Description
Analyzing the problem from Supply Chain Management (SCM) perspective and tackling the problem by studying the implication of various suggestions suggested and implementing the same in the present scenario. Keeping in mind the cost of implementing this suggestion should not exceed the cost of penalty paid by Boeing, time and complexity. As I am not having exact data I will only be discussing the different approaches, which can be used for analyzing & solving the problem faced by Boeing 787 program.Concepts such as Six Sigma, LEAN, SCOR and Convergence are used to solve the given problem. And finally the best suitable of the discussed approach is suggested
Boeing
787:Case
Analysis
ASHISH
JUDE
MICHAEL
What
went
wrong?
Boeing
787:
Dreamliner
A
detailed
analysis
of
issues
causing
delay
of
Boeing
787
and
suggesting
a
model
which
would
had
prevented
these
issues.
(This
case
analysis
is
only
for
academic
purpose)
P G P E x
2 0 1 2 -? 1 3
I I M
S h i l l o n g
2
Boeing
787:Case
Analysis
Introduction
(Extract
from
Case):
In
April
2008,
Boeing
confirmed
a
delay
in
the
787-?airplane
and
announced
a
14-? mont
delay
in
delivering
Boeing’s
most
anticipated
airplane.
The
Boeing
787-? airplane,
to
be
put
in
service
in
2008
Initially,
has
become
Boeing’s
best-?selling
new
plane
ever;
as
of
September
2008,
the
Boeing
Company
had
orders
for
895
airplanes
from
58
customers
worldwide
with
an
estimated
backlog
value
of
$151
billion
(see
Exhibit
1).
Although
not
a
full-?blown
crisis
such
as
the
one
faced
by
Airbus
with
its
A380
airplane
delays,
the
announcement
was
nonetheless
a
potentially
serious
setback
for
Boeing.
Notes
the
Wall
Street
Journal:
“Some
analysts
believe
Boeing
could
be
liable
for
as
much
as
$4
billion
of
concessions
and
penalty
payments
to
airlines
for
missed
deadlines.
Boeing
plans
to
book
the
first
25
deliveries
at
zero-?profit
margin
to
cover
penalties.”1
Analyst
estimates
indicate
that
the
delay
could
cost
Boeing
over
$2
billion
dollars
in
penalties
alone,
plus
additional
R&D
expenses
over
the
next
few
years
(see
Exhibit
2).
According
to
Boeing’s
revised
schedule,
the
first
test
flight
of
the
787-?airplane
was
expected
to
be
carried
out
in
late
2008,
and
the
first
deliveries
in
the
3rd
quarter
of
2009.
The
company
also
planned
a
dramatically
slower
ramp-?up
in
production;
Boeing’s
goal
now
is
to
produce
10
787s
a
month
starting
in
2012,
a
figure
significantly
lower
than
originally
planned
(see
Exhibit
3).
Notes
Boeing’s
787
spokesperson,
Yvonne
Leach,
the
average
delay
for
all
58
787-?customers
is
expected
to
be
about
20
months.
Problems
Statement:
Delay
in
planed
scheduled
of
Boeing
787
and
the
heavy
loss
(about
4
Billion
USD)
incurred
to
Boeing
because
of
that.
Objective:
Find
the
reasons,
which
caused
the
delay
and
analyze
them,
suggest
the
probable
solutions
for
the
prevention
and
corrective
action
of
this
problem.
Methodology:
Analyzing
the
problem
from
Supply
Chain
Management
(SCM)
perspective
and
tackling
the
problem
by
studying
the
implication
of
various
suggestions
suggested
and
implementing
the
same
in
the
present
scenario.
Keeping
in
mind
the
cost
of
implementing
this
suggestion
should
not
exceed
the
cost
of
penalty
paid
by
Boeing,
time
and
complexity.
As
I
am
not
having
exact
data
I
will
only
be
discussing
the
different
approaches,
which
can
be
used
for
analyzing
&
solving
the
problem
faced
by
Boeing
787
program.
Problem
Analysis:
If
we
read
the
case
we
can
find
that
there
were
more
than
one
problem
which
cumulatively
gave
rise
to
this
delay.
I
will
be
discussing
each
one
by
one:
1.
Unexpected
Shortages
of
Fasteners.
Unexpected
Shortage
of
fasteners
made
Boeing
to
pressurized
suppliers
for
quick
delivery
and
they
rushed
to
make
the
fasteners
as
a
result
they
did
not
properly
documented
the
work
as
required
by
federal
authority.
Boeing 787:Case Analysis
3
2.Underestimation
of
work
content
in
the
task
of
writing
flight
control
codes:
Both
Boeing
and
Honeywell
initially
underestimated
the
work
content,
which
was
there
in
writing
these
codes
as
a
result
they
were
now
scrambling
to
write
them.
3.
From
bleeding
edge
to
leading
edge:
Boeing
introduced
first
time
a
game
changing
innovation
which
they
call
“Bleeding
edge”
in
order
to
have
a
“Leading
edge”.
This
innovation
was
the
extensive
usage
of
carbon
fiber
(composites)
technology.
787
used
as
much
as
50%
of
its
total
weight
of
composited
as
compared
to
12%
in
777.
(Exhibit
7)
This
helped
to
reduce
the
weight
of
aircraft
and
hence
improve
the
fuel
efficiency.
But
if
the
components
of
the
aircraft
are
too
light
which
was
the
case
with
central
wing
box
needed
strengthening.
To
over
come
this,
engineers
devised
a
patch
for
first
6
aircraft
and
will
change
the
design
after
seventh
one.
Designing
patch
caused
Boeing
months
delay
and
re-?designing
the
central
wing
box,
which
was
the
responsibility
of
Boeing’s
partner,
now
became
Boeing’s
concern.
This
a
big
problem
unless
the
flight
test
are
cleared.
4.
Boeing’s
business
strategy:
Boeing
out
sourced
a
large
amount
of
responsibilities
to
overseas
(Spain,
Italy,
France,
Australia
and
Japan).
