Washington at a place called Everett plant. Unlike other traditionally built jetliners, the 787 is about 20 percent lighter which saves fuel and lowers overall cost of travel because the jet is made of nearly 80 percent composite material. Along with the new lighter sleeker look, the 787 was redesign with better headroom, larger windows and electronics in the passenger cabinets as well as the flight deck. While this new undertaking seems to be business as usual, Boeing was actually changing the way it now built aircraft. Bousch (2010, December) said it best when he stated, with the 787, Boeing set out to do something revolutionary by tapping suppliers not only for materials, parts, and components, but also innovation. And in doing so, it set out not only to bring a new platform to market as quickly as possible, but also, ironically, to reduce business risk by reducing its dependence on its own operations. The newly developed 787 was to be first aircraft from Boeing manufactured almost exclusively through outsourcing. Almost 70 percent of the plane’s parts were built in other countries. According to Hill (2011), this was Boeing’s gamble that outsourcing would contribute to the huge costs of production while utilizing the expertise of worlds most efficient producers thereby driving down the costs of making the plane (p. 564). Additionally, Boeing thought that outsourcing the planes components would help reduce planes normal develop time of six years to four while building brand awareness and sales in the countries where manufacturing was performed.
Boeings’ Risks associated with Outsourcing
While Boeing had plenty of cost-cutting reasons for outsourcing nearly 70 percent of the 787 aircrafts manufacturing to 17 contractors in some 10 countries, I’m not sure the risk associated with such a huge amount of outsourcing was truly evaluated by Boeings management. This change in philosophy was evident by the fact that in the company’s past production of Boeing models 777, 767 and 707 some of its components were outsourced to companies around the globe, but not in any of those models was more than 50 percent sent to outside manufacturers. Nevertheless, the initial response to the 787 was tremendous. Mike Blair, Vice- President and General Manager of the 787 program declared, as July 31, 2007, 47 customers worldwide have ordered more than 683 airplanes worth more than $110 billion dollars at current list prices, making the 787 Dreamliner the most successful commercial airplane launch in history. And there’s more to come! (Aeromagazine (2007), p. 4). Those positive sentiments from Boeing didn’t last very long. Boeings’ efforts to be leaner and “cut out the fat” cause them to rely to heavily on key components to be delivered by outsourced contractors and suppliers. By December 2007, Boeing was starting to question its move to global outsourcing. Boeing’s most fierce competitor Airbus had already suffered from problems with delays due to outsourcing when it produced the Airbus A380 Super-Jumbo. With the company now experiencing breakdowns within the...