Boeing formed strategic partnerships with 27 companies across multiple countries to build its new 787 Dreamliner aircraft. This was intended to reduce Boeing's financial risk but resulted in major delays and issues. Problems arose due to lack of coordination between partners, cultural differences, and Boeing asking suppliers to design their own parts without clear specifications. While intended to cut costs and development time, the partnerships ended up increasing Boeing's costs and led to a three year delay in delivering planes. However, Boeing is moving forward with the 787 which offers fuel efficiency advantages attractive to airlines, and has introduced larger 787 models that may lead to future profitability.
Boeing 787 case discussion suri gurumurthi, ph.d.ssuser454af01
A married couple presents with symptoms concerning for a sexually transmitted disease. Patient A has anal fissures and a rash, while Patient B has a genital ulcer. Laboratory testing reveals Patient A is positive for both Treponema pallidum and non-treponemal antibodies, indicating secondary syphilis. Patient B is positive for Treponema pallidum antibodies only, consistent with early latent syphilis.
Case competition final boing dreamlinerDan Nielsen
- Boeing has transformed from an aircraft manufacturer to a "master planner", outsourcing more production but facing challenges in managing suppliers.
- The new "Build to Fly" strategy aims to address issues like control, reliance and visibility in the supply chain by facilitating more collaboration between Boeing and partners.
- The Boeing BIO1000 concept is for a new mid-sized fuel efficient aircraft that could replace aging 737s, targeting growing demand for shorter flights. Its innovative design and "Build to Fly" approach aim to give Boeing long-term competitive advantage.
The document summarizes Boeing's 787 Dreamliner aircraft project. It discusses how Boeing aimed to regain market dominance with the more fuel efficient 787. However, Boeing faced significant manufacturing delays due to issues with international suppliers providing incorrect or late parts. The aircraft also experienced battery issues that resulted in a fleet-wide grounding. While the 787 has promising features, outsourcing parts reduced Boeing's control and introduced quality problems. The project faced major challenges but could help Boeing if the aircraft proves successful.
The document discusses delays faced by Boeing in delivering its 787 Dreamliner aircraft. Key reasons for delays included an unexpected shortage of fasteners from suppliers, underestimating the work required to develop flight control software, and labor strikes threatening progress. Boeing also faced challenges transitioning to new composite materials. To address delays, Boeing worked more closely with suppliers and revised project timelines and plans.
This report discusses the materials used in manufacturing the Boeing 787 Dreamliner. It notes that the 787 uses composite materials for around half of its airframe, resulting in around a 20% weight savings compared to more conventional aluminum designs. It also discusses the benefits of using titanium and nano-coatings on engine components, allowing them to withstand higher temperatures and friction. The report concludes that advances in materials have allowed Boeing to develop airplanes that are more cost-effective and fuel efficient while maintaining environmental friendliness.
Boeing 787: Global Supply Chain Management Takes Flight
Learn how Boeing was able to reduce the supply chain risk associated with moving to a globally-distributed manufacturing model for Boeing's 787 Dreamliner.
Building the Boeing 787 - Anthony Abdelnour - Group ProjectAnthony Abdelnour
The document discusses Boeing and Airbus, the two major companies in the commercial aircraft manufacturing industry. It provides statistics comparing their sales, revenues, market share, and new aircraft models. Boeing outsources 70% of production through global partners while Airbus production is distributed across Europe. The pros and cons of outsourcing discussed are efficiency gains but also potential reduced control and quality issues.
The document provides an analysis of issues that caused delays in the delivery of Boeing's 787 Dreamliner airplane. It identifies several problems that contributed to the delays, including unexpected shortages of fasteners from suppliers that caused Boeing to rush suppliers, leading to quality control issues. Overall, the delays cost Boeing over $4 billion in penalties to airlines. The document analyzes the problems from a supply chain management perspective and suggests implementing changes to prevent such delays in the future, such as better supply chain coordination and quality control measures.
Boeing 787 case discussion suri gurumurthi, ph.d.ssuser454af01
A married couple presents with symptoms concerning for a sexually transmitted disease. Patient A has anal fissures and a rash, while Patient B has a genital ulcer. Laboratory testing reveals Patient A is positive for both Treponema pallidum and non-treponemal antibodies, indicating secondary syphilis. Patient B is positive for Treponema pallidum antibodies only, consistent with early latent syphilis.
