Supply chain woes are putting the brakes on Boeing’s ability to push its 787 Dreamliner aircraft away from the gate and onto the tarmac. This large, light, fuel-efficient craft is already a year overdue, and its tardiness is calling into question whether or not a virtual enterprise that relies heavily on partners and suppliers is the right business model. One would argue — given the latest news out of Boeing — that it is not.
Beoing’s dream for this airliner was to move manufacturing to the company’s Tier 1 partners, who would coordinate with the Tier 2 and 3 suppliers, and all Boeing had to do was assemble the parts and save a whole bunch of time, effort, and money. But just this week, the aerospace company announced it will acquire the North Charleston, SC, manufacturing operations of Vought Aircraft Industries, one of its key suppliers.
This little maneuver is costing the company about $1 billion, plus millions of dollars in penalties and concessions to customers waiting for the planes they ordered, which they thought they would have by now.
So what went wrong? Managing Automation took an in-depth look at the risky process two years ago in the article “Boeing’s Big Supply Chain Wager.” The new model required new technology, new business processes, and a completely new culture. That’s a lot to take on along with the responsibility of a brand new product.
Supply chain collaboration tools from Exostar and E2Open were supposed to streamline communication around inventory, schedules, and conflicts. Yet, Boeing was sending engineers and managers to Japan and Italy to monitor work at suppliers, the Wall Street Journal reports. And now, Boeing is taking back control by purchasing the Vought plant — something it already did last year for another Vought assembly plant.
While Boeing scrambles to save its Dreamliner, it’s time for the industry to start dissecting this business case to identify the major disconnect in this supply chain model. Was it people, processes, or technology?
What’s your take?
7 Comments
DFMA. In working as a tier one to several industries I am incessantly shocked by the lack of understanding of manufacturing processes, and the lack of curiosity. From the point of view of a Tier One, who also works on 2nd and 3rd tiers in some cases, I rarely if ever see a design thrown out there that is just right. Designing for manufacturability is a dying concept. It is disheartening.
While the Dreamliner was being developed Boeing also developed the LR and ER versions of the & 777. Maybe not as complex as the Dreamliner, but pretty big projects (with suppliers involved) too. These projects were quite successful and came in early – so early in fact that people could be lent to other projects and project members could actually take Christmas off. The schedule, by the way, was considered to be very aggressive. So, as compared to the Dreamliner, what did this project do right? The comments above give examples, but very little of cause and effect – what is the root cause of failure. It was NOT trying a new supply chain concept – the real issue is deeper than that. Rudi
Back about 2000, I had occasion to visit the Auburn-Cord-Dusenberg Museum in Auburn, IN. One of the exhibits was a list of the auto manufacturers in existance in the Michigan/Indiana area from 1900-1950. If I remember correctly, there were about 300 of them. Only a handful of them were still in existance in 2000 (some have since disappeared). Most of these companies, particularly those prior to WWII, I would classify as assemblers and/or coachbuilders (custom body builders). One of these, Checker Motors, was of particular interest to me as I grew up near Kalamazoo, MI, home to Checker Motors. When Checker went out of business, I believe it was the mid-1970’s, the Kalamazoo Gazette reported it this way (paraphrasing): Checker sourced their parts from the Big Three (and their suppliers) and assembled them on their custom frame and body. As the Big Three started building smaller cars, it was no longer cost-effective to source the heavy-duty, full-sized parts. So they went out of business. History appears to tell us that the assembler business model doesn’t work; there is some “critical mass” of actual manufacturing that is required for a business to survive (and frame/body apparently isn’t sufficient). At a guess, I’d suspect that a company should control anything that isn’t commoditized or is sole-sourced.
The Boeing scenario is a case of too many new changes and not enough preliminary due diligence in their tier 1 thru 3 suppliers. Change is good if its controlled and managed by those understanding each of the nuances (people experiences and knowledge base). I would say the biggest contributor is the lack of use of their local personnel before considering the move with international partners!
While product development projects I have run may be much smaller than the Dreamliner, I have experienced similar problems. Based on my experiences with new technologies, it is often too easy to depend on results from analysis rather than actual testing results. This is especially true for complex structures and joints as are found in the Dreamliner.
As is so typical.Boeing goes about making planes with a different mindset and new paradigms without securing fundamental prerequisites for success and without paying attention to the processes involved. The same now holds true for critiqueing what went really wrong and suggesting remedies. At the core of it all are lack of Manufacturing Knowledge, the application of non-robust Processes ,downright Complacency and superficial Problemsolving.
The way it is on the drawing and the way Boeing has been putting it together for years were different. When suppliers build what is actually on the drawing per contract and it doesn’t quite fit right….. the battle is on. It takes auto companies about 3 years to fight through this with their suppliers. Much longer with an aircraft.