Boeing 787 Dreamliner: An Innovation and Product Development Miscalculation?

Boeing 787 Dreamliner: An Innovation and Product Development Miscalculation?

Lillie Green

Webster University

Abstract

This paper will discuss and explore the supply issues that Boeing encountered while manufacturing their 787 aircraft. It will also analyze and provide an assessment of the issues.

Boeing 787 Dreamliner: An Innovation and Product Development Nightmare?

        It was an effort to regain market share from their competitor Airbus that pushed Boeing  on a mission to completely innovate the airline industry with an entirely new designed airplane. Prior to Boeing’s new mission of designing and manufacturing an entire new aircraft, only incremental innovations were added to existing aircraft.  The goal of the project was to generate revenues by creating value for customers.

According to Brainmates.com (2017), “60% of the materials used to make it are composite fibres rather than aluminum,…Advanced software was used to give it a unique and very aerodynamic shape”, (p.2). So, Boeing’s under taking would be an entirely new concept, one that would involve radical innovation.

        Boeing’s strategy in the making of the Dreamliner was “to design and build an airplane that will take passengers where they want to go, when they want to go, without intermediate stops; do it efficiently while providing the utmost comfort to passengers; and make it simple and cost-effective for airlines to operate ( https://brainmates.com 2017).

While Boeing’s idea was commended at the time it was introduced, Boeing faced and addressed the issues that they might encounter while taking on this new venture. In order to carry out the enormous task, Boeing decided to outsource and involve suppliers in the US and other countries as a way to cut the cost of production.

According to Steve Denning (2013).  Boeing planned results were: and were they achieved? 

1. To improve the customers travel experience by making the flight more comfortable
2. To build ultra- efficient engines that could make the aircraft suitable for long haul flights
3. To reduce maintenance and replacement costs

If the planned results were achieved it would create added value for their customers. However, their chosen path to get the job done did not include all the calculation costs associated with completing the project under cost and in a timely manner.

        The product design process involved outsourcing by the using “Tier 1 suppliers to building “large sections of the plane, which would then be assembled in a few pieces at Boeing’s own plant” (Bowman, 2009, p 1). There was not a problem in the use of outsourcing. Boeing had used outsourcing in the production of its previous airplanes it was a common practice in the industry for companies when did not have the necessary expertise in some areas, therefore they would outsource for the knowledge they lacked. But, in the manufacturing of the Dreamliner, Boeing went overboard with outsourcing. Boeing wanted to shift manufacturing and assembly costs and  financial reponsibility to multiple tiers without visibility, “handing them absolute ownership of the design of their respective piece of the plane and management of its own subcontractors” (Papageorge, 2017).

In addition, to the problem with outsourcing, a root problem that caused delays and increased costs was the use of subcontractors in the coordination of the components parts that were necessary to put the plane together. When the subcontractors failed in these tasks, Boeing still had to provide the support necessary to complete the job by sending engineers worldwide to solve the various technical problems. “Ultimately, Boeing has to redesign the entire aircraft sub-assembly process” (Dennings, 2013, p.3).

With the manufacture of the 787, Boeing changed the structure of the supply chain. Boeing’s supply chain contained more than 50 suppliers which included the US, South Korea, Italy, Japan, Australia, China, Sweden, France, and Canada (see illustration below). In doing so, Boeing hoped to “reduce the 787’s development time from six to four years and development cost from $10 to 6 billion” (Denning, 2013). Something that did not occur, the end result was a project that was billion dollars overbudgets and three years behind schedule.

[pic 1]

Their inability to control such a large number of suppliers left the fate of the Dreamliner in the hands of its suppliers. With so many tiers, “you only know what’s going on with your tier 1 supplier. You have no visibility, no coordination, no real understanding of how all the pierce fit together” (Gates, 2013). Labor cost are cheaper overseas, therefore the outsourcing manufacturing and production would save Boeing money and costs saving that could be passed on to the customer.

The manufacturing of plane was left up to Boeing’s suppliers. Boeing expected them to carry out the making of their individual with components supplied by tier 2 and 3 suppliers with little oversight. The problem with this is that Boeing would not know if when all the individual pieces which were done by all the different suppliers when they would be put together if they would fit. Neither could they assess the quality of the components which also became a problem for Boeing later causing more delays and additional costs.