Case competition final boing dreamlinerDan Nielsen
- Boeing has transformed from an aircraft manufacturer to a "master planner", outsourcing more production but facing challenges in managing suppliers.
- The new "Build to Fly" strategy aims to address issues like control, reliance and visibility in the supply chain by facilitating more collaboration between Boeing and partners.
- The Boeing BIO1000 concept is for a new mid-sized fuel efficient aircraft that could replace aging 737s, targeting growing demand for shorter flights. Its innovative design and "Build to Fly" approach aim to give Boeing long-term competitive advantage.
The document summarizes Boeing's 787 Dreamliner aircraft project. It discusses how Boeing aimed to regain market dominance with the more fuel efficient 787. However, Boeing faced significant manufacturing delays due to issues with international suppliers providing incorrect or late parts. The aircraft also experienced battery issues that resulted in a fleet-wide grounding. While the 787 has promising features, outsourcing parts reduced Boeing's control and introduced quality problems. The project faced major challenges but could help Boeing if the aircraft proves successful.
The document discusses delays faced by Boeing in delivering its 787 Dreamliner aircraft. Key reasons for delays included an unexpected shortage of fasteners from suppliers, underestimating the work required to develop flight control software, and labor strikes threatening progress. Boeing also faced challenges transitioning to new composite materials. To address delays, Boeing worked more closely with suppliers and revised project timelines and plans.
This report discusses the materials used in manufacturing the Boeing 787 Dreamliner. It notes that the 787 uses composite materials for around half of its airframe, resulting in around a 20% weight savings compared to more conventional aluminum designs. It also discusses the benefits of using titanium and nano-coatings on engine components, allowing them to withstand higher temperatures and friction. The report concludes that advances in materials have allowed Boeing to develop airplanes that are more cost-effective and fuel efficient while maintaining environmental friendliness.
Boeing 787: Global Supply Chain Management Takes Flight
Learn how Boeing was able to reduce the supply chain risk associated with moving to a globally-distributed manufacturing model for Boeing's 787 Dreamliner.
Building the Boeing 787 - Anthony Abdelnour - Group ProjectAnthony Abdelnour
The document discusses Boeing and Airbus, the two major companies in the commercial aircraft manufacturing industry. It provides statistics comparing their sales, revenues, market share, and new aircraft models. Boeing outsources 70% of production through global partners while Airbus production is distributed across Europe. The pros and cons of outsourcing discussed are efficiency gains but also potential reduced control and quality issues.
The document provides an analysis of issues that caused delays in the delivery of Boeing's 787 Dreamliner airplane. It identifies several problems that contributed to the delays, including unexpected shortages of fasteners from suppliers that caused Boeing to rush suppliers, leading to quality control issues. Overall, the delays cost Boeing over $4 billion in penalties to airlines. The document analyzes the problems from a supply chain management perspective and suggests implementing changes to prevent such delays in the future, such as better supply chain coordination and quality control measures.
1-2 pages of five supply chain lessons learned from the Bo.pdfConceptcreations1
1-2 pages of five supply chain lessons learned from the Boeing case. Each lesson can be in a
short paragraph.
Managing New Product Development and Supply Chain Risks: The Boeing 787 Case The 787
Dreamliner's unconventional supply chain To reduce the 787's development time from six to four
years and development cost from $10 to $6 billion, Boeing decided to develop and produce the
Dreamliner by using an unconventional supply chain new to the aircraft manufacturing industry.
The 787s supply chain was envisioned to keep manufacturing and assembly costs low, while
spreading the financial risks of development to Boeing's suppliers. Unlike the 737s supply chain,
which requires Boeing to play the traditional role of a key manufacturer who assembles different
parts and subsystems produced by thousands of suppliers (Figure 3 ), the 787's supply chain is
based on a tiered structure that would allow Boeing to foster partnerships with approximately 50
tier-1 strategic partners. These strategic partners serve as "integrators" who assemble different
parts and subsystems produced by tier-2 suppliers (Figure 4). The 787 supply chain depicted in
Figure 4 resembles Toyota's supply chain, which has enabled Toyota to develop new cars with
shorter development cycle times Figure 4 Redesigned supply chain for the Dreamliner program
Table 3 Comparison of Boeing's strategy for its 737 and 787 programs
Managing New Product Development and Supply Chain Risks: The Boeing 787 Case
Christopher S. Tang and Joshua D. Zimmerman UCLA Anderson Schood
ctangearnderson.uda.edu joshua zimmerman.20096anderson.uda.edu Commented by James I.