This
projest
has
the
maximum
number
of
outsourced
components
(Exhibit
5)
.
There
are
as
many
as
risk
sharing
50
partners.
This
caused
delay
in
fuselage
assembly
because
of
the
breaking
of
supply
chain
between
the
suppliersi.e.
Vought
received
parts
from
Japan
&
Australia
where
else
Isreal
Aircraft
Industries
was
doing
all
things
by
itself
for
similar
parts
and
another
was
the
lack
of
aerospace
experience
of
workforce
among
some
suppliers
ie.
Spirit
Aero-?Systems.
5.
Revised
plan:
Responding
quickly
to
the
delay
Mr.Shanahan
revamped
787
executive
team
and
reorganized
into
:
1) Airplane
development.
2) Global
Supply
Chain
3) The
final
assembly
and
delivery.
Also
Boeing
sent
its
employees
stationed
at
each
suppliers
factory
in
order
to
have
better
control
over
the
supply
chain.
Vought’s
&
GA’s
plant
problem
is
fixed
by
Ex-?Boeing
managers
in
each
plant.
Production
activities
were
rationalized
and
areas
of
responsibilities
were
re
drawn
to
speed
up
aircraft
production.
6.
Potential
Treats:
Strikes
by
Labor
and
Engineers
are
threatening
Boeing
now.
The
labor
strike
is
basically
against
the
outsourcing
done
by
Boeing
and
the
pressure
caused
by
Boeing
on
the
employees
to
start
assembly
of
aircrafts
with
thousands
of
shortages.
And
the
engineers
want
to
reduce
the
number
of
contract
jobs
created
by
Boeing.
Both
of
the
unions
want
more
Jobs
and
are
against
the
business
4
Boeing
787:Case
Analysis
strategy
of
Boeing,
The
strike
is
such
a
big
problem
that
if
there
are
three
strikes
and
it
will
be
very
difficult
for
Boeing
to
run
the
show.
Hypothesis
Development
&
Analysis:
In
hypothesis
development
I
will
try
to
solve
the
listed
problems
with
each
one
of
the
below
states
strategy:
1.Lean
Management:
Specify
the
value
desired
by
the
customer.
Identify
the
value
stream
for
each
product.
Make
the
flow
continuously.
Introduce
pull
between
all
steps
where
continuous
flow
is
possible.
Manage
towards
perfection.
Principle
behind
lean
management
is
to
reduce
waste.
Above
stated
matrix
shows
how
we
can
implement
LEAN
concept.
If
we
consider
the
problem
faced
by
Boeing
and
try
to
solve
them
one
by
one
we
will
find
if
Lean
is
useful
for
us.
Problem
with
LEAN
is
that
it
is
basically
works
at
tactical
or
operational
level
and
it
takes
time
to
implement.
Implementation
of
LEAN
leads
to:
1. Speed
up
the
value
chain.
2. Waste
elimination.
3. Value
system
redesign.
1.Unexpected
Shortage
of
Fasteners:
First
question
arises
why
the
fasteners
felled
shortage?
There
can
be
two
scenario’s
either
less
quantity
was
ordered
or
they
were
wasted
during
assembly.
The
first
scenario
may
be
due
to
the
mistake
during
ordering
which
is
generally
negligible.
Second
scenario
may
be
possible
that
the
available
quantity
of
fasteners
were
wasted
during
assembly.
LEAN
Management
can
address
this.
By
giving
limited
number
of
fasteners
to
an
operator
whose
job
is
only
to
do
that
particular
job
in
a
lean
production
line.
2.Underestimation
of
work
content
in
the
task
of
writing
flight
control
codes:
This
is
a
lapse,
which
can
contribute
to
a
strategic
level
forecasting
&
planning
failure.
In
this
case
we
can
implement
LEAN
at
operation
level
by
speeding
up
the
coding
process
which
can
be
said
as
a
Corrective
action
rather
than
preventive
action.
Hence
we
cannot
solve
this
problem
by
LEAN.
3.
From
bleeding
edge
to
leading
edge:
Boeing
has
tried
some
innovative
technology
and
this
problem
aroused
during
R&D
phase
and
LEAN
concept
can’t
help
us
much
in
solving
this
problem.
4.
Boeing’s
business
strategy:
The
difficulty
to
manage
the
supply
chain
among
the
suppliers
and
Boeing.
The
problem
was
regarding
the
balancing
of
supply
chain
and
ensuring
that
product
Boeing 787:Case Analysis
5
flows
continuously.
Lean
would
have
helped
at
operational
and
at
most
tactical
level
but
not
strategic
level.
5.
Revised
plan:
We
can
see
the
role
of
LEAN
when
Mr.Shanahan
revamped
787
executive
team
and
reorganized
into
:
1) Airplane
development.
2) Global
Supply
Chain
3) The
final
assembly
and
delivery.
4) Sending
Boeing
representatives
to
supplier’s
location.
6.
Potential
Treats:
The
major
reason
for
strikes
stated
is
the
anger
due
to
the
number
of
jobs
Outsourced.
Hence
here
also
Lean
concept
can’t
be
applied.
Thus
we
can
see
that
we
can
help
us
in
fixing
some
issues
(2
out
of
6)
but
not
all
by
LEAN
Concept.
Main
drawback
is
cannot
be
used
as
a
tool
for
strategic
supply
chain
improvement
tool.
We
can
achieve
Island
of
excellence
in
an
organization
by
implementing
only
LEAN
and
will
take
lot
of
time
to
yield
results.
2.Six
Sigma:
D
Define
the
customer,
Critical
to
Quality
issues,
business
process.
M
Measure
the
performance
of
business
of
the
business
process.
A
Analyze
to
determine
the
root
cause
and
opportunities
for
improvement.
I
Improve
the
process,
develop
and
deploy
implementation
plan.
C
Control
the
improvement
to
keep
on
new
course.
By
implementing
Six
Sigma
we
can
achieve:
1. Variation
Reduction.
