Introducing
Your new presentation assistant.
Refine, enhance, and tailor your content, source relevant images, and edit visuals quicker than ever before.
Trending searches
Service Rate/Order Arrival Rate
GE
General Electric GEnx engine
Manufacturers 100 engines per year for the Boeing 747, averaging 8 engines per month.
ROLLS-ROYCE
Rolls-Royce Trent 1000 Engine
Manufacturers 67 engines per year for the Boeing 747, averaging 6 engines per month.
Customers have the choice of two engines, General Electric GEnx or Rolls-Royce Trent 1000. 60% of the initial 895 orders selected the GE engine. Today, Boeing produces around 167 Dreamliners each year, with a total of 702 produced as of the end of April 2016. Today, the 60/40 ratio still exists, as GE continues to be the preferred engine for the 787. GE consistently out delivers on customer orders, compared to Rolls-Royce.
Upstream Suppliers Vs. Downstream Suppliers
Upstream
Kawasaki Heavy Industries: Midfuselage Section
Alenia: Midfuselage Section and Horizontal Stabilizer
Vought: Rear Fuselage Sections
Spirit Aerosystems: Nose Sections, Engine Pylons, Fixed Leading Edges, Movable Leading Edges
Downstream
Mitsubishi Heavy Industries: Wing Box
Saab: Aft Cargo Door and Forward Cargo Door
Latecoere: Aft Cargo Door and Forward Cargo Door
Messier-Dowty: Main Landing Gear Parts and Nose Landing Gear Parts
Boeing: Vertical Fin
Boeing Canada: Main Landing Gear Doors (Body and Wing)
Korean Air: Wing Tips and Tail Cone
Fuji Heavy Industries: Center "wing box" fuselage section
Supplier Selection
Visibility
increase visibility on development process, and
integrate critical business processes.
- Unavailability of correct and timely information.
- Cultural differences among suppliers
On-Time
Risk Sharing Contract
WIN/WIN
WIN/LOSE
Delay
What Does Boeing Procure?
LOSE/WIN
LOSE/LOSE
Supplier Y
On-Time
Delay
787 Dreamliner Supply Chain Disaster
Supplier X
Outsourcing
Capacity
Boeing is known for its engineering and manufacturing, so when those were both outsourced, the company became fully reliant on its suppliers.
Delays in production and execution of the 787 were a direct result of Boeing’s full reliance on its suppliers. Any break in the supply chain caused significant delays in the overall production. Delays were caused because efficiency was dependent on the synchronized just-in-time deliveries of all major sections from Boeing’s tier-1 strategic partners. If the delivery of a section is delayed, the delivery schedule of the whole aircraft is delayed.
While Boeing has always outsourced a portion of its production, structure of the outsourcing was very different with the 787. With the Dreamliner, Boeing contracted with a top tier of about 50 suppliers, handing them complete control of the design of their piece of the plane.
Those major partners had to make the upfront investment, share the risk and own their design. Each was responsible for managing its own subcontractors. Boeing had no real understanding of how all the pieces fit together.
Capacity
Engagement
Contract Highlights:
Rolls Royce
Contract Value: $2.7 billion dollars
Scope of Work: Provide 19 engines for Norwegian Air's Boeing 787 Dreamliners
Additional Value: Trent 1,000 jet engines and "Total Care Package" - long term maintenance plan
GE Aviation Systems
Contract Value: $1 billion dollars
Scope of Work: Developed the GEnx for the Boeing 787 Dreamliner and Boeing 747-8, the GEnx provides new levels of operating efficiencies, using a composite fan case and blades, and a unique combustion system for vastly lower emissions.
Additional Value: engine technology alone will contribute as much as 8 percent to the increased fuel efficiency of the new airplane
Saab Aerostructures
Contract Value: Initial Estimate $100 Million, revenues are expected to reach a multi-million dollar level
Scope of Work: Design, development and manufacturing of Large Cargo Doors, Bulk Cargo Door and Access Doors for the Boeing 787 Dreamliner
Additional Value: Doors will mainly be made of composite materials
Alcoa
Contract Value: $2.5 billion dollars
Scope of Work: Alcoa will supply fastening systems for every Boeing platform and ready-to-install titanium seat track assemblies for the entire 787 Dreamliner
Additional Value: Advanced titanium and other specialty light weight metals products, 3D-printed parts
Eaton Aerospace
Contract Value: $88 million dollars
Scope of Work: Eaton provided quick-disconnect coupling and hoses to support the new aircraft’s Integrated Cooling System (ICS) and Power Equipment Cooling System (PECS)
Additional Value: These systems provide efficient liquid cooled thermal management across an array of electrical systems and instruments within the platform
Boeing was scheduled to debut the 787 Dreamliner in a test flight in August 2007 and then achieve first delivery in May 2008. The dates were pushed back numerous times, and did not get the Dreamliner in the air for a test flight until November 2010, a 3 year delay. Boeing delivered its first 787 in the fall of 2011. The plane entered production almost 4 years late and cost the company about 5x the original $6 billion estimate.