Nelson M.S. MBCP, CORP Business Continuity Services To stimulate revenue growth and
market response, Boeing decided to develop the 787 Dreamliner. The 787 Dreamliner is not only
a revolutionary aircraft, but it also utilizes an unconventional supply chain intended to drastically
reduce development cost and time. However, despite significant management efforts and capital
investment, Boeing is currently facing a series of delays in its schedule for the maiden flight and
plane delivery to customers. This paper analyzes Boeing's rationale for the 787's unconventional
supply chain, describes Boeing's challenges for managing this supply chain, and highlights some
key lessons for other manufacturers to consider when designing their supply chains for new
product development. Acknowiedyments: We uould like to thank Wiliam Schmidt of the Hartard
Business School and ane anonymous reviewer for their constructive comments an an earlier
version of this paper. Introduction Since the U.S. government deregulated air travel in 1977 ,
more airlines have entered the market causing fierce price competition. As airfares continued to
decline, the total number of U.S. passengers per year has risen from approximately 240 million
to 640 million from 1977 to 1999. At the same time, U.S. commercial aircraft manufacturers
have faced major competition from European companies..
This document provides a case study on lessons learned from Boeing's 787 Dreamliner project. Key points:
- Boeing significantly increased outsourcing for the 787 to 70% in an attempt to reduce costs and risks, utilizing a novel multi-tier supply chain model. This led to underestimating integration costs and losing control over key technologies.
- Major delays occurred, with the first 787 delivery over 2 years late. Issues with lithium batteries also grounded the 787 fleet temporarily in 2013.
- Nine lessons are identified, including the need for accurate cost estimation considering all costs, assembling a management team with supply chain expertise, and proactively managing labor union relationships. Outsourcing too
The document provides an outlook on the global aerospace and defense industry in 2012. It finds that the commercial aircraft industry is expected to continue growing due to increasing orders and production, while parts of the defense industry may decline due to decreased military spending, particularly in the US and Europe. Overall, the financial performance of top aerospace and defense companies is projected to be similar to 2011. The document also discusses trends in commercial aircraft production, air traffic control modernization, global defense spending, business jets, and regional outlooks.
Boeing is the world's largest aerospace company with over 159,000 employees. Its strategic planning began with the alliance of five major aviation companies and is now focused on running a healthy core business, leveraging strengths, and conquering new frontiers. Boeing uses an internal matrix structure to balance power between functions and divisions, and integration is key to coordinating production across industries. Legal factors, social responsibilities, production capacity, and competitors like Airbus can all impact Boeing's strategic, tactical, operational, and contingency planning at different levels of the organization.
In this presentation there is analysis for Boeing, history, sales, supply side analysis, Commercial Aircraft Demand Determinants, Market Drivers, Order Comparison, Delivery Comparison, Current Strategy
Remanufactured Products: A New Business Model For Light-Vehicle OEMsRon Giuntini
This document proposes a new business model for US automakers to focus on remanufacturing light vehicles. It argues that remanufacturing could increase profit margins for automakers from 4-6% to 8-12% by offering fleet operators remanufactured vehicles and components at a lower total ownership cost, while also reducing environmental impact and circumventing stricter fuel efficiency standards. The document outlines the key elements of this proposed remanufacturing business model, including targeting fleet operators as customers and minimizing their total ownership costs through remanufactured acquisitions.
Sampling of Current LCC IssuesImprovements in the NewsCom.docxjeffsrosalyn
Sampling of Current LCC Issues/Improvements in the News
Commercial Airliner Aircraft - (Recent News Briefs in AIAA Morning Launch)
· Boeing Plans to Cut Up to 8000 jobs from Commercial Aircraft Division
· Boeing 737 Accelerated Assembly Automation
· Boeing Changing Supplier Terms Amid Cost Cutting Efforts
· Low Oil Prices Improving Airline Revenue Outlook
· American Airline Tops Profit Estimates, Defers Aircraft Deliveries
· Southwest Airline Delays Delivery of Boeing 737-Max Aircraft
· Boeing 737-Max & 777X 2018 Status
· Bombardier Delivers First C Series Jetliner - Challenge to Boeing & Airbus
· Airbus Cuts Production Rate of A380 Super Jumbo Airliners
· Airbus $1.5 Billion Loss From A350 & A400M Development Issues
Boeing plans to cut up to 8,000 airplane jobs: sources | Reuters
www.reuters.com/article/us-boeing-redundancies-idUSKCN0WW0AF
Mar 30, 2016 - Boeing Co plans to cut up to 8000 jobs this year at its commercial ... about 1,600 through voluntary layoffs and 2,400 by leaving open positions ...