2. Stability
&
Accuracy
In
this
problem
we
and
attack
the
problem
at
microscopic
level,
we
can
standardize
various
processes
and
reduce
the
variations.
We
will
try
to
solve
each
problem
by
Six
sigma
and
see
how
efficient
is
it
in
present
case.
1.Unexpected
Shortage
of
Fasteners:
If
we
assume
that
the
shortage
rise
was
due
to
the
bad
quality
of
fasteners
supplied
by
supplier.
Six
Sigma
would
had
help
the
supplier
to
reduce
its
variation
so
that
the
fasteners
would
had
been
standardized
and
this
problem
would
had
been
prevented.
In
other
words
Boeing
can
demand
its
suppliers
and
its
own
factory
to
adhere
to
Six
Sigma
level
in
critical
processes.
2.Underestimation
of
work
content
in
the
task
of
writing
flight
control
codes:
We
can’t
help
this
problem
just
using
Six
Sigma.
6
Boeing
787:Case
Analysis
3.
From
bleeding
edge
to
leading
edge:
Design
by
Six
Sigma
technique
would
have
helped
in
preventing
this
problem.
And
also
for
redesigning
we
should
follow
the
same.
4.
Boeing’s
business
strategy:
Six
Sigma
can’t
help
business
strategy,
as
Six
Sigma
is
operation
level
concept
not
a
strategic
level.
5.
Revised
plan:
Revised
plan
can
take
help
of
Sig
Sigma
when
the
Boeing
repersentatives
stationed
at
supplier
premises
pressurize
them
to
improve
their
critical
processes
to
Six
Sigma
level.
6.
Potential
Treats:
Sig
Sigma
may
not
help
us
in
solving
the
threat
of
strikes.
In
brief
we
can
say
that
thought
at
operational
level
we
may
improve
the
scenario
but
at
strategic
level
we
cannot
do
by
utilizing
Six
Sigma.
3.SCOR
(Supply
Chain
Operation
Reference)
Model:
SCOR
helps
us
optimizing
supply
chain
as
a
whole
by:
1. Top
down
analysis
2. End
to
end
view
Above
diagram
gives
a
general
end-?to-?end
view
of
a
supply
chain.
And
in
next
diagram
shows
the
implementation
of
SCOR
Model.
Boeing 787:Case Analysis
7
SCOR
is
a
SCM
reference
models
it
integrate
the
well-?known
concepts
of
business
process
reengineering,
benchmarking
and
process
measurement
into
a
cross-? functional
framework.
The
below
stated
diagram
explains
how
it
helps
in
strategic
supply
chain
management.
8
Boeing
787:Case
Analysis
Lets
try
to
solve
problems
faced
by
Boring
through
SOCR
Model.
1.
Unexpected
Shortages
of
Fasteners.
If
we
assume
that
the
shortage
occurred
because
of
the
non-?receipt
of
items
from
suppliers
we
can
solve
the
issue
by
SCOR
but
Quality
issues
of
supplier
can’t
be
covered.
2.Underestimation
of
work
content
in
the
task
of
writing
flight
control
codes:
This
could
have
been
prevented
if
SCOR
model
would
have
been
adopted.
3.
From
bleeding
edge
to
leading
edge:
This
is
a
design
issue,
which
cannot
be
solved
by
SCOR.
4.
Boeing’s
business
strategy:
SCOR
is
a
strategic
tool
to
optimize
strategy
hence
it
could
have
been
used.
5.
Revised
plan:
Revised
plan
could
have
been
much
better
if
they
would
have
used
SCOR
model
completely.
6.
Potential
Treats:
Redefining
the
supply
chain
strategy
can
arrest
potential
threats,
which
can
also
be
done
by
following
SCOR
model.
But
it
may
not
solve
the
complete
problem.
We
can
see
that
SCOR
model
would
have
been
able
to
help
us
to
solve
many
problems
but
not
all.
4.Convergence
Model
(Six
Sigma+Lean+SCOR)
Convergence
model
is
the
intersection
of
Six
Sigma,
Lean
&
SCOR.
The
diagram
below
shows
clearly
what
is
Convergence
Model.
Boeing 787:Case Analysis
9
First
I
will
explain
how
Six
Sigma
model
(DMAIC)
is
followed
in
Supply
Chain
Excellence
perfectly
synchronize
with
each
other.
“Define”
can
be
used
to
supply
chain
definition
and
priorities,
“Measure”
can
be
used
to
analyze
“SCOR”
card,
“Analyze”
analogous
to
Work
and
information
flows,
“Improve”
to
implementation
plan
and
“Control”
to
Deployment
Organization.
Define
Supply
chain
definition
and
priorities.
Measure
Analyze
basis
of
competition
(SCORcard).
Analyze
Work
and
Information
Flows.
Improve
Project
definitions
and
implementation
plan.
Control
Deployment
organization.
We
can
also
say
that
Six
Sigma
can
be
used
to
control
the
microscopic
parameters
of
SCOR
model.
Now
I
will
discuss
how
each
attribute
of
SCOR
both
Internal
&
Customer
can
be
achieved
by
either
Six
Sigma
or
Lean.
In
below
stated
matrix
it
is
shown
how
each
attribute
is
related
to
a
Metric
or
Activity
and
the
approach
we
should
use.
Customer
Internal
Reliability
Responsiveness
Flexibility
Costs
Assets
Perfect
Order
fulfillment.
Order
Fulfillment
Cycle
time.
Supply
Chain
Flexibility.
Supply
Chain
Management
Cost.
Cost
of
Goods
Sold
(COGS).
Cash
to
cash
cycle
time.
Return
on
supply
chain
fixed
assets.
Return
of
Working
Capital.
Six
Sigma
Lean
Lean
Lean
Lean
&
Six
Sigma
Lean
&
Six
Sigma
Lean
&
Six
Sigma
Lean
&
Six
Sigma
Now
we
will
try
to
solve
the
problems
using
SCOR
model
and
also
how
actually
the
problems
were
solved
actually.
