Boeing Learns From 787 Mistakes:
Using Technology to Create Supply Chain Success
The Boeing Company is one of the largest Aerospace and Defense enterprises in the world. Presently headquartered in Chicago, Illinois; they have contributed to some of the largest breakthroughs in aviation technology — breakthroughs that greatly enhance the lives of the world’s people. Boeing began as a small startup in 1916; but by the Korean War, defense efforts had grown Boeing to one of only 23 companies with $1 Billion in annual revenue. Boeing parlayed this growth into being one of the premier designers and manufacturers of commercial aircraft. Designs such as the 707, 737, and 747 cemented their role as the leader in the industry until 2003 when Airbus first surpassed Boeing in annual sales and order backlog. (Nolan 2012)
CEO Phil Condit saw Airbus making progress well prior to 2003, however. In 1996 Condit determined that the Boeing Company needed to be refocused in order to compete with the European conglomerate. Airbus had an advantage in innovation and manufacturing because it used collaboration amongst many suppliers to produce quality aircraft in the most cost effective way possible. In order to continue in its global leadership position, Condit set Boeing along a path to leverage their core competencies, “with detailed customer knowledge and focus on operating lean and efficient systems.”
This plan would be called the “2016 Strategy” and it would see Boeing change its relationship with suppliers from third-party contract-based to close, strategic partners. (Nolan 2012) In future designs, Boeing would rely on these partners to not only build, but also design subcomponents for aircraft. Boeing knew that it must have a way of coordinating the design process among all suppliers, which cleared the way for a powerful Enterprise Resource Management (ERP) tool. Boeing selected Exostar’s Supply Chain Management Solution to coordinate the design and supply chain for the first project under the 2016 Strategy, the 787. (PRNewswire 2013)
The 787 was conceived as a revolutionary design that would be a replacement for the aging 767, cost about the same, but be 20% more fuel efficient. It would accomplish this by utilizing a construction of 50% composite – something never before attempted in the commercial aviation arena. In summary, Boeing was endeavoring to build a brand new clean-sheet aircraft from materials never used, using methods never attempted, and using a supply chain more far reaching than ever experienced by the plane maker.
In retrospect, it may be easy to see why the 787 has had so many problems. The problems are so large that Forbes was prompted to publish an article titled, “What Went Wrong at Boeing.” (Denning 2013) Boeing has worked through most of its supply chain woes and has delivered over 60 787s to date. Boeing is now designing a next generation version of its supremely popular 777, the 777-8/9.
Boeing’s desire to reduce costs and production time by relying risk-taking suppliers to design and produce major aircraft components has led to many failures and cost overruns in the 787 program. In order for Boeing to avoid the pitfalls of the 787 program, Boeing must take the lessons of the past in concert with good technology to ensure good management of the new 777 supply chain. Literature Review
Boeing’s move toward a supply chain that relied on utilizing risk-taking suppliers for the 787 was meant to reduce the design timeframe and shorten the production cycle, however it actually placed the future competitive ability of Boeing in peril. The present paper specifically focuses on the practice of outsourcing design of the aircraft to the aforementioned suppliers and how improper oversight of the process led to delay, cost overruns, and the loss of intellectual property. The literature reviewed during this investigation is both peer-reviewed and journalistic in nature. The...
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