Tag Archives: Boeing Series

How Boeing Changed an Industry

How Supply Chain Management at Boeing Changed an IndustryAs we have stated previously on the Celtrino blog, the lessons learned by Boeing in the construction of their revolutionary new airliner are also lessons which can be learned by others. The Dreamliner is an incredible feat of aeronautical engineering, but the supply chain management infrastructure behind it is equally impressive. In fact, both the technical and supply chain aspects have revolutionised the aircraft construction industry.

The Dreamliner has been designed for maximum fuel efficiency and passenger comfort using revolutionary materials and fabrication methods. Perhaps of greater interest to businesses outside the aeronautical industry is the outsourcing of Boeing’s core operations and the infrastructure required to support this paradigm shift.

As we have said in previous posts, Boeing’s new supply chain required tighter integration with contractors coupled with a new software platform underpinning the chain to facilitate efficient data interchange. Boeing shifted the entire focus of their business outward, taking note of their customers’ customers needs, assisting suppliers with inventory and manufacture problems and generally keeping the supply chain moving. Boeing moved away from pure aeroplane construction and took a more management-focused role, bringing a number of disparate contractors and production processes together in the creation of a new airliner.

The new outward-looking perspective did not turn Boeing into a service company, nor was it a negative action. By monitoring, reporting and assisting suppliers, Boeing was able to build exactly what they wanted, how they wanted. The Dreamliner arrived in several large parts which required final construction on site at Boeing, a process which takes just three days.

Despite encountering a number of processes during the project, Boeing proved not only that this change in business focus could work, but also that their supply chain management system was capable of disseminating information in a timely manner to all interested parties. In doing this, Boeing also fundamentally changed the way that their competitors regard the aircraft assembly process and underlying management systems.

The Dreamliner project was neither smooth nor easy, but Boeing clearly demonstrate that looking after your suppliers is of equal value to looking after your own business’ needs.


SCM at Boeing and the Dawn of a New Age in Aircraft Manufacture

Although the Dreamliner promises to change the aviation industry thanks to its increased fuel efficiencies and revolutionary materials, Boeing nevertheless underwent a number of nightmare problems which threatened the future of the aircraft. Originally promised for delivery to customers in May 2008, a series of catastrophes delayed shipment until October 2011. As consecutive delivery dates came and went, industry analysts and competitors seized on Boeing’s problems as evidence that the company had completely lost the plot when it came to building planes.

Dreamliner, Boeing

Source: Wikipedia

A shortage of parts, inability of contractors to meet their obligations and even an onboard fire during a test flight all played their part in delaying shipment of Dreamliners which in turn cost Boeing dear. Additional investment in large-scale composite manufacturing technology further added to the construction costs. Factor in payments to customers for non-delivery of the aircraft and it is tempting to write the Dreamliner off as a horribly expensive experiment in outsourced construction.

Yet despite the problems and associated costs, the Dreamliner and its construction process are set to reap major returns for Boeing in the future. As with any new process, the implementation will always involve the resolution of a number of teething problems, but if done correctly, the lessons learned will only serve to improve the supply chain for future operations.

Although many of Boeing’s competitors laughed at the misfortune and the massive costs involved in initial construction, the potential profits from the Dreamliner over the next decade may well mean they end up laughing on the other side of their faces. The Dreamliner has been specifically designed for fuel efficiency – a hot topic as environmental concerns and rising fuel costs become uppermost in airline business models; by addressing these concerns, Boeing have stolen a march on their competitors.

The technology behind the Dreamliner has been made possible by the enhanced supply chain management systems utilised by Boeing. Using the lessons learned, Boeing have set out the stall for construction of their future aircraft models, and the potential for even greater profit margins.

Boeing Outsource When Lacking Skills

OutsourcingThe epic Dreamliner project instituted by Boeing changed the way many businesses look at supply chain management permanently. Although Boeing recorded several glaring problems, such as a 3-year delay in delivery of their first aircraft, the changes to their manufacturing and delivery process have fundamentally changed the future operations of their business for the better.

From the outset, the Dreamliner eschewed the traditional engineering goal of greater speed in favour of increased efficiency and economy. The lynchpin of this design was to be the use of carbon reinforced plastic composite materials for nearly 50% of the aeroplane, including the wing and fuselage.

As good as the idea was however, Boeing lacked the skills and equipment required for creating carbon composite components, fundamental to the success of the Dreamliner. The manufacturing of these parts was therefore outsourced to contractors who had the requisite abilities.

This shift to outsourced component construction required a paradigm shift in the Boeing supply chain and the way it was managed. To allow for free data interchange between supply chain members, Boeing implemented a ‘collaboration hub’ that kept stakeholders fully informed of manufacturing progress.

As the project progressed, the contractors encountered a number of problems which delayed the project as a whole and required direct intervention by Boeing. As roles were adjusted and responsibilities shifted around the supply chain, the implementation of the collaboration began to prove its worth by providing a single point of reference for every stakeholder. Production information was available in real time allowing for tweaks and balances at each supplier (of whom there were over 50).

Boeing took the brave step of starting a project which they themselves could not complete, but choosing a supply chain management system which would not only underpin the project, but adjust according to circumstances. Applying this scenario to your own business, how could a radical supply chain alteration benefit you? Is your current supply chain management system flexible enough to cope?

