2. Boeing 787
Dreamliner
September 25, 2013
A Case Study for Project Management:
Lessons Learned
2
Abdullah Gaznaii
Alfredo Martinez
Jamie Gregory
Mohamed F. Sollimon
A Case Study for Project Management:
Lessons Learned
Sorted alphabetically :
3. Outline
• The Aerospace Industry – An Overview
• 787 Dreamliner Project
• Lessons Learned
• Conclusion
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4. The Aerospace Industry
• Aerospace has been an important employer,
providing highly skilled jobs.
• Aerospace manufacturing sector has been the
technological backbone of American
manufacturing.
• Decline in employment:
> 900 thousand in 1989
< 500 thousand in 2013
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5. Large Commercial Aircraft (LCA)
• Defined as non-military aircraft with a seating
capacity above 100.
• Today the LCA market is a duopoly consisting of
Boeing and Airbus.
• New core business model: Boeing has become a
Systems Integrator
• Boeing 727 (1960): 2% outsourced
• Boeing 777 (1990): 30% outsourced
• Boeing 787 (2013): 70% outsourced
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6. 787 Dreamliner
• Boeing’s new flagship LCA
• Advanced technology
Composite material structure
Propulsion system
20% fuel reduction
• Multi-tier supply chain
Cut development costs from $7.3 to $4.2 billion
Reduce development time by 2 years
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9. Lesson 1: Assemble a management team
with requisite expertise
Traditional Supply Chain
Dreamliner Supply Chain
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10. Lesson 1: Assemble a management team
with requisite expertise
“Without the requisite skills to manage an unconventional
supply chain, Boeing was undertaking a huge managerial
risk in uncharted waters.”
Mike Bair,
Proven marketing
expertise
Patrick Shanahan,
Proven supply-chain management
expertise
(Tang and Zimmerman 2009)
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11. • New outsourcing model adds complexity,
enforcing need for visibility
• Exostar software alone is not sufficient
• Multi-tier and outsourcing practice led to
inaccurate information inputs
• Recommendations:
Ground rules for accurate and updated information
Assess and manage cultural differences
Lesson 2: Supply chain visibility should be
improved to ensure issues are addressed
on time
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12. Lesson 3: Cost estimation of a project should
follow a full understanding of all the
underlying costs
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7.3b 4.2b 15b
Estimated cost
(conventional
outsourcing)
Estimated cost
(new outsourcing
model) Actual cost
Does that look right?
13. • Accurate cost estimation is critical input for decision making
and to avoid project overruns.
Reduce Cost
𝑅𝑂𝑁𝐴 =
𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 𝑎𝑓𝑡𝑒𝑟 𝑡𝑎𝑥
(𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑒𝑡 𝑎𝑠𝑠𝑒𝑡𝑠)
Reduce equipment and inventory
Lesson 3: Cost estimation of a project should
follow a full understanding of all the
underlying costs
14. • Taking on increased risk of outsourcing
• Hidden costs of integration, cooperation, and
collaboration
• Increased cost and time necessary to make design
changes through multi-tiered suppliers
Lesson 3: Cost estimation of a project should
follow a full understanding of all the
underlying costs
15. • A single tier-1 supplier could drag
the whole product quality down.
• It is essential to have a strict
supplier selection process to
ensure their qualification in terms
of:
Technical expertise
Capacity to deliver on time
Meeting expected quality
Lesson 4: Improve Tier-1 supplier training
and selection process
16. • In such a high tech. and time critical project
suppliers should be provided with:
On-site quality control
Close management of supplier
Technical support if necessary
Lesson 4: Improve Tier-1 supplier training
and selection process
17. Lesson 5: Proactively manage relationship
with labour unions
• Is Labour union a stakeholder?
• Boeing approved a big change
• Previous history with labour disputes
• Costly 2008 strike (September 7th , 8 weeks)
• Recommendations:
Utilize previous lesson learned
Incurrent risk assessment and management
Involve key stakeholders in the decision making process.
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18. Lesson 6: Risk-sharing contracts need to
include partner specific incentives/penalties
for timely/late work
• All partners slow to the speed of the weakest
link
• Recommendations:
Incentives for Tier-1 suppliers that meet
milestones early or on time
Penalties for missed deadlines
Increase buy-in from Tier-1 suppliers
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