Boeing 787 Fulfilment Delay

Introduction
Boeing Commercial Airplanes, a business unit of The Boeing
Company, is committed to being the leader in commercial aviation by offering
airplanes that deliver superior design, efficiency and value to customers
around the world.  
There are more than 10,000 Boeing commercial jetliners in service, flying passengers and more than 5,700 Boeing airplanes are currently on order. The company is headquartered in Seattle, Wash and employs more than 60,000 people worldwide. (Boeing 2018)
According to Prezi, Odeh Loai (2015) the plane was designed
to provide passengers with a better flying experience and more efficient
commercial jetliner. Its aim was to have 20% less fuel per passenger, more
environmental friendly and quieter taking offs and landings.
A plane known as the Dreamliner 787 has caused problems to
company’s image. There was a delay in the planes being created in time for the
launch date. There have been many reasons for the planes delay however the
supply chain of the plane has been considered the core cause of the problem.
Mohamed Farrag Soliman Al Okaily, Slideshare (2013)
Boeing 787 fulfilment delay occurred due to 3 reasons: its supply chain, outsourcing and development progress.
Boeing’s supply chain affected the manufacturing the plane.
Considering Slack et al (2010) defines supply chain as a strand of linked
operations. The three factors that affected the supply chain are control,
communication and supplier collaboration. For example, the supplier
relationship was different too 737 program used traditional supplier
relationship while 787 program used strategic partners with tier 1 suppliers.
(Tang, Zimmerman & Nelson 2015) Due to these reasons Boeing risked the
launch of the plane causing delays and a bad relationship with its supplier’s
due to lack of communication.

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This is supported by Sodhi.S.M & Tang. C (2012) who
states that 50 tier-1 suppliers to design and build entire sections of the
plane and ship them to Boeing. By reducing its direct supply base from thousands
for the 737 to 50 for the new 787, caused communication barrier due to Tier 1
suppliers being from all over the world in different time zones and who speak
different languages. Boeing should have had a relationship with its suppliers
for instance, team building and online training to achieve a solid cooperation.
To continue, Boeing decided to reduce development time from
six to four years as much as extra costs from 10 to 6 billion by using
unconventional supply chain new to the aircraft manufacturing industry. (Tang,
Zimmerman & Nelson 2015)
Collins. M (2010) The
Boeing Supply Chain Model supports that development for time and cost
affected the planes progress when building it. For example, Boeing forced the
Tier 1 suppliers to design and build all tooling for their part of the airplane
without any compensation from Boeing. This is considered to be risky and also
suggests that the company rushed the process of building the Dreamliner.
Despite the work load dumped on the Tier 1 suppliers, there was an issue of
money on the contract. Tang, Zimmerman & Nelson (2015) highlights that
supply contracts were different from 737 programs had a fixed price contract
with delay penalty while 787 program had risk sharing contracts. This made the
workers strike causing delay on the Dreamliner. It can be argued that through
specialization of labour work can be divided and performed better. Due to these
reasons Boeing’s aim to reduce the development cost and development time caused
a disaster to the supply chain. It can be argued this caused the company to
rush when building the plane.
Furthermore, according to Forbes, Denning S (2013) Boeing
was outsourcing internationally and locally aiming to have lowering costs and
rushing development. However, the end result was negative the project was
billions of dollars over budget and three years behind schedule. “We spent
a lot more money,” Jim Albaugh, Chief of Commercial Airplanes at Boeing,
explained in January 2011, “in trying to recover than we ever would have spent
if we’d tried to keep the key technologies closer to home.” It can be argued
the company changing its supply chain model caused the downfall. New technology
is only needed a company when need be for instance car industry. However, Boeing
should have worked with what they know and what they do best.
This is supported by Tang, Zimmerman & Nelson (2015)
Boeing 787 program sourcing strategy was 70% unlike the 737 program that was
35-50%. Boeing outsourced their core areas in business. This shows that they
over budgeted, instead of lowering costs through outsourcing. Sodhi.S.M &
Tang. C (2012) also states that as Boeing outsourced more it made communication
and coordination between Boeing and its suppliers difficult for managing the
progress of the 787-development program.
Table 1 (Sodhi and Tang, 2012)
Boeing’s problem in the supply chain occurs on the upstream
supplier related issue. According to Robert J. Bowman, Supply Chain Brain (2009)
buyers of the Dreamliner were upset but so were the suppliers of the company.
The company decide to change how they paid their suppliers usually they would
pay them when done developing a particular component. Boeing 787 paid suppliers
when everybody finished doing their piece. This caused many suppliers to back
out from the contract due to waiting for so long to paid. According to Chopra S
& Meindl P (2004) a good contract should account for all factors that
impact supply chain performance and should be designed to increase supply chain
profits in a way that benefits both the supplier and buyer. The labour was
dissatisfied as Boeing 787 also outsourced more and suppliers were worried
about their job security. (Tang, Zimmerman & Nelson 2015)
According to Mohamed Farrag Soliman Al Okaily, Slideshare
(2013) Boeing supply chain caused problems due to the whole supply chain model
being changed. For instance, Tier 1 suppliers were given big responsibility on
building the plane. Tier 1 supplier had lack of knowledge they outsourced
development tasks to Tie 2 suppliers who did not have the skills required. This
caused delay in development and manufacturing work. This causes process risk
due to late delivery of a section, the delivery schedule of the whole aircraft
is delayed. (Tang, Zimmerman & Nelson 2015)
Boeing 787 did not consider that failure of one supplier
bringing in a part will lead to plane delay. Due to this Boeing 787 should have
improve tier 1 supplier training and selection process. This avoids a single
tier 1 supplier to drag the whole product quality down and also having a
selection process ensures quality control. According to Chopra S & Meindl P
(2004) supplier scoring and assessment is the process used to rate supplier
performance. Supplier selection uses the output form supplier scoring and
assessment to identify the appropriate supplier. This includes meeting expected
quality, technical expertise and also delivery on time. Suppliers should have a
close management, on site quality control and technical assistance when needed.