Boeing Tighter Supply Chain Integration for Success

Keeping a close eye on the supply chain is essential to ensure raw materials are successfully converted into saleable goods, but is observation enough to succeed? Boeing’s epic Dreamliner project demonstrated that tighter integration of the supply chain constituents was absolutely essential in order for the first of the new aircraft to be delivered.

The Dreamliner was born out of a desire for greater efficiency both in the aircraft itself and in the construction process behind it. Boeing took the previously unheard of step of outsourcing the manufacture of the aeroplane components to 50 specialist subcontractors and used a central supply chain management portal to keep tabs on progress. The idea was that the components would be created simultaneously at various plants and then delivered to Boeing for final construction in a three-day window.

Such a deadline requires that members of the supply chain be working in synchronisation with each other and that they are fully informed about progress at each point. As problems arose during manufacture, partners were kept abreast with delays and developments allowing them to adjust their own processes to compensate.Boeing Tighter Supply Chain Integration Success

The collaboration hub also allowed Boeing to keep a tight handle on supplier progress and provided a mechanism by which they could address issues with contractors as and when they arose. At certain points during the project, Boeing was forced to step in and reclaim certain responsibilities to ensure the project continued on track.

The stated goals of the Dreamliner project were impossible to achieve without close integration between suppliers, subcontractors and Boeing themselves. Close communication and working practices made the dream a reality where many industry pundits had predicted disaster.

Collaboration between suppliers has often been seen as an evil necessity, rather than a genuine route to success. The eventual success of the Dreamliner was hard won, but the lessons learned by Boeing will shape the way they work with subcontractors permanently.

How would your business benefit from tighter supply chain integration? What would you need to change to make it a reality?

How Boeing’s Customer’s Customers Inspire Their Success

For manufacturers it is often tempting to think in terms of satisfying our immediate customers’ needs – after all they are the ones paying the bills. But what if we considered the needs of our customer’s customers?

Boeing Passenger Zone

Source: Boeing

This is precisely what Boeing did in the run up to the release of their new Dreamliner aircraft. Widely recognised for its incredible efficiencies and revolutionary manufacturing process, the Dreamliner is also the result of extensive market research undertaken by the plane builder.

Traditionally, aircraft manufacturers build the shell of the plane and tweak the cabin innards to suit their customers, the airline. In this scenario, the needs of the passenger tend to be considered last – something Boeing regarded as fundamentally wrong. In 2000, at the start of the Dreamliner design process, Boeing instituted their Passenger Experience Research Center (PERC). This analysed the psychological and emotional responses of passengers to air travel. The research took the form of various focus groups as well as a look into the medical effects of flying.

Using the data gathered through PERC, Boeing managed to address a number of the passengers’ wants through clever design. The Dreamliner is intended to help passengers fall in love with flying again by helping them reconnect with their earliest positive emotions. The high tech carbon composite fuselage also allows for greater control of the internal cabin environment recreating atmospheric conditions closer to Earth and thereby reducing many of the negative health effects associated with long haul flights such as headaches, itchy eyes and dry noses.

By considering the needs of their customers’ customers, Boeing have created an aircraft which passengers actually want to fly in. The application of the results of extensive customer research has therefore made the Dreamliner easier to sell to airlines too.

All of this raises the question, how could your business improve by considering the needs of customers further down the supply chain?


Boeing Prove Direct Integration Is Not Everything

During late 2011, Boeing finally began shipment of their latest aircraft, the 787 ‘Dreamliner’. Three years late and massively over budget, the Dreamliner has had a troubled route to market but Boeing executives are convinced that the changes the technological and manufacturing advances made during the project, coupled with their new approach to supply chain management will reap major benefits in the future.

Prior to the Dreamliner, Boeing bought parts from suppliers before assembling the finished aircraft themselves. The 787 project however required suppliers to design and build major sections of the aircraft before delivering them to Boeing. The ultimate goal was to reduce the final assembly time by Boeing to just three days.Supply Chain Management in Boeing

To make this ambitious plan a reality, Boeing implemented a collaboration hub which would bring together all 34,000 suppliers involved with producing parts for the Dreamliner. The system allows suppliers access to real time data to ensure that every single part is assembled in the correct order and delivered on time; with a three day assembly window, timing of deliveries is critical so that everything is in place at the right time.

The centralised data system means that every member of the supply chain is immediately aware of any potential delays and can adjust their assembly and delivery schedules accordingly. As the primary buyer, Boeing are able to gain an instant overview of the entire supply chain, so that parts are only ordered as requested and helping to speed payment of invoices between suppliers.

One of the most notable aspects of Boeing’s new supply chain management platform is that it is not reliant on every supplier having the same ERP systems in place in their businesses. Instead of using a proprietary EDI format to join inventory and accounts systems, the new Boeing platform collects and retains information in the online hub.

Although Boeing’s new cloud-based supply chain management system has revolutionised the way that the business operates in terms of efficiencies and future cost savings, there remains room for improvement. Using a platform which allows for transparent data transfer between ERP systems would further reduce complexity and potential data duplication between onsite systems and Boeing’s portal. Time will tell whether Boeing’s supply chain management system undergoes such an evolution.