1. Unexpected
Shortages
of
Fasteners.
We
can
assume
this
problem
would
had
arise
because
of:
a) Low
quality
of
fasteners
sent
by
supplier:
This
can
be
solved
by
improving
quality
and
implementing
Six
Sigma
at
suppliers
premisis.
b) Limited
quantity
was
ordered
and
was
wasted
during
assembly
at
Boeing
assembly.
To
prevent
this
LEAN
concept
can
me
implement
in
Being
Assembly
line.
c) As
a
result
of
shortage
Boeing
pressurized
suppliers
for
quick
delivery
and
they
rushed
to
make
the
fasteners
as
a
result
they
did
not
properly
documented
the
work
as
required
by
federal
authority.
Here
SCOR
model
comes
into
play
Boeing
would
have
dilated
risk
by
keeping
more
suppliers
also
requirement
of
documentation
of
process
would
had
been
floated
to
supplier
along
with
other
additional
requirement.
And
plan
10
Boeing
787:Case
Analysis
would
have
been
drawn
in
keeping
in
mind
the
lead-?time
taken
by
supplier
and
also
strategy
in
case
the
supplier
misses
its
delivery
schedule.
2.Underestimation
of
work
content
in
the
task
of
writing
flight
control
codes:
This
could
have
been
controlled
if
both
LEAN
and
SCOR
would
had
been
followed.
LEAN
for
standardization
and
proper
scheduling
so
that
correct
estimate
regarding
completion
of
activity
can
be
determined.
SCOR
in
the
case
of
properly
re-?arranging
this
activity
in
supply
chain
plan
and
also
a
back-?up
plan
if
this
gets
delays
which
other
activity
can
be
completed.
3.
From
bleeding
edge
to
leading
edge:
Using
50%
composite
material
was
going
to
be
break
through
innovation
in
Aircraft
manufacturing.
SCOR
would
have
enabled
to
properly
plan
and
given
some
cushion
for
solving
problems
like
these
and
integrate
that
plan
with
the
supply
chain
so
that
this
problem
would
not
had
affected
this
assembly
like
in
such
a
critical
manner.
4.
Boeing’s
business
strategy:
Convergence
is
the
most
appropriate
tool
to
optimize
a
vast
supply
chain
network
with
so
many
risk
partners.
As
a
project
with
such
level
complexity
we
have
to
control
quality
of
its
and
suppliers
(tier
1,2&3),
On
Time
Delivery
(OTD)
of
its
own
&
suppliers,
control
on
overall
cost
of
supply
chain
and
the
real
time
flow
of
information
among
all
risk
partners.
A
holistic
picture
is
required.
If
we
see
Convergence
model
Quality
related
parameters
can
be
taken
care
by
Six-?Sigma,
OTD
and
Cost
control
by
LEAN
concept
and
real
time
information
flow,
holistic
picture
and
other
supply
chain
optimization
by
SCOR
model.
5.
Revised
plan:
If
we
observe
the
revised
plan
closely
they
have
adopted
some
parameters
of
Six
Sigma
and
SCOR.
For
example
sending
representatives
into
supplier’s
premises
to
ensure
good
quality,
OTD
and
correct
information
flow.
LEAN
was
missing
as
it
will
take
lot
of
money
to
stationed
your
representative
at
each
factory
location
of
a
supplier.
It’s
an
additional
cost
to
Boeing.
6.
Potential
Treats:
Potential
threats
of
strikes
would
also
had
been
reduced
by
opting
convergence
model
as
the
frustration
in
the
employees
due
to
unplanned
activities
would
have
been
less.
They
would
have
saved
more
on
cost
and
would
have
given
incentives
to
both
engineers
and
employees.
Hence
I
definitely
would
have
suggested
Boeing
management
to
Implement
Convergence
model
for
management
of
their
supply
chain
instead
of
adopting
partly
some
solutions
Six
Sigma
,
LEAN
&
SCOR
in
bits
and
pieces.
As
overall
synergy
of
these
three
can
bring
wonders.
Boeing 787:Case Analysis
11
Suggested
Solution:
Lean
Six
Sigma
SCOR
Convergence
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
The
above
matrix
you
can
see
that
by
adopting
Convergence
model
we
can
attack
simultaneously
all
the
problems
and
solve
them.
That
will
take
less
time
as
compared
to
solve
each
problem
with
different
approach,
as
all
of
these
problems
are
interlinked.
Conclusion:
I
was
not
able
to
add
much
of
mathematical
analysis,
as
I
wanted
to
analyze
the
case
by
descriptive
analysis
rather
than
analytic,
as
I
was
not
having
the
exact
cost
of
implementing
these
models
at
a
scale
which
Boeing
require
them.
For
understanding
them
I
need
some
company
confidential
data.
But
still
with
the
amount
of
penalty
levied
on
Boeing
amounted
to
2507
Million
USD
for
initial
310
aircrafts
and
a
whooping
4
Billion
USD
is
anticipated
for
entire
project.
This
is
a
huge
amount
and
we
would
have
implemented
Convergence
model
in
much
lesser
than
this.
For
Vast
&
Complex
Global
Supply
Chain
like
Boeing
787
Convergence
is
a
complete
SCM
management
model.
-?-?-?-?-?-?-?-?-?-?-?-?-?-?-?-?-?
12
Boeing
787:Case
Analysis
Boeing 787:Case Analysis
13
14
Boeing
787:Case
Analysis
Boeing 787:Case Analysis
15
Reference
Case:
Boeing 787: The Dreamliner (B) from Foster Business School; University of Washington (Exhibits are taken from the case it self). Sources: 1. SCOR, Lean and Six Sigma – Supply Chain Synergy by Douglas
Kent and Hitesh Attri.
2. Supply Chain Operations Reference (SCOR) Model Convergence with Lean
and Six Sigma by Matthew J. Milas.