Boeing Rolling Out Accelerated Assembly Automation At 737 Factory.
Reuters (6/17) reported that Boeing is debuting the Spar Assembly Line (SAL) at its 737 manufacturing plant in Renlon, Washington, “adding a new robotic system to drill holes in the main beams inside each wing known as spars, industry sources said.” According to the article, the roll out of the new systems bolsters Boeing’s headway into automation “as it prepares to boost output of its best-selling airliner, while also preparing the ground work for future aircraft that will be designed with radical new manufacturing methods in mind.” The aircraft manufacturer “says greater automation will cut the amount of ‘rework’ caused by production glitches, reduce injuries and support sharp increases in output at factories.”
Boeing Changes Payment, Inventory Terms With Suppliers Amid Cost Cutting Efforts.
Reuters (7/7) reports that Boeing has ramped up its efforts to “conserve cash, cut costs in its supply chain and trim inventory of parts in its factories,” informing suppliers that it will take up to 120 days to pay for its expenses, “rather than 30 days as in the past.” According to sources close to the matter, Boeing is introducing the new payment scheme this year. In addition, the source said that the company is also decreasing its overall factory inventory and is relying on suppliers to store parts and equipment. Confirming the reported changes in a statement to Reuters, Boeing spokeswoman Jessica Kowal said that in order to stay competitive, “we are in the process of adjusting the payment terms of our large suppliers,” adding that “our new payment terms are in line with their payment schedules to their own suppliers.”
Low Oil Prices Fueling Airline Revenue Outlook, IATA Says.
USA Today (6/2) reports that according to new data released on Thursday by the International Air Transport Association (IATA), carriers worldwide are expected to generate a total of $3.
The document summarizes cost-cutting efforts on the Lockheed Martin S-3 Viking digital flight data computer program. A multi-functional team prioritized holding costs to a minimum from the start of development. Design reuse from the C-17 program and supplier collaboration helped reduce design and material costs. Automating component selection and assembly processes through new tools also reduced labor costs. As a result, the team exceeded their cost objectives while meeting schedule and performance targets, providing a model for managing costs on other programs.
The document discusses Boeing's 787 Dreamliner project and its global supply chain management approach. Some key points:
1) Boeing outsourced 70% of production to suppliers around the world, breaking from its typical secretive approach.
2) Suppliers experienced delays in delivering parts on schedule, which caused delays in Boeing's production and assembly.
3) Boeing's heavy reliance on the global supply chain made it vulnerable to issues outside its control with suppliers. Stronger management of the supply chain may have helped mitigate these problems.
Evaluating the success factors of partnering in the building construction ind...Alexander Decker
This document discusses partnering in the building construction industry in Ghana. It identifies increased opportunity for innovation and value engineering, improved project outcomes in terms of cost, time and quality, lower administrative and legal costs, achieving better buildability, establishing a more dynamic organizational structure and clear lines of communication, and developing an environment for long-term profitability as the critical success factors of partnering based on a study of 15 construction companies in Accra, Ghana. The document also provides background on the origins and evolution of partnering in construction projects internationally and identifies some potential problems with partnering.
An analysis of Boeing company for Finance class. Designed to feel like a professional stock review including industry trends, catalysts, and potential growth using a FCF model.
Boeing is the world's largest aerospace company and second largest defense contractor. It generates over $60 billion in annual revenue from commercial airliners, military aircraft, weapons, space systems, and other services. Boeing competes with Airbus, Lockheed Martin, and European Aeronautic Defence and Space Company in commercial and defense markets. It aims to leverage its expertise in aerospace to develop new products and services through strategies outlined in its "Vision 2016" plan.
Boeing is the world's largest aerospace company and second largest defense contractor. It generates over $60 billion in annual revenue from commercial airliners, military aircraft, rockets, satellites and other products. Boeing competes with Airbus, Lockheed Martin and EADS in both commercial and defense markets. The commercial aircraft industry has high barriers to entry due to large capital requirements, long development cycles and product risks. Boeing aims to leverage its strengths in engineering and customer relationships into new aerospace products and services.
