Case Study

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Case study: Boeing’s Dreamliner

The story: When Boeing delivered its new Dreamliner 787 to All Nippon Airlines last month, it was the culmination of a long and drawn-out process. The first delivery came more than three years after the revolutionary aircraft – its innovation coming both from its use of composite materials and in terms of how the supply chain was managed – was first scheduled.

The challenge: One reason for the delay was an industry-wide shortage of aerospace fasteners, the nuts, bolts, rivets and washers that hold aircraft together. Although fasteners comprise only about 3 per cent of the cost of an aircraft, they became a serious supply-chain issue.

The worldwide downturn in the aircraft industry caused by the terrorist attacks of September 11 2001 led to consolidation among fastener makers, along with reduced capacity and smaller workforces. Although demand began to increase again, the fastener makers resisted adding capacity because of the continuing uncertainty over just how much demand there would be. So by the end of 2006 the fastener sector was running at only 80-90 per cent capacity.

The problem: In 2007 Boeing’s analysis of the shortage confirmed that there were fundamental ordering and scheduling problems. Because fasteners are used by Boeing as well as its partners, and each had its own way of procuring them, the fastener makers were unable to get a clear picture of demand. Above all, the process was not geared to forecasting demand.

Boeing’s study also revealed that the shortages might continue into 2012, even if fastener makers had increased capacity.

The response: Boeing decided to...
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