Boeing Case Study - 2010 Global Business Case Study Competition
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This is the handout slides from Manchester Business School's presentation at the GBCC in Seattle. The team was made up of myself, Marc, Mili and Richard and was based on the supply chain management issues that Boeing were facing at the time.
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Boeing Case Study - 2010 Global Business Case Study Competition
- 1. Build-to-Home Grounded Boarding Take off Maintenance
- 2. Analysis
- 3. Analysis China – WTO & Airbus Global Recession Technological Strategic Window Suppliers Developing Core Competencies Legal Issue – Pratt & Whitney Oil Prices Environmental Regulation and Reform
- 4. Current Supply Chain Development of 787 Reliant on OUTSOURCING PROBLEMS Delays and penalties Threat of IP theft Two-tier outsourcing Responsibility vs. Accountability - lack of control
- 5. Solution Grounded Boarding Take Off Maintenance
- 6. Supply Chain Management Strategic Few Suppliers High impact on business Good relationship is key High Example: Wingbox (Alenia) Kraljic Matrix Impact on Business Non-critical Many suppliers Low impact on business BUT still may cause delays Example: Food Service Equipment (Diethelm Keller Aviation) Low High Low Complexity of Supply Market
- 7. Customer Relationship Management “Safe Pair of Hands” Soft Approach Foster trust through transparency of operations and soft-sell techniques R Cheap, quick and easy to do Q Repeated delays may make it difficult to believe BUT WE RECOMMEND: Hard Approach Make a guarantee to deliver that is favourable to the client R Significant improvement in customer relations Q High Risk
- 10. Bringing them closer to us
- 11. Effectively monitor and manage suppliers
- 12. Build on supplier knowledge
- 13. Find a way to increase job security Build-to-print and Build-to-performance TAKE THE BEST OF BOTH WORLDS
- 14. Implementation Grounded Boarding Take Off Maintenance
- 15. LT Implementation Plan Begin planning Sky Valley Supplier management programme 2-part identification of suppliers Non- Critical vs. Strategic
- 16. LT Implementation Plan Non- Critical vs. Strategic Begin planning Sky Valley Supplier management programme 2-part identification of suppliers -Bargaining Power & Cost Savings Methods used to grow Sky Valley Develop Core Competencies -Incentives to relocate -Affiliate branch -Acquisition
- 18. Transportation
- 19. TransactionSynergies - Procurement Economies of Scale - Communication - Wastage Labour - Pool of workers - Commitment to region: job security Begin planning Sky Valley Supplier management programme 2 part identification of suppliers Methods used to grow Sky Valley Develop Core Competencies Take Advantage of Benefits
- 20. Financials Grounded Boarding Take Off Maintenance
- 24. Transport cost savings: increase as Sky Valley grows: 50% “near-sourced” by 2015
- 26. Communication
- 28. Alternatives
- 29. Alternatives
Editor's Notes
- QUOTE:We are the internal TASK FORCE commissioned to provide an analysis of Boeing’s Commercial operations and to make recommendations in the short and long term. Today we would like to introduce to you an innovative concept for Boeing “Near-sourcing” which will make you ... Bn dollarsThis view is the basis of both our recommendations, the first being: How we move forward in the short term and the second, A longer term view on near-sourcing, – that being, bringing the companies that play a role in making our planes, closer to home, to a place we would like to call Sky Valley, Washington. A place for great engineering and a platform for continued leadership.We will show how we make you a trillion dollars?We will begin with by......Boeings Sky Valley
- We began our analysis by conducting a SWOT and Pestle analysis on the firm to identify the external factors which may prove to threaten or provide opportunities to the firm.Politically, Boeings ability to continue selling planes to China depends on the future of the trade agreements between the USA and China, which is highly uncertain. Although the WTO and airbus issues seem to have now concluded, this is another potential future threat to Boeings operations.With the development of the 787 Dreamliner, Boeing has a strategic window to challenge the hub-and-spoke model that Airbus has bet on. Boeing’s bet is on a fragmented travel where more and more cities are paired to make direct travel between them possible. Still on technology, it is important that Boeing look into protecting their IP. As they increasingly outsource to suppliers they run the risk of allowing those companies to develop core competencies which they can use to become competitors (as may soon be the case with China) or they can decide to sell to other firms, like Airbus.One legal issue worth noting is the legal battle between Pratt & Whitney and IAM, which could threaten the extent to which Boeing can be versatile in changing where it operatesFinally, rising oil prices, together with the proposed Obama regulations and reform (such as the cap and trade system) may lead to rising costs for Boeing and its customers. This may however turn out to be an opportunity if Boeing continues to lead the way in terms of energy efficient, environmentally friendly planes.