SpiceJet Airlines is an Indian low-cost carrier that has struggled financially in recent years, accumulating losses of over $500 million against shareholder funds of $300 million. It faces several strategic issues that threaten its ability to continue as a going concern, including high costs from its mixed fleet of aircraft types, lack of capital, and inefficient operations. Its key strategic challenge is achieving sustainable growth through addressing these underlying financial and operational weaknesses in order to become a strong competitor in the growing Indian market.
The Race For The Future Of Aircraft SeatingTorben Haagh
The document discusses the race for developing lighter aircraft seating. Rising fuel costs are incentivizing airlines to invest in weight-reducing technologies. Aircraft seating manufacturers are developing seats using composites that are 30% lighter. Companies like Recaro have obtained certification for seats that are 3kg lighter and reduce space while improving passenger comfort. Lighter seats benefit airlines through reduced fuel costs and increased payload, and benefit the environment through lower emissions.
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years and development cost from $10 to $6 billion, Boeing decided to develop and produce the
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parts and subsystems produced by thousands of suppliers (Figure 3 ), the 787's supply chain is
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parts and subsystems produced by tier-2 suppliers (Figure 4). The 787 supply chain depicted in
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Managing New Product Development and Supply Chain Risks: The Boeing 787 Case
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a revolutionary aircraft, but it also utilizes an unconventional supply chain intended to drastically
reduce development cost and time. However, despite significant management efforts and capital
investment, Boeing is currently facing a series of delays in its schedule for the maiden flight and
plane delivery to customers. This paper analyzes Boeing's rationale for the 787's unconventional
supply chain, describes Boeing's challenges for managing this supply chain, and highlights some
key lessons for other manufacturers to consider when designing their supply chains for new
product development. Acknowiedyments: We uould like to thank Wiliam Schmidt of the Hartard
Business School and ane anonymous reviewer for their constructive comments an an earlier
version of this paper. Introduction Since the U.S. government deregulated air travel in 1977 ,
more airlines have entered the market causing fierce price competition. As airfares continued to
decline, the total number of U.S. passengers per year has risen from approximately 240 million
to 640 million from 1977 to 1999. At the same time, U.S. commercial aircraft manufacturers
have faced major competition from European companies..
This document provides a case study on lessons learned from Boeing's 787 Dreamliner project. Key points:
- Boeing significantly increased outsourcing for the 787 to 70% in an attempt to reduce costs and risks, utilizing a novel multi-tier supply chain model. This led to underestimating integration costs and losing control over key technologies.
- Major delays occurred, with the first 787 delivery over 2 years late. Issues with lithium batteries also grounded the 787 fleet temporarily in 2013.
- Nine lessons are identified, including the need for accurate cost estimation considering all costs, assembling a management team with supply chain expertise, and proactively managing labor union relationships. Outsourcing too
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· Boeing Changing Supplier Terms Amid Cost Cutting Efforts
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Similar to BoeingsStrategicPartnershipsforthe787Dreamliner, MKTU 640, feldmanj (16)
1. Running head: BOEING᾽S STRATEGIC PARTNERSHIPS FOR THE 787 1
Boeing’s Strategic Partnerships for the 787 Dreamliner
Joseph Feldman
Brandman University
Seminar in International Marketing
MKTU 640
November 23, 2014
2. BOEING᾽S STRATEGIC PARTNERSHIPS FOR THE 787 2
Boeing’s Strategic Partnerships for the 787 Dreamliner
Introduction
The purpose of this paper is to identify the advantages and disadvantages of Boeing’s market
entry strategy use of strategic partners in the building of the 787 Dreamliner. Boeing had formed
a strategic partnership with 27 companies across numerous countries that resulted in a three year
delay and then had further problems as two planes had battery explosions. The strategic
partnership reduced Boeing’s financial risk as it gave greater responsibility to its tier 1 strategic
partners. Traditionally, Boeing had designed their airplanes and then contracted with suppliers to
fulfill parts orders. The Boeing 787 Dreamliner is dubbed by some researchers as the largest
project that involved numerous strategic partners. In the near term the outcome was disastrous as
Boeing’s cost went up and the delay resulted in order cancelations.
