While the initial reaction to Boeing’s 787 electrical problems was to blame outsourcing, there is more and more understanding that outsourcing itself is not the issue. Boeing has always outsourced the production of batteries. There are several explanation that emerged since.
(1) It’s not outsourcing. It is the trend of modularization: We know that more modular designs allow for lower cost, but come at the expense of quality and performance. One should say that this is a very valid argument, since modularization is clearly the enabler of the excessive outsourcing trend.
(2) An alternative explanation is that It’s not outsourcing itself, but rather the specific method of outsourcing where Boeing outsources the design and control over sub tiers. This is the main focus of The Seattle Times’s article (“Boeing 787’s problems blamed on outsourcing, lack of oversight“).
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The Wall Street Journal ran a series of articles on the challenges Airbus is facing. I will try to cover several of these, as each highlights a different issue, and I would like to begin with the one discussing the effort made by both Airbus and Boeing to fight the delays that plagued their operations during the last several years (“Hit by Delays, Airbus Tries New Way of Building Planes“.)
Both Boeing and Airbus have outsourced, during the last few years, not only their production, but also the design of the different parts, as well as the management of the suppliers’ sub-tiers. We have documented these in the past (“Boeing Delivers First Dreamliner“,) and the article, briefly mentions these. Manufacturing problems have left Boeing with more than 40 almost-completed Dreamliners awaiting fixes. Their main customers now expect to get their planes around four years late. The project has cost Boeing billions more than its initial $10 billion budge. The reader must recall that Boeing has embarked on this ambitious outsourcing plan to reduce investment costs, and speed R&D and production. As we all know, things have not panned well for these two goals. What were the main reasons: loss of visibility of the progress of different suppliers, as well as incentive issues. It took Boeing quite a while to figure it out, but they finally have:
In a major retreat, it has since bought up suppliers, brought work back in-house and integrated more closely with its remaining contractors. “We gave away a lot of elements of work that we’d always done in the past, and then didn’t provide the kind of oversight necessary for some of the people that were doing work that they’d never done before,” said Boeing Executive Vice President Jim Albaugh, who ran its airplane division until June, at an investor conference last fall. To retrench, Boeing mobilized hundreds of engineers specialized in manufacturing and industrial issues, who have pored over every element of the program, including at suppliers. At its factory near Seattle, Boeing built a control room with video links to overseas suppliers, allowing its engineers to examine parts live on shop floors in Japan or Italy. For a second, larger version of the Dreamliner, Boeing opted to design many outsourced components itself, such as the plane’s rear section and tail wings.
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There have been a number of recent articles that touch on some recurring Operations Room themes.
- First up, big planes! We have had a number of articles on the travails of the Boeing company in launching the 787. Now the Wall Street Journal reports that they have reached an important milestone (Boeing Hits a Milestone, Jun 8).
Boeing Co. rolled out the first 787 Dreamliner from its main factory that won’t need major additional work before delivery, a long-delayed milestone that reflects streamlined manufacturing of the company’s flagship passenger jet but also points up the program’s enormous costs. …
Assembling the 787—the first jetliner made from mostly carbon-fiber composites—involves tens of thousands of steps, from installing galleys and complex electrical systems to fusing the wings to the body. Boeing, which started making 787s in 2007, had been sending them out of its main factory in Everett, Wash., with many of those steps—sometimes thousands—unfinished, due to parts shortages and design changes on the advanced new jet. Those planes went to a separate facility in Boeing’s giant campus to be completed.
The plane that rolled out this week—Boeing’s 66th Dreamliner—skipped that costly step. Workers had only around 300 mostly small assembly tasks left to complete, about 100 more than the company’s goal, but far fewer than the roughly 6,000 on the earliest Dreamliners, said a person familiar with the plane.
Boeing, in a statement, confirmed the plane “will be the first airplane to go straight into preflight operations” from the Everett plant. The minor tasks left for plane No. 66 can be handled outside of the factory before being prepared for delivery.