Figure 1 (Sodhi and Tang, 2012)
Figure 2 (Sodhi and Tang, 2012)
According toOdeh Loai, Prezi (2015) Boeing 787 supply chain issue was lack of communication and visibility skill and lack of power to control human resources. It can be argued that Boeing 787 needs risk management this helps the company to be able to communicate and train for problems that may occur. It also shows to the public that the company can solve its own problems portraying a strong stable company. There are factors that affect the supply chain such as market, development time, environment and social satisfactory. Boeing aim to be cost effective, high quality and comfortable aircraft, reduce development time and avoid extra costs however fuel cost and environment restriction make it challenging. The company needs to make sure they satisfy its customers but also maintain its stay ahead of competition. Boeing 787 also needs to be able to adapt to changes of the environment and technology.
Risk management 
According to Donald Waters (2009) risk in a supply
chain is any threat of an event that might disturb the flow of materials or
stop things happening as planned. Risk can either be internal or external it
can be argued that Boeing 787 faced internal risks. Internal risks are
considered to be late delivery, excess stock, financial risks, minor accidents
and human error. The three core elements of risk management are identifying
risks to the supply chain, analyse the risks and design appropriate responses
to the risk. According to Supply Chain Digital, Pierce Freddie (2011) Boeing
having been rushing the launch of the plane they were supposed to debut the 787
Dreamliner in a test flight in August 2007 and then achieve first delivery in
May 2008. But there have pushing the date back in November 2010 there was fire
and an emergency landed was requested, Boeing said they would have the plane operational
2011. But Boeing should launch the plane when its ready to avoid risks such as
late delivery, minor accidents, financial risks and human error.
TQM (Quality
management)
Quality
management process according to W. Edward Deming (1950) in the planning phase
was referred to as PDCA cycle. Deming suggests you select a problem faced by
the company in depth discuss the possible causes for the problem and generate
an alternative to solve the problem (plan). The next stage you put into work
the alternative suggested (do), on the (check) phase you work it if the
solution worked out and lastly if it worked out the (act) phase states that you
carry on this process with the solution. Boeing can improve quality and
maintain it considering the following, according to the Project Management
Institute’s Guide to the Project Management Body of Knowledge (PMBOK), in the
company quality can be improved if it goes through quality planning basically
the company makes sure it has documents that’s states the quality policy of the
company and quality. Quality assurance is carried out to make sure that the
quality planning falls through hence it is checked throughout internal and
external to guarantee the improvement of quality. Quality control lastly makes
sure that the management results and product results are monitored and checked
if they are working together if not what can be done to improve results in
order for them to work together. Boeing can also give workers bonuses and
rewards depending on the work load produced this will boost workers to be
motivated and improve quality.
Outsourcing
According to
Chopra S & Meindl P Supply Chain
Management strategy, planning and operation the following should be
considered when out sourcing. Use multifunctional teams, ensure appropriate
coordination across regions and business units, always evaluate the total costs
of ownership and build long term relationships with key suppliers. Boeing can
benefit from these factors and would have avoided out sourcing being a
liability. Boeing should work on supply chain coordination this helps on global
coordination considering they used 50 suppliers. Lastly a good relationship
between a buyer and supplier encourages trust which is good for business.
Boeing’s supplier performance lacked transparency and communication causing
both parties to work independently instead of together as a team. This suggests
that through training Boeing’s supplier and buyer can perform better and
develop the company
Boeing managed to solve the problem although it is an
ongoing process. According to Odeh Loai, Prezi
(2015) Boeing paid out suppliers that were in financial risk. Boeing sent own
staff to suppliers where knowledge/management was unavailable. Provided
replacement aircraft to customers. Boeing updated progress regularly on website
this keeps customers on loop on what is going on with the company showing they
are developing and improving loyal customers will appreciate the update.
Boeing 787 should not outsource the company’s
core areas in business unless they have improved control. Supply Chain Digital, Pierce Freddie (2011) For example, when
Boeing controls cost estimation by understanding all underlying costs. The
company can have decision making meetings to avoid project over runs. Boeing
will not repeat a mistake of having 50 suppliers around the world because it
will lead to expense but also delay of products. This makes Boeing cost
effective and capable of staying ahead of competitors’ due to control of how
things run. According to Robert J. Bowman, Supply Chain
Brain (2009) buyers of the Dreamliner were upset but so were the suppliers of
the company. Boeing should provide training and quality management. The company
has a history of strike 2008 it should treat its labour as a stakeholder. This
makes workers important in the company’s decision-making process. This helps
the business grow as the workers know the company and work for it. Providing
training helps them be motivated and also increase or improve their skills. For
instance, if workers know each other’s part in the company they can help each
other out in case one is not there. This helps the company to not rely on one
person but business continues regardless of one worker’s absence. Also, Boeing
should train staff in order to improve their skills this benefits the company
also on the performance management. Finally, the success of training helps
improve productivity and quality.According to Mohamed Farrag Soliman Al Okaily,
Slideshare (2013) Boeing supply chain caused problems that made the delay
happen. Boeing should hire skilled supply chain specialists and engineers to
avoid huge managerial risks. Failure to this management faces a risk of
inexperienced management team without supply chain skill. According to Mohamed Farrag Soliman Al Okaily,
Slideshare (2013) Boeing supply chain caused problems that made the delay
happen. There should be a frequent check in order to provide assistance to
suppliers when needed. Boeing should reward tier 1 suppliers that meet
milestones on time. This motivates people to work harder and better.
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