Building the 787 Essay Example for Free

Building the 787 Essay Boeing is an Aerospace science company and is the worlds most leading aerospace science company and is the largest manufacturer and producer of commercial and military aircrafts. Boeing creates and produces rotorcraft, electronic and defense systems, missiles, satellites, launch vehicles and advanced information and communication systems. A little known fact about Boeing is that they are a major services supply to NASA and Boeing helps to operate the International Space station. Boeings main corporate office is located in Chicago, Illinois and employs over 158,000 individuals throughout countries all over the world. Boeing also outsources some its manufacturing business to national and foreign countries. The main assembly hub is located in Washington at a place called Everett plant. Unlike other traditionally built jetliners, the 787 is about 20 percent lighter which saves fuel and lowers overall cost of travel because the jet is made of nearly 80 percent composite material. Along with the new lighter sleeker look, the 787 was redesign with better headroom, larger windows and electronics in the passenger cabinets as well as the flight deck. While this new undertaking seems to be business as usual, Boeing was actually changing the way it now built aircraft. Bousch (2010, December) said it best when he stated, with the 787, Boeing set out to do something revolutionary by tapping suppliers not only for materials, parts, and components, but also innovation. And in doing so, it set out not only to bring a new platform to market as quickly as possible, but also, ironically, to reduce business risk by reducing its dependence on its own operations. The newly developed 787 was to be first aircraft from Boeing manufactured almost exclusively through outsourcing. Almost 70 percent of the plane’s parts were built in other countries. According to Hill (2011), this was Boeing’s gamble that outsourcing would contribute to the huge costs of production while utilizing the expertise of worlds most efficient producers thereby driving down the costs of making the plane (p. 564). Additionally, Boeing thought that outsourcing the planes components would help reduce planes normal develop time of six years to four while building brand awareness and sales in the countries where manufacturing was performed. Boeings’ Risks associated with Outsourcing While Boeing had plenty of cost-cutting reasons for outsourcing nearly 70 percent of the 787 aircrafts manufacturing to 17 contractors in some 10 countries, I’m not sure the risk associated with such a huge amount of outsourcing was truly evaluated by Boeings management. This change in philosophy was evident by the fact that in the company’s past production of Boeing models 777, 767 and 707 some of its components were outsourced to companies around the globe, but not in any of those models was more than 50 percent sent to outside manufacturers. Nevertheless, the initial response to the 787 was tremendous. Mike Blair, Vice- President and General Manager of the 787 program declared, as July 31, 2007, 47 customers worldwide have ordered more than 683 airplanes worth more than $110 billion dollars at current list prices, making the 787 Dreamliner the most successful commercial airplane launch in history. And there’s more to come! (Aeromagazine (2007), p. 4). Those po sitive sentiments from Boeing didn’t last very long. Boeings’ efforts to be leaner and â€Å"cut out the fat† cause them to rely to heavily on key components to be delivered by outsourced contractors and suppliers. By December 2007, Boeing was starting to question its move to global outsourcing. Boeing’s most fierce competitor Airbus had already suffered from problems with delays due to outsourcing when it produced the Airbus A380 Super-Jumbo. With the company now experiencing breakdowns within the supply chain, final preparation and assembly was ultimately impossible. Boeing realized that it was more difficult than expected to navigate so many different suppliers and get required components to its assembly plant within a specified time to complete assembly. Scott Carson, Boeings executive vice president of commercial airplanes, put it succinctly: â€Å"It has simply proved to be more difficult than we anticipated to complete the structural work on the airplane out of sequence in our Everett, Washington factoryâ⠂¬  (Teresko, 2007, p. 1). As delays mounted, Boeing had to finally admit that the weak link in the production of the Dreamliner 787 was its global outsourcing. There were issues from the start that the public never knew about. Boeing overestimated there ability to have proper oversight over contractors. Some suppliers, outsource there work to other suppliers and some had difficulty getting approval and licensing to manufacture there products. The risk that Boeing took was one that could have backfired based on the fact that delays are continuing and in the end, this outsourcing relationship of manufacturers and supply chain management could whine up costing the company more than money. Is Boeing giving up its competitive advantage by outsourcing its core components to suppliers across the world? One would question whether this choice to outsource so much of its design and components and technology to the Japanese will eventually even the playing field. Newhouse (2007) claims that â€Å"Boeing developed much of the materials, manufacturing processes, tooling, tolerances and allowances, and other design features, which are then transferred to suppliers in Japan, Italy and elsewhere. Over time, institutional learning and forgetting will put the suppliers in control of the critical body of knowledge, and Boeing will steadily lose touch with key technical expertise† (p. 4). Newhouse goes on to say that Japanese suppliers are acquiring so-called core competences, hence giving up its competitive edge by outsourcing major parts of the Boeing 787 (p.4). Whatever the opinion, only time will tell if this systematic change of having suppliers and there governments absorb the financial risk will undoubtedly by the rise or fall of Boeing as the world foremost leader in commercial aircraft. Managing the Globally Dispersed Supply Chain By mid 2008 the Boeing 787 had out sold the Airbus A380 by almost 400 orders. The Boeing flagship aircraft was order by more than 50 airlines with orders totaling 857 worth more than 144 billion dollars. These orders, originally schedule to be delivered for May 2008 were now being pushed back to the end of the year due to what Boeing called delays in dealing with its global supply chain which have affectively crippled there assembly lines. It appears that Boeings undertaking was more than just attempting to change the assembly and supply chain processes but it attempt at changing the materials in which aircraft are made seemed daunting enough. The delays appear to be due in