3. Google.com
doc_947414554.pdf
Analyzing the problem from Supply Chain Management (SCM) perspective and tackling the problem by studying the implication of various suggestions suggested and implementing the same in the present scenario. Keeping in mind the cost of implementing this suggestion should not exceed the cost of penalty paid by Boeing, time and complexity. As I am not having exact data I will only be discussing the different approaches, which can be used for analyzing & solving the problem faced by Boeing 787 program.Concepts such as Six Sigma, LEAN, SCOR and Convergence are used to solve the given problem. And finally the best suitable of the discussed approach is suggested
Boeing
787:Case
Analysis
ASHISH
JUDE
MICHAEL
What
went
wrong?
Boeing
787:
Dreamliner
A
detailed
analysis
of
issues
causing
delay
of
Boeing
787
and
suggesting
a
model
which
would
had
prevented
these
issues.
(This
case
analysis
is
only
for
academic
purpose)
P G P E x
2 0 1 2 -? 1 3
I I M
S h i l l o n g
2
Boeing
787:Case
Analysis
Introduction
(Extract
from
Case):
In
April
2008,
Boeing
confirmed
a
delay
in
the
787-?airplane
and
announced
a
14-? mont
delay
in
delivering
Boeing’s
most
anticipated
airplane.
The
Boeing
787-? airplane,
to
be
put
in
service
in
2008
Initially,
has
become
Boeing’s
best-?selling
new
plane
ever;
as
of
September
2008,
the
Boeing
Company
had
orders
for
895
airplanes
from
58
customers
worldwide
with
an
estimated
backlog
value
of
$151
billion
(see
Exhibit
1).
Although
not
a
full-?blown
crisis
such
as
the
one
faced
by
Airbus
with
its
A380
airplane
delays,
the
announcement
was
nonetheless
a
potentially
serious
setback
for
Boeing.
Notes
the
Wall
Street
Journal:
“Some
analysts
believe
Boeing
could
be
liable
for
as
much
as
$4
billion
of
concessions
and
penalty
payments
to
airlines
for
missed
deadlines.
Boeing
plans
to
book
the
first
25
deliveries
at
zero-?profit
margin
to
cover
penalties.”1
Analyst
estimates
indicate
that
the
delay
could
cost
Boeing
over
$2
billion
dollars
in
penalties
alone,
plus
additional
R&D
expenses
over
the
next
few
years
(see
Exhibit
2).
According
to
Boeing’s
revised
schedule,
the
first
test
flight
of
the
787-?airplane
was
expected
to
be
carried
out
in
late
2008,
and
the
first
deliveries
in
the
3rd
quarter
of
2009.
The
company
also
planned
a
dramatically
slower
ramp-?up
in
production;
Boeing’s
goal
now
is
to
produce
10
787s
a
month
starting
in
2012,
a
figure
significantly
lower
than
originally
planned
(see
Exhibit
3).
Notes
Boeing’s
787
spokesperson,
Yvonne
Leach,
the
average
delay
for
all
58
787-?customers
is
expected
to
be
about
20
months.
Problems
Statement:
Delay
in
planed
scheduled
of
Boeing
787
and
the
heavy
loss
(about
4
Billion
USD)
incurred
to
Boeing
because
of
that.
Objective:
Find
the
reasons,
which
caused
the
delay
and
analyze
them,
suggest
the
probable
solutions
for
the
prevention
and
corrective
action
of
this
problem.
Methodology:
Analyzing
the
problem
from
Supply
Chain
Management
(SCM)
perspective
and
tackling
the
problem
by
studying
the
implication
of
various
suggestions
suggested
and
implementing
the
same
in
the
present
scenario.
Keeping
in
mind
the
cost
of
implementing
this
suggestion
should
not
exceed
the
cost
of
penalty
paid
by
Boeing,
time
and
complexity.
As
I
am
not
having
exact
data
I
will
only
be
discussing
the
different
approaches,
which
can
be
used
for
analyzing
&
solving
the
problem
faced
by
Boeing
787
program.
Problem
Analysis:
If
we
read
the
case
we
can
find
that
there
were
more
than
one
problem
which
cumulatively
gave
rise
to
this
delay.
I
will
be
discussing
each
one
by
one:
1.
Unexpected
Shortages
of
Fasteners.
Unexpected
Shortage
of
fasteners
made
Boeing
to
pressurized
suppliers
for
quick
delivery
and
they
rushed
to
make
the
fasteners
as
a
result
they
did
not
properly
documented
the
work
as
required
by
federal
authority.
Boeing 787:Case Analysis
3
2.Underestimation
of
work
content
in
the
task
of
writing
flight
control
codes:
Both
Boeing
and
Honeywell
initially
underestimated
the
work
content,
which
was
there
in
writing
these
codes
as
a
result
they
were
now
scrambling
to
write
them.
3.
From
bleeding
edge
to
leading
edge:
Boeing
introduced
first
time
a
game
changing
innovation
which
they
call
“Bleeding
edge”
in
order
to
have
a
“Leading
edge”.
This
innovation
was
the
extensive
usage
of
carbon
fiber
(composites)
technology.
787
used
as
much
as
50%
of
its
total
weight
of
composited
as
compared
to
12%
in
777.
(Exhibit
7)
This
helped
to
reduce
the
weight
of
aircraft
and
hence
improve
the
fuel
efficiency.
But
if
the
components
of
the
aircraft
are
too
light
which
was
the
case
with
central
wing
box
needed
strengthening.
To
over
come
this,
engineers
devised
a
patch
for
first
6
aircraft
and
will
change
the
design
after
seventh
one.
Designing
patch
caused
Boeing
months
delay
and
re-?designing
the
central
wing
box,
which
was
the
responsibility
of
Boeing’s
partner,
now
became
Boeing’s
concern.
This
a
big
problem
unless
the
flight
test
are
cleared.
4.
Boeing’s
business
strategy:
Boeing
out
sourced
a
large
amount
of
responsibilities
to
overseas
(Spain,
Italy,
France,
Australia
and
Japan).
