Boeing Learns

Boeing Learns From 787 Mis come acrosss Using Technology to Create Supply twine Success Introduction 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(prenominal) of the largest breakthroughs in aviation technology breakthroughs that greatly enhance the lives of the worlds people. Boeing began as a sm either startup in 1916 but by the Korean War, defense efforts had grown Boeing to one of only 23 companies with $1 trillion in annual revenue.Boeing parlayed this growth into being ne of the premier designers and manufacturers of commercial aircraft. Designs such as the 707, 737, and 747 cemented their fiber as the leader in the industry until 2003 when Airbus first surpassed Boeing in annual sales and order backlog. (Nolan 2012) chief executive officer Phil Condit saw Airbus making progress well prior to 2003, how incessantly. In 1996 Condit determined that the Boeing Company needed to be refocused in order to fence with the European conglomerate.Airbus had an advantage in innovation and manufacturing because it used collaboration amongst many another(prenominal) suppliers to roduce quality aircraft in the intimately hail 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 tilt 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 too design subcomponents for aircraft. Boeing knew hat it must have a way of coordinating the design process among all suppliers, which cleared the way for a powerful Enterprise Resource focal point (ERP) tool. Boeing selected Exostars Suppl y Chain Management Solution to coordinate the design and fork over 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 2 more tuel efficient.It would accomplish this by utilizing a construction of 50% composite something neer in the lead 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 ren dition of its supremely popular 777, the 777-8/9. Boeings desire to reduce cost and mathematical product time by relying try-taking suppliers to design and get out 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 Boeings 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, owever 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 skilful property. The literature reviewed during this investigation is both peer-reviewed and Journalistic in nature.The following review is presented in a ordered flow to show why Boeing chose this new strategy, some select major problems that occurred, and finally the actions that were taken to renew those problems. Christopher S. Tang and Joshua D. Zimmerman (2009) begin their Journal article, Managing New Product Development and Supply Chain Risks The Boeing 787 Case, by pose out the drivers for the 787 design strategy. In the 1990s, Boeing had decided that it must offer more customer value to compete with EADS Airbus in the commercial aircraft industry.Ultimately, Boeing settled on designing a new mid-size, wide body flow that would offer a superior passenger experience and burn 20% less fuel. To bring the squirt to market faster and cheaper, Boeing wanted to move away from its role as a manufacturer and effect ore of a systems integrator. Tang, et al. say this strategy intended to save $4 billion in development cost and shave 2 years off the de sign period. (Tang, Zimmerman, Nelson, 2009) Boeing refers to these risk-sharing partners as Global Supply Partners (6SP).During an interview with gentleman Trade Steven Schaffer, then vice president of Boeing Commercial Airplanes Global Partners, said the name change reflected a deeper business relationship. (Bernstein, 2006) In Chapter 8 of Cases on Supply Chain and Distribution Management Issues and Principals, the nature of he relationship is further discussed. The suppliers are called risk-sharing, because they invest much of their own money into the success of the final assembled product. In fact, Boeing was able to get $4. billion of the $10 billion design budget from 6SPs around the world. These suppliers nave significant risk since they dont see any income until the aircraft are delivered. (Garg Gupta, 2012) In a seminal ex post analysis of the 787 outsourcing plan, Ehsan Elahi (2012) of the University of mamma Boston asserts that improper monitoring and suboptimal sup plier election led to the appearance of many hidden costs and that Boeing didnt have an adequate understanding of the operational risks associated with outsourcing new product development.He concludes that these oversights led to poor stock performance, a drop it Boeings credit rating, and late delivery penalty payments for customers. The research by Elahi in the UMASS paper, along with his division to the Chapter in Miti Garg and Sumeet Guptas book, lays out a great case for how too much reliance on impertinent design can lead to a loss of intellectual property. On pages 67-169 of the book, Elahi discusses how these partners were given the opportunity to study how to build aircraft from composites without Boeing retaining any exclusivity rights.