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|How much of a service can be outsourced before the benefits stop outweighing the costs? For the first time in the history of the company, Boeing is| |outsourcing more than 70% of the production of its new aircraft the 787 Dreamliner. This is not just the production or assembly of the plane, but | |also the specifics of engineering the individual parts. With so many parts being designed and assembled in other countries there have been | |communication issues, lengthy delays and increased costs. This paper will explore the benefits and costs of outsourcing such a big public project. | |It will discuss how Boeing or similar companies can better mange outsourced projects or more efficient alternatives to outsourcing them all | |together. | | | | | | | |Copyright 2007-2009, David Mahmoodi. All Rights Reserved. For copyright permissions, contact the author directly or Professor Amar Gupta | |(email@example.com) at The University of Arizona. |
Outsourcing of the Boeing 787 Dreamliner
Outsourcing has become a major trend in recent years with more and more companies contracting work out to third parties. This work can be done in the same country by another company or it can be completed in countries thousands of miles away. The Boeing Company, aircraft manufacturer, is one example of a company outsourcing. The Boeing Company was not the first company to outsource work to other countries, but did utilize and profit from the use of 3rd party labor. However, this trend of successful outsourcing would end for Boeing with the introduction of the Boeing 787 Dreamliner. Boeing has outsourced more than 70% of the design and production of the plane (Seattle Times). However, there have been many complications that have led to costly delays and billions of dollars being lost. If Boeing would have done a more complete analysis of the project and its risks, the magnitude of what was being outsourced might have been decreased. At the same time, if Boeing could utilize a model, such as the 24 hour knowledge factory, the Dreamliner project could have been much more efficient and cost effective.
History of Boeing
The Boeing Company was founded in 1916. They worked in several different areas of work from commercial airplanes to launch and orbital systems. However, it was not until the 1950’s when the jet aircraft was put into use for the first time that the Boeing Company started to control the commercial airline market (Harvard Business School). Boeing would go unchallenged for roughly the next fifty-three years. However, during this time the European company Airbus began to grow. Eventually, Airbus would grow into Boeing’s only competition. In fact, in 2003 Airbus sold more airplanes than Boeing. Airbus has had more deliveries ever since (Airbus). Boeing needed...