This
projest
has
the
maximum
number
of
outsourced
components
(Exhibit
5)
.
There
are
as
many
as
risk
sharing
50
partners.
This
caused
delay
in
fuselage
assembly
because
of
the
breaking
of
supply
chain
between
the
suppliersi.e.
Vought
received
parts
from
Japan
&
Australia
where
else
Isreal
Aircraft
Industries
was
doing
all
things
by
itself
for
similar
parts
and
another
was
the
lack
of
aerospace
experience
of
workforce
among
some
suppliers
ie.
Spirit
Aero-?Systems.
5.
Revised
plan:
Responding
quickly
to
the
delay
Mr.Shanahan
revamped
787
executive
team
and
reorganized
into
:
1) Airplane
development.
2) Global
Supply
Chain
3) The
final
assembly
and
delivery.
Also
Boeing
sent
its
employees
stationed
at
each
suppliers
factory
in
order
to
have
better
control
over
the
supply
chain.
Vought’s
&
GA’s
plant
problem
is
fixed
by
Ex-?Boeing
managers
in
each
plant.
Production
activities
were
rationalized
and
areas
of
responsibilities
were
re
drawn
to
speed
up
aircraft
production.
6.
Potential
Treats:
Strikes
by
Labor
and
Engineers
are
threatening
Boeing
now.
The
labor
strike
is
basically
against
the
outsourcing
done
by
Boeing
and
the
pressure
caused
by
Boeing
on
the
employees
to
start
assembly
of
aircrafts
with
thousands
of
shortages.
And
the
engineers
want
to
reduce
the
number
of
contract
jobs
created
by
Boeing.
Both
of
the
unions
want
more
Jobs
and
are
against
the
business
4
Boeing
787:Case
Analysis
strategy
of
Boeing,
The
strike
is
such
a
big
problem
that
if
there
are
three
strikes
and
it
will
be
very
difficult
for
Boeing
to
run
the
show.
Hypothesis
Development
&
Analysis:
In
hypothesis
development
I
will
try
to
solve
the
listed
problems
with
each
one
of
the
below
states
strategy:
1.Lean
Management:
Specify
the
value
desired
by
the
customer.
Identify
the
value
stream
for
each
product.
Make
the
flow
continuously.
Introduce
pull
between
all
steps
where
continuous
flow
is
possible.
Manage
towards
perfection.
Principle
behind
lean
management
is
to
reduce
waste.
Above
stated
matrix
shows
how
we
can
implement
LEAN
concept.
If
we
consider
the
problem
faced
by
Boeing
and
try
to
solve
them
one
by
one
we
will
find
if
Lean
is
useful
for
us.
Problem
with
LEAN
is
that
it
is
basically
works
at
tactical
or
operational
level
and
it
takes
time
to
implement.
Implementation
of
LEAN
leads
to:
1. Speed
up
the
value
chain.
2. Waste
elimination.
3. Value
system
redesign.
1.Unexpected
Shortage
of
Fasteners:
First
question
arises
why
the
fasteners
felled
shortage?
There
can
be
two
scenario’s
either
less
quantity
was
ordered
or
they
were
wasted
during
assembly.
The
first
scenario
may
be
due
to
the
mistake
during
ordering
which
is
generally
negligible.
Second
scenario
may
be
possible
that
the
available
quantity
of
fasteners
were
wasted
during
assembly.
LEAN
Management
can
address
this.
By
giving
limited
number
of
fasteners
to
an
operator
whose
job
is
only
to
do
that
particular
job
in
a
lean
production
line.
2.Underestimation
of
work
content
in
the
task
of
writing
flight
control
codes:
This
is
a
lapse,
which
can
contribute
to
a
strategic
level
forecasting
&
planning
failure.
In
this
case
we
can
implement
LEAN
at
operation
level
by
speeding
up
the
coding
process
which
can
be
said
as
a
Corrective
action
rather
than
preventive
action.
Hence
we
cannot
solve
this
problem
by
LEAN.
3.
From
bleeding
edge
to
leading
edge:
Boeing
has
tried
some
innovative
technology
and
this
problem
aroused
during
R&D
phase
and
LEAN
concept
can’t
help
us
much
in
solving
this
problem.
4.
Boeing’s
business
strategy:
The
difficulty
to
manage
the
supply
chain
among
the
suppliers
and
Boeing.
The
problem
was
regarding
the
balancing
of
supply
chain
and
ensuring
that
product
Boeing 787:Case Analysis
5
flows
continuously.
Lean
would
have
helped
at
operational
and
at
most
tactical
level
but
not
strategic
level.
5.
Revised
plan:
We
can
see
the
role
of
LEAN
when
Mr.Shanahan
revamped
787
executive
team
and
reorganized
into
:
1) Airplane
development.
2) Global
Supply
Chain
3) The
final
assembly
and
delivery.
4) Sending
Boeing
representatives
to
supplier’s
location.
6.
Potential
Treats:
The
major
reason
for
strikes
stated
is
the
anger
due
to
the
number
of
jobs
Outsourced.
Hence
here
also
Lean
concept
can’t
be
applied.
Thus
we
can
see
that
we
can
help
us
in
fixing
some
issues
(2
out
of
6)
but
not
all
by
LEAN
Concept.
Main
drawback
is
cannot
be
used
as
a
tool
for
strategic
supply
chain
improvement
tool.
We
can
achieve
Island
of
excellence
in
an
organization
by
implementing
only
LEAN
and
will
take
lot
of
time
to
yield
results.
2.Six
Sigma:
D
Define
the
customer,
Critical
to
Quality
issues,
business
process.
M
Measure
the
performance
of
business
of
the
business
process.
A
Analyze
to
determine
the
root
cause
and
opportunities
for
improvement.
I
Improve
the
process,
develop
and
deploy
implementation
plan.
C
Control
the
improvement
to
keep
on
new
course.
By
implementing
Six
Sigma
we
can
achieve:
1. Variation
Reduction.