- We began our analysis by conducting a SWOT and Pestle analysis on the firm to identify the external factors which may prove to threaten or provide opportunities to the firm.Politically, Boeings ability to continue selling planes to China depends on the future of the trade agreements between the USA and China, which is highly uncertain. Although the WTO and airbus issues seem to have now concluded, this is another potential future threat to Boeings operations.With the development of the 787 Dreamliner, Boeing has a strategic window to challenge the hub-and-spoke model that Airbus has bet on. Boeing’s bet is on a fragmented travel where more and more cities are paired to make direct travel between them possible. Still on technology, it is important that Boeing look into protecting their IP. As they increasingly outsource to suppliers they run the risk of allowing those companies to develop core competencies which they can use to become competitors (as may soon be the case with China) or they can decide to sell to other firms, like Airbus.One legal issue worth noting is the legal battle between Pratt & Whitney and IAM, which could threaten the extent to which Boeing can be versatile in changing where it operatesFinally, rising oil prices, together with the proposed Obama regulations and reform (such as the cap and trade system) may lead to rising costs for Boeing and its customers. This may however turn out to be an opportunity if Boeing continues to lead the way in terms of energy efficient, environmentally friendly planes.
- Although Boeing has outsourced extensively, we do not believe they have over-outsourced. To explain this have looked at a supply chain management model, the Kraljic Matrix which shows, on the y-axis, the impact supplier components have on business against the complexity of the supplier market on the x-axis.In the short term, we will use this model to identify the different kind of suppliers we are dealing with.Suppliers which produce non-critical components, such as Diethelm Keller Aviation, will be changed for one of their competitors if they are not performing to the standard we require.On the other hand, Boeing will have to build successful relationships with suppliers which produce strategic components such as Alenia. Other examples...
- Betsy Talton Quote: As well as focussing on the fixing supply issues, we also need to be forward facing and support customers – if disastisfied/concerned about supply of 787s – impacts their business – which directly affects oursOrders, however, plummeted to a level not seen since the recession in 1971, a 40-year low. For 2009, Boeing recorded 263 gross orders and 121 cancellations for a net order book of 142. This compares to 662 orders in 2008 and 1,413 orders in 2007.To ensure that no further orders are cancelled or penalties encurred we suggest one of two strategies to be used, a soft approach...
- Mili will now present our implementation plan for Sky Valley which will leverage the lessons we have learned. Sky Vally will...
- Non-critical – same as VW and Mercedes
- QUOTE:We are the internal TASK FORCE commissioned to provide an analysis of Boeing’s Commercial operations and to make recommendations in the short and long term. Today we would like to introduce to you an innovative concept for Boeing “Near-sourcing” which will make you ... Bn dollarsThis view is the basis of both our recommendations, the first being: How we move forward in the short term and the second, A longer term view on near-sourcing, – that being, bringing the companies that play a role in making our planes, closer to home, to a place we would like to call Sky Valley, Washington. A place for great engineering and a platform for continued leadership.We will show how we make you a trillion dollars?We will begin with by......Boeings Sky Valley
- In conclusion, our proposal is not about the £1bn saved, or any other number, our proposal is about helping Boeing regain and sustain leadership within the industry – and by doing so also helping a troubled American manufacturing industry.to most people, the sky is the limit. but to those who love aviation, the sky is home. Sky Valley brings aviation home.