Reasons for the delays ranged from a shortage of bolts to inadequacies in flight control software. Components were also of poor quality. Traditionally, Boeing’s in-house experts created detailed specifications for every part of the plane made by suppliers, and had the in-house technical capability to closely monitor whether the work came up to spec. Due to all the outsourcing, Boeing was unable to do so.
• Aerospace support
• Avionics and avionics components
• Common aerospace commodities
• Electrical, hydraulic and mechanical systems
• Interiors
• Major structures
• Non-production goods and services
• Propulsion systems
• Purchased outside production
• Technology
Supplier Partnerships
- Due to delays in delivery
- Concern about the increased weight.
Background
Engagement
Supplier Selection
Boeing is the world's largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security systems.
Boeing employs approximately 160,000 people across the United States and in more than 65 countries.
Boeing leverages the talents of hundreds of thousands of skilled people who work for Boeing suppliers worldwide.
Boeing 787 Dreamliner
The Game Changer
Weight Reduction: A Goal of the Dreamliner
The Boeing 787 Dreamliner is a long-range, mid-size wide-body,
twin-engine jet airliner. It seats between 242 to 335 passengers
in typically 3-class seating configurations.
Benefits
Customers:
- improve flight operational efficiency by providing big-jet ranges to midsize airplanes, while flying at approximately the same speed
- allow airlines to offer nonstop flight to and from more and smaller cities
- designed to use 20% less fuel, compared to similarly sized planes
- 10% lower cost-per-seat mile
Passengers:
- redesign aircraft, improving travel experience and comfort
- Dreamliner made of composite materials vs traditional aluminum, allowing for increased humidity and pressure to be maintained in passenger cabin
Potential suppliers are evaluated on a range of criteria, including commercial offerings, ability, capacity, integrity, financial health, geographic location, performance, reliability, quality of product, on-time delivery and overall customer-supplier relations. A key criterion is a proven ability to manage a subtier supply chain. Subtier suppliers are the suppliers who provide raw materials and other items to first-tier Boeing suppliers.
Architecture
REDESIGNED SUPPLY CHAIN FOR THE 787 DREAMLINER
Architecture
TRADITIONAL SUPPLY CHAIN FOR AIRCRAFT MANUFACTURING
Outsourcing
Boeing began production of the 787 with more than 30,000 suppliers. By 2005, the company reduced its supply base to 6,450 suppliers in more than 100 countries. Today, that number has been reduced even further to 5,400 supplier factories. Sources from South Korea, Italy, Japan, Australia, China, Sweden, France, and Canada all had significant roles in the production of the 787 Dreamliner.
What Lead to the 787 Dreamliner
Supplier Presence
1977
U.S. government deregulated air travel. As a result, more airlines entered the market, creating fierce price competition. The U.S. commercial aircraft manufacturers were also faced with major competition from European companies.
Late 1990s
Boeing began losing market share to French manufacturer, Airbus. As a result, Boeing was under pressure to decide between 2 basic competitive strategies:
1) reduce costs and selling prices of existing types of aircrafts
2) develop a new aircraft to raise revenues through value creation
2003
Boeing chose to focus on creating additional value for its customers (the airline companies) and the passengers, by developing the 787 Dreamliner.
Thank you for your attention
Conclusion
LEADERSHIP
OUTSOURCING STRATEGY
- Optimize Outsourcing
-70% > x > 40%
RECOMMENDATIONS
SUPPLIER SELECTION
COMMUNICATIONS
potential suppliers.
management of suppliers.
deliverables.
- Increase Accountability
- Reduce controllable delays
Maintenance.
at key suppliers within supply chain:
- Prevent miscommunications
- Increase accountability
- Ensure stronger responsiveness
- Identify controllable and uncontrollable
delays and assign accordingly.
- Better manage the risk within Risk
Pooling
-Focus on Buy in
-Increase accountability and quality
standards upstream
**Graph Courtesy of http://theblogbyjavier.com/2011/10/28/will-boeing-787-ever-break-even/
Noelle Cole
Julia Park-Charlton
**Graph Courtesy of CBS News Moneywatch