2. Stability
&
Accuracy
In
this
problem
we
and
attack
the
problem
at
microscopic
level,
we
can
standardize
various
processes
and
reduce
the
variations.
We
will
try
to
solve
each
problem
by
Six
sigma
and
see
how
efficient
is
it
in
present
case.
1.Unexpected
Shortage
of
Fasteners:
If
we
assume
that
the
shortage
rise
was
due
to
the
bad
quality
of
fasteners
supplied
by
supplier.
Six
Sigma
would
had
help
the
supplier
to
reduce
its
variation
so
that
the
fasteners
would
had
been
standardized
and
this
problem
would
had
been
prevented.
In
other
words
Boeing
can
demand
its
suppliers
and
its
own
factory
to
adhere
to
Six
Sigma
level
in
critical
processes.
2.Underestimation
of
work
content
in
the
task
of
writing
flight
control
codes:
We
can’t
help
this
problem
just
using
Six
Sigma.
6
Boeing
787:Case
Analysis
3.
From
bleeding
edge
to
leading
edge:
Design
by
Six
Sigma
technique
would
have
helped
in
preventing
this
problem.
And
also
for
redesigning
we
should
follow
the
same.
4.
Boeing’s
business
strategy:
Six
Sigma
can’t
help
business
strategy,
as
Six
Sigma
is
operation
level
concept
not
a
strategic
level.
5.
Revised
plan:
Revised
plan
can
take
help
of
Sig
Sigma
when
the
Boeing
repersentatives
stationed
at
supplier
premises
pressurize
them
to
improve
their
critical
processes
to
Six
Sigma
level.
6.
Potential
Treats:
Sig
Sigma
may
not
help
us
in
solving
the
threat
of
strikes.
In
brief
we
can
say
that
thought
at
operational
level
we
may
improve
the
scenario
but
at
strategic
level
we
cannot
do
by
utilizing
Six
Sigma.
3.SCOR
(Supply
Chain
Operation
Reference)
Model:
SCOR
helps
us
optimizing
supply
chain
as
a
whole
by:
1. Top
down
analysis
2. End
to
end
view
Above
diagram
gives
a
general
end-?to-?end
view
of
a
supply
chain.
And
in
next
diagram
shows
the
implementation
of
SCOR
Model.
Boeing 787:Case Analysis
7
SCOR
is
a
SCM
reference
models
it
integrate
the
well-?known
concepts
of
business
process
reengineering,
benchmarking
and
process
measurement
into
a
cross-? functional
framework.
The
below
stated
diagram
explains
how
it
helps
in
strategic
supply
chain
management.
8
Boeing
787:Case
Analysis
Lets
try
to
solve
problems
faced
by
Boring
through
SOCR
Model.
1.
Unexpected
Shortages
of
Fasteners.
If
we
assume
that
the
shortage
occurred
because
of
the
non-?receipt
of
items
from
suppliers
we
can
solve
the
issue
by
SCOR
but
Quality
issues
of
supplier
can’t
be
covered.
2.Underestimation
of
work
content
in
the
task
of
writing
flight
control
codes:
This
could
have
been
prevented
if
SCOR
model
would
have
been
adopted.
3.
From
bleeding
edge
to
leading
edge:
This
is
a
design
issue,
which
cannot
be
solved
by
SCOR.
4.
Boeing’s
business
strategy:
SCOR
is
a
strategic
tool
to
optimize
strategy
hence
it
could
have
been
used.
5.
Revised
plan:
Revised
plan
could
have
been
much
better
if
they
would
have
used
SCOR
model
completely.
6.
Potential
Treats:
Redefining
the
supply
chain
strategy
can
arrest
potential
threats,
which
can
also
be
done
by
following
SCOR
model.
But
it
may
not
solve
the
complete
problem.
We
can
see
that
SCOR
model
would
have
been
able
to
help
us
to
solve
many
problems
but
not
all.
4.Convergence
Model
(Six
Sigma+Lean+SCOR)
Convergence
model
is
the
intersection
of
Six
Sigma,
Lean
&
SCOR.
The
diagram
below
shows
clearly
what
is
Convergence
Model.
Boeing 787:Case Analysis
9
First
I
will
explain
how
Six
Sigma
model
(DMAIC)
is
followed
in
Supply
Chain
Excellence
perfectly
synchronize
with
each
other.
“Define”
can
be
used
to
supply
chain
definition
and
priorities,
“Measure”
can
be
used
to
analyze
“SCOR”
card,
“Analyze”
analogous
to
Work
and
information
flows,
“Improve”
to
implementation
plan
and
“Control”
to
Deployment
Organization.
Define
Supply
chain
definition
and
priorities.
Measure
Analyze
basis
of
competition
(SCORcard).
Analyze
Work
and
Information
Flows.
Improve
Project
definitions
and
implementation
plan.
Control
Deployment
organization.
We
can
also
say
that
Six
Sigma
can
be
used
to
control
the
microscopic
parameters
of
SCOR
model.
Now
I
will
discuss
how
each
attribute
of
SCOR
both
Internal
&
Customer
can
be
achieved
by
either
Six
Sigma
or
Lean.
In
below
stated
matrix
it
is
shown
how
each
attribute
is
related
to
a
Metric
or
Activity
and
the
approach
we
should
use.
Customer
Internal
Reliability
Responsiveness
Flexibility
Costs
Assets
Perfect
Order
fulfillment.
Order
Fulfillment
Cycle
time.
Supply
Chain
Flexibility.
Supply
Chain
Management
Cost.
Cost
of
Goods
Sold
(COGS).
Cash
to
cash
cycle
time.
Return
on
supply
chain
fixed
assets.
Return
of
Working
Capital.
Six
Sigma
Lean
Lean
Lean
Lean
&
Six
Sigma
Lean
&
Six
Sigma
Lean
&
Six
Sigma
Lean
&
Six
Sigma
Now
we
will
try
to
solve
the
problems
using
SCOR
model
and
also
how
actually
the
problems
were
solved
actually.