Note that this suggests that Boeing has now worked through (or at least isn’t adding to) the massive amount of inventory they had sitting around at the end of last summer. (more…)
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The Wall Street Journal had an interesting story on process changes at Boeing that aim to produce more 737s without having to expand the size of their Renton, Washington, factory (Boeing Teams Speed Up 737 Output, Feb 7). The scale of what they are trying to do is pretty impressive.
Workers here recently boosted 737 output to 35 jets a month from 31.5, and Chicago-based Boeing aims to produce 42 planes a month in 2014. Executives said they are studying ways to eventually reach 60 a month as they plan a retooled version of the plane called the 737 Max, a jet that Boeing expects to begin delivering in 2017. The company is trying to pare an order backlog of some 3,700 jetliners, including about 2,300 of its best-selling 737s. …
“How do you produce more aircraft without expanding the building?” is the question Boeing managers in Renton continually focus on, said Eric Lindblad, vice president for 737 manufacturing operations. “Space is the forcing function that means you’ve gotta be creative.”
So how are they are going about this? Largely by applying lean operations with cross-functional teams focusing on different parts of the plane. (more…)
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Wall Street Journal had several articles on Continental Airlines flights to the East Coast from Europe that have been forced to make unexpected stops in Canada (and smaller airports on the east coast) to fill up their fuel after running into unusually strong headwinds. (“Nonstop Flights Stop for Fuel“, and “With Few Options, Continental Could Add Extra Tanks“) The stops are partly the result of a decision by United to use smaller jets on a number of long, trans-Atlantic routes.
United’s strategy works when the winds are calm, and it allows the airline to operate less expensive aircraft with fewer cabin-crew members to an array of European cities that wouldn’t generate enough traffic to justify larger planes. But by pushing its international Boeing Co. 757s to nearly the limit of their roughly 4,000-nautical-mile range, United is leaving little room for error when stiff winds increase the amount of fuel the planes’ twin engines burn.
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Posted in Airlines, global operations, Integration, Manufacturing, Operations Strategy, outsourcing, process improvement, Procurement, Supply Chain Risk, Uncategorized, tagged Boeing, Dreamliner on September 26, 2011|
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Finally, after many delays, Boeing delivered the first Dreamliner. The Wall Street Journal, which has been following the development closely throughout the years, had a nice article about the topic (“For Boeing, It’s Been a Long, Strange Trip“):
Boeing—eight years after it began developing the ultra-efficient jet—is still trying to prove it can make a success of both its innovative product and new approach to plane-making. For decades, Boeing designed and built its jets in-house, bearing the whole expense. In 2003, it embarked on the unprecedented step of outsourcing most of the Dreamliner’s manufacturing to far-flung suppliers.
The article is correct to point out the new approach to plane-making and the innovative product, yet, I think it is somewhat misleading to say that outsourcing the manufacturing was unprecedented. As we have been writing in several posts about the topic Boeing chose to outsource not only the manufacturing, but also the design and management of sub-component suppliers. Many of the causes of delays can be attributed to the lost visibility brought by this model. It is true though that under the new model, Boeing has been reduced to a large-scale assembler, and suppliers will do most of the production. The lack of visibility and miscommunication regarding production responsibilities led to absurd situations:
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So last week the Lariviere clan was on vacation in the Pacific Northwest. One of the highlights of the trip (to my mind) was a visit to the Future of Flight in Everett, Washington, which features a tour of the Boeing factory that makes 747s, 767, 777, and 787s. How cool is that?
According to my kids (ages 10 and 11) not so cool.
They began whining about this outing back in May when I bought tickets. “But it’s the only public tour of a plane factory in the country,” I said. “Who cares?” they said. “It’s the biggest building in the world by volume,” I said. “So?” they said. “You could play 75 simultaneous football games there!” I said. “We don’t like football,” they said.
Sometime I feel I have failed as a parent.
In any event, having just been at Everett, the following headline from Bloomberg (Aug 23) caught my eye:
And I said to myself, I’ve seen that inventory! (more…)
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