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Boeing 787 case study
Transcript of Boeing 787 case study
Todays round flight will include destinations to:
Please Fasten your seat belt and enjoy the ride!
Ladies and Gentlemen
On board the flight Stewards include:
Marc, Sitong, Loai, Simon, Mohammad, Monchipa
Designed to provide passengers a better flying experience and more efficient commercial jetliner.
20% less fuel per passenger
Quieter takeoffs and landings
However, there are delivery and products delayed and batteries overheated problems.
Overview of the strategic problem faced by the organisation
Supply chain issue
Strategic choice (PEST and Porters five forces Analysis)
Factors influencing supply chain configuration
Strategic choices and decisions
Long Term Changes
Overview of the strategic problem faced by the organisation
High costs and slow product development cycles in comparison to competitors.
Airbus YOY recieving higher number of orders since 2008 crisis.
Boeing effected to a greater extent than Airbus
And now we have arrived at our final destination: Washington, where the main Boeing Manufacturing Plant is located
Thank you for staying in your seats we hope you enjoyed your ride!
Please notify any of the cabin crew for any questions or queries!
Supply Chain Issue
Lack of communication and visibility skill
Lack of quality control
Lack of power to control their human resource
Airplane deregulation policy from The U.S. in 1997 facilitated price competition
An increasing in fuel cost and environment restriction will be more challenging for Boeing in the future
As Boeing is a multinational enterprise, it has to deal with a lot of issue from culture different
Consumers demanding lower prices
Increasing number of people flying
Airlines demanding more fuel efficient aircraft
Advance technology allows Boeing to search for cheaper and better quality of materials like Carbon Fiber
Porters Five Forces
Threat of new entrants (Low)
It requires extensive cost and resources
Threat of substitute product (Low/Moderate)
Airplane is by far faster than any other transportation choices, but when compare with price and other factors it is beatable.
Bargaining power of suppliers(Low)
Depends on some components, as it could be rare items.
Bargaining power of buyers (Low)
Duopoly in the market
Rivalry among existing competitors(High)
Due to deregulation and increasing consumer price sensitivity resulting in price competition
The two competitors have a great affect on each others.
Factors influencing the supply chain configuration
In order to keep/increase market share and revenue growth , Boeing will always have to keep their supply chain as valuable/cost efficient as possible in order to stay ahead of competition.
In order to compete, Boeing have to be working in a supply chain that will cut down the development time as much as possible without Extra costs.
Boeing need to always be on par with the latest technologies in fuel efficiency,alternative energy, new composite materials as well as many other aspects,so the supply chain has to be flexible enough to adapt to the constant changes and advances in environmental technologies.
Boeing need to maintain having high quality comfortable and luxurious aircrafts while keeping size , weight and costs at the minimum for themselves and their customers.
The move from a conventional supply chain with Boeing as key manufacturers relying on thousands of multi tiered suppliers to an unconventional supply chain with around 50 tier 1 suppliers/ strategic partners. (Outsourcing)
Excellent strategy to share risk with “ integrators”
Theoretically should cut cost by 4 billion dollars and time by 2 years
Such a transformation needs a very competent team with vast supply chain management experience. ( Boeing had a not so competent team at first.
Long Term Reactions
15% pay rise over 4 years with a reduction in outsourcing promised
New plant to deal with disruption
Bought some facilities from suppliers and made investments when they were unwilling/unable
Paid out suppliers that were in financial risk
Sent own staff to suppliers where necessary knowledge/management was unavailable
Provided replacement aircraft to customers
Updated progress regularly on website
Effective but often expensive
Only options due to constraints such as time
Possible other options could have included changing suppliers if time was not an issue
No more extensive outsourcing without improved control
More visibility for both Boeing and suppliers
Promise to improve quality management and training
More time on supplier selection
Involvement in tier 1s supplier selection
Employment of more supply chain specialists and engineers
Analysis of current suppliers and assistance on issues where needed
Positive actions that should lead to improved supply chains
Lessons learned appear to be helping Boeing supply chain as a whole
Appear to have helped although it is an ongoing process
We will now start decending in the Washington Dulles Internationa Airport. Please make sure you are seated and your seatbelts are fastned!
"Organization goal is to improve the product and service quality, performance and profitability in the most efficient ways that it is measured by the customers satisfaction.
Strategic Choice: Value-creation strategy
Reason: Boeing chose to pursue a value added strategy to differentiate itself from Airbus, whilst also appealing to consumer demand for fuel efficiency (airlines) and comfort (passengers) whist reducing costs at the same time."
New team leader:
A more experienced supply chain management was needed to take over control.
Exxon communication tool:
Again, relying on outsourcing for communication, very good theoretically but had to be managed properly by Boeing for it to work.
The acquisition of the fuselage plant to cancel further delay caused by the supplier. This decision made them manage the time and quality of deliverables much better.
Deregulation of USA airline industry increased competition.
Forecasted increase in passengers: 5% increase in passenger traffic between 2011 and 2013.
Boeing had to adapt to low costs.
Two options for Boeing:
Differentiate the product
-Reduced cost from 10 to 6 billion dollars.
-Increased fuel efficiency by 20% (fuel costs account for 30% of the global airline operating costs).
-shortened development time from six to four years.