part because the supply chain had so many suppliers and contractors trying to protect their own financial investment that all parties eventually suffered from continued delays and wound up risking profits. The continued changing and late delivery dates inevitably cost Boeing and its suppliers billions of dollars. After almost three years the Boeing 787 is still missing its self imposed deadlines for deliveries. According to Cohan (2010), Boeing has missed deadline after deadline with the 787 program – six times over the last two-and-a-half years-and it now looks poised to do so for a seventh time (p.1). Scott Hancher, the Boeing 787 programs third director, seems incline to blame the delays on instrument changes and suppliers inability to properly install parts for the tail-wing. Regardless of his accusations, the 787 still needs to be tested by the Federal Aviation Administration (FAA) before there is any certification. Not all of blame is on the contractors and suppliers. Boeing knew that they were embarking on unprecedented ways to produce commercial aircraft and there engineers should have developed software that could predict how the aircrafts composite materials would hold up under the normal stresses of air travel. This inability to predict the safety of the plane caused problems with cracks in the plane and delays imposed by the FAA until they issues were resolved and the aircraft deemed safe for passenger travel. Boeing now appears to making the anticipated changes by taking on more work and responsibility to the supply chain in order to effectively manufacture and produce the 787 aircraft to the specifications of the FAA. In 2009 Boeing brought its Dreamliner operations from two of its suppliers that were said to have had the most problems along the supply chain. This change has stepped up production of parts because other suppliers have realized the financial drawbacks and possible lost of contracts. This has prompted quicker responses and resolutions that have fixed the flaws in the manufactured products. Boeing in there attempt to be innovative and to create a new market forgot that there largest competitor Airbus was continuing to grow its market and create opportunities from Boeings mishaps. We can only hope that Boeing follows Airbus as the second major aircraft developer to increase restrictions on contractors and require that they only outsource a small portion of work to Asian countries in an attempt to develop partnerships for production and possibly development. McInnes (2008) was correct when he asserted that with a consortium of EADS (owners of Airbus) and Northrop Grumman winning a 40 billion dollar order from the United States government to build 179 refueling aircraft for the US Air Force, Boeing could do good with just getting the 787 certified and get on with deliveries as soon as possible (p.4). Is Boeing’s Outsourcing essentially sending American Jobs Overseas? The question about outsourcing has many Americans worried that jobs are being shipped overseas where labor is cheaper. Boeing the world’s largest commercial aircraft producer has made outsourcing its primary means for development of its groundbreaking commercial aircraft, the Boeing 787 Dream-liner. In an unprecedented move, Boeing decided to outsource nearly 70 percent of the development and component manufacturing to suppliers and contractors around the world. With its primary assembly plant in Seattle, Washington area, Boeing and its employees are worried that this trend will continue and cost many of them their jobs. In a recent Seattle-Post Intelligencer poll, 80 percent of the pollsters thought that outsourcing overseas will hurt the economy in the long-term. Americans have reason to worry, it’s not none how many jobs have been lost overseas thus far but its believed that over 2 million service jobs will be lost in the next decade or so. According to Cook and Nyhan (2004), Perhaps no player in the local economy has sent more jobs overseas than Boeing.Skip navigation The company makes no excuses for sending work to South Africa, Italy, China, Russia and other far-flung parts on the globe and the company argues it has no choice. It must build planes with fewer and more productive workers to remain competitive (p.2). In an effort to cut cost and look for the best manufacturers and engineers at there craft Boeing feels there move to outsourcing was inevitable because it is the future of airplane development. This effort to compete has forced the hand on over 40,000 employees that have lost there jobs at Boeing since 2001 and have benefited countries like China and Russia where we seen as many as 5,000 new jobs created for engineers and those with aerospace technologies and manufacturing skills. Though opinion will continue to be varying when it comes to outsourcing, Boeings’ says the company is committed to a stab le workforce. He believes the red-hot success of the Dream-liner 235 firm orders so far goes a long way to validating the new outsourcing strategy. Without the ability to reduce the planes overall development costs and be able to sell at prices comparable to older jetliners, success would be far less assured (Holmes, 2006, p. 4). The approach by Boeing has caused much concern but for now has been profitable with the huge orders for the 787 Dream-liner. The true test will be when be when supply chain again fails to be dispersed efficiently and the cost increase with the manufacturing of an aircraft. Will this cause the destabilization of the American workforce? Will it decrease Boeings new dependency on using outsourced foreign technologies and manufacturing? These questions will not be answered until there is another downturn in which large companies again turn to outsourcing in an effort to reduce production cost to stay competitive. Reference Blair, M. (2007, August). Building the dream: Boeing 787.retrieved from: http//boeing.com/commercial/aeromagazine.com Cohan, P. (2010, July). Boeing 787 delays: will the seventh missed deadline be the last? Daily Finance. Retrieved from: http://www.dailyfinance.com/story/company- news/boeing-787-delays Cook, J. and Nyhan, P. (2004, March). Outsourcings long-term effects on U.S. jobs at issue. Seattle PI Business. Hill, C. (2010). International Business, 8th Edition. Irwin/McGraw-Hill/MBS. Holmes, S. (2012). Boeings Global Strategy. Bloomberg Business. Retrieved from:http://www.businessweek.com/magazine/content/06_05/ Newhouse, J. (2007, March).Boeing Versus Airbus: Flight Risk, Outsourcing Challenges. Retrieved from:http://www.cio.com/article/29096/Boeing_Versus_ Airbus_Flight_Risk_Outsourcing_Challenges_?page=3 Teresko, J. (2007, December). Boeing787: a matter of materials – special report: anatomy of a supply chain. Retrieved from: http://www.industryweek.com/articleid-15339showall=1 Boeing. (2010). History. Retrieved on August 24, 2012 from http://www.boeing.com/history/narrative/n001intro.html