1. Unexpected
Shortages
of
Fasteners.
We
can
assume
this
problem
would
had
arise
because
of:
a) Low
quality
of
fasteners
sent
by
supplier:
This
can
be
solved
by
improving
quality
and
implementing
Six
Sigma
at
suppliers
premisis.
b) Limited
quantity
was
ordered
and
was
wasted
during
assembly
at
Boeing
assembly.
To
prevent
this
LEAN
concept
can
me
implement
in
Being
Assembly
line.
c) As
a
result
of
shortage
Boeing
pressurized
suppliers
for
quick
delivery
and
they
rushed
to
make
the
fasteners
as
a
result
they
did
not
properly
documented
the
work
as
required
by
federal
authority.
Here
SCOR
model
comes
into
play
Boeing
would
have
dilated
risk
by
keeping
more
suppliers
also
requirement
of
documentation
of
process
would
had
been
floated
to
supplier
along
with
other
additional
requirement.
And
plan
10
Boeing
787:Case
Analysis
would
have
been
drawn
in
keeping
in
mind
the
lead-?time
taken
by
supplier
and
also
strategy
in
case
the
supplier
misses
its
delivery
schedule.
2.Underestimation
of
work
content
in
the
task
of
writing
flight
control
codes:
This
could
have
been
controlled
if
both
LEAN
and
SCOR
would
had
been
followed.
LEAN
for
standardization
and
proper
scheduling
so
that
correct
estimate
regarding
completion
of
activity
can
be
determined.
SCOR
in
the
case
of
properly
re-?arranging
this
activity
in
supply
chain
plan
and
also
a
back-?up
plan
if
this
gets
delays
which
other
activity
can
be
completed.
3.
From
bleeding
edge
to
leading
edge:
Using
50%
composite
material
was
going
to
be
break
through
innovation
in
Aircraft
manufacturing.
SCOR
would
have
enabled
to
properly
plan
and
given
some
cushion
for
solving
problems
like
these
and
integrate
that
plan
with
the
supply
chain
so
that
this
problem
would
not
had
affected
this
assembly
like
in
such
a
critical
manner.
4.
Boeing’s
business
strategy:
Convergence
is
the
most
appropriate
tool
to
optimize
a
vast
supply
chain
network
with
so
many
risk
partners.
As
a
project
with
such
level
complexity
we
have
to
control
quality
of
its
and
suppliers
(tier
1,2&3),
On
Time
Delivery
(OTD)
of
its
own
&
suppliers,
control
on
overall
cost
of
supply
chain
and
the
real
time
flow
of
information
among
all
risk
partners.
A
holistic
picture
is
required.
If
we
see
Convergence
model
Quality
related
parameters
can
be
taken
care
by
Six-?Sigma,
OTD
and
Cost
control
by
LEAN
concept
and
real
time
information
flow,
holistic
picture
and
other
supply
chain
optimization
by
SCOR
model.
5.
Revised
plan:
If
we
observe
the
revised
plan
closely
they
have
adopted
some
parameters
of
Six
Sigma
and
SCOR.
For
example
sending
representatives
into
supplier’s
premises
to
ensure
good
quality,
OTD
and
correct
information
flow.
LEAN
was
missing
as
it
will
take
lot
of
money
to
stationed
your
representative
at
each
factory
location
of
a
supplier.
It’s
an
additional
cost
to
Boeing.
6.
Potential
Treats:
Potential
threats
of
strikes
would
also
had
been
reduced
by
opting
convergence
model
as
the
frustration
in
the
employees
due
to
unplanned
activities
would
have
been
less.
They
would
have
saved
more
on
cost
and
would
have
given
incentives
to
both
engineers
and
employees.
Hence
I
definitely
would
have
suggested
Boeing
management
to
Implement
Convergence
model
for
management
of
their
supply
chain
instead
of
adopting
partly
some
solutions
Six
Sigma
,
LEAN
&
SCOR
in
bits
and
pieces.
As
overall
synergy
of
these
three
can
bring
wonders.
Boeing 787:Case Analysis
11
Suggested
Solution:
Lean
Six
Sigma
SCOR
Convergence
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
The
above
matrix
you
can
see
that
by
adopting
Convergence
model
we
can
attack
simultaneously
all
the
problems
and
solve
them.
That
will
take
less
time
as
compared
to
solve
each
problem
with
different
approach,
as
all
of
these
problems
are
interlinked.
Conclusion:
I
was
not
able
to
add
much
of
mathematical
analysis,
as
I
wanted
to
analyze
the
case
by
descriptive
analysis
rather
than
analytic,
as
I
was
not
having
the
exact
cost
of
implementing
these
models
at
a
scale
which
Boeing
require
them.
For
understanding
them
I
need
some
company
confidential
data.
But
still
with
the
amount
of
penalty
levied
on
Boeing
amounted
to
2507
Million
USD
for
initial
310
aircrafts
and
a
whooping
4
Billion
USD
is
anticipated
for
entire
project.
This
is
a
huge
amount
and
we
would
have
implemented
Convergence
model
in
much
lesser
than
this.
For
Vast
&
Complex
Global
Supply
Chain
like
Boeing
787
Convergence
is
a
complete
SCM
management
model.
-?-?-?-?-?-?-?-?-?-?-?-?-?-?-?-?-?
12
Boeing
787:Case
Analysis
Boeing 787:Case Analysis
13
14
Boeing
787:Case
Analysis
Boeing 787:Case Analysis
15
Reference
Case:
Boeing 787: The Dreamliner (B) from Foster Business School; University of Washington (Exhibits are taken from the case it self). Sources: 1. SCOR, Lean and Six Sigma – Supply Chain Synergy by Douglas
Kent and Hitesh Attri.
2. Supply Chain Operations Reference (SCOR) Model Convergence with Lean
and Six Sigma by Matthew J. Milas.
3. Google.com
doc_947414554.pdf