Boeing and the 787 Dreamliner
“Boeing is the world's largest aerospace company and leading manufacturer of commercial
jetliners and defense, space and security systems” (Boeing, 2014, para. 1). In 2013 the company
posted $86.6 billion in revenue of which nearly $53 billion came from their commercial airplane
division (Boeing, 2013, p. 17). The company was in a race to stay competitive with competitor
(e.g. Airbus) as they envisioned the building of the Boeing 787 Dreamliner that would be a
lighter plane, hold more passengers, and be twenty percent more fuel efficient (Huffington Post,
2011, p. 1). In an attempt to lower the production cost and save time “Boeing decided to develop
and produce the Dreamliner by using an unconventional supply chain new to the aircraft
manufacturing industry” (Tang & Zimmerman, 2009, p. 77). This ended in disaster as the Boeing
787 Dreamliner faced design and supply issues, two major malfunction battery explosions, and a
three year delay in selling the planes.
3. BOEING᾽S STRATEGIC PARTNERSHIPS FOR THE 787 3
The Problem
Boeing encountered design and supply issues as the company created “risk sharing
partnerships” with over 27 different companies in numerous countries. The following chart
describes the major Tier 1 partnerships Boeing created in building the 787 Dreamliner (The
Sacramento Bee, 2013, para. 8):
Prior to the 787 Dreamliner, Boeing had relied on their in-house engineers to draw and
construct the components that had gone into their commercial airliners. The 787 Dreamliner
design called for replacing the body and wings from aluminum to carbon-fiber composites.
Boeing reduced the amount of components they would make to 30% and increased the amount of
parts suppliers would make to 70% (Stone & Ray, 2013, para. 6). Traditionally Boeing had
outsourced 60% of its airplane components (Epstein & Crown, 2008, para. 6). “Half a dozen
4. BOEING᾽S STRATEGIC PARTNERSHIPS FOR THE 787 4
main suppliers were put in charge of building big sections of the plane that were to be flown,
fully completed, to Boeing’s factory in Everett, Wash., then snapped together in three days and
delivered to customers” (Stone & Ray, para. 6). According to James Allworth (2013) a major
downfall of the 787 Dreamliner is that Boeing had not solved putting all the parts of the puzzle in
creating the 787 Dreamliner, and “[a]sked the suppliers to create their own blueprints for parts”
(para. 8).
Pros and Cons
At the time Boeing thought strategic partnerships with multiple companies in numerous
countries would benefit the operation in many ways. This new role that Boeing was assuming
would transform their 787 Dreamliner operation from being a manufacture into an integrator.
Potential advantages of strategic alliances Boeing could realize includes shorter development
time, lower development costs, reduction of financial risks, increased production, expertise from
suppliers, and international companies helping with marketing in their respective countries.
“Under the 787 program, Boeing instituted a new risk sharing contract under which no strategic
suppliers will receive payment for the development cost until Boeing delivers its first 787 to its
customers” (Tang & Zimmerman, p. 78). The following chart illustrates Boeings Dreamliner
supply chain (Tang & Zimmerman, p. 77):
5. BOEING᾽S STRATEGIC PARTNERSHIPS FOR THE 787 5
This arrangement placed an emphasis on the Tier 1 strategic partners to concentrate on “raw
material procurement and early component subassembly” (Tang & Zimmerman, p. 78). Boeing
expected all of the components to be sent to their U.S. assembly plant where the 787 Dreamliner
would be built in three days. “Relative to the 737 supply chain, this drastic reduction in cycle
time would in turn increase Boeing's production capacity without incurring additional
investments” (Tang & Zimmerman, p. 78).
Boeing faced many types of risks when they entered into strategic partnerships for the 787
Dreamliner. A few of these risks includes process, labor, management, and demand risks. In an
attempt to reduce risks Boeing implemented the use of Exostar software to track suppliers’
progress. Tim Opitz, director of 787 Production and Support Tools in Boeing Commercial
Airplanes states “[Exostar gives] the ability to have a common view with our partners of real-
time, supply chain performance reduces risk, improves cycle times and ensures compliance with
agreed processes” (Exostar, 2013, p. 2). The following describes how Exostar software could
help in Boeing’s supply chain arrangements with their strategic partners (Exostar, 2013, p. 3):
Collaborate on planning schedules
Issue purchase orders
Track purchase order changes
Exchange shipping information
Manage returns
Track shipments
Unfortunately for Boeing the strategic partnership did not work out as exactly as planned.
Prior to the two malfunctioned battery explosions that was previously discussed, Boeing had
issues with their supply partners. One example of a lack of transparency came when “[o]ne of the
6. BOEING᾽S STRATEGIC PARTNERSHIPS FOR THE 787 6
Tier-1 suppliers, Vought, hired Advanced Integration Technology (AIT) as a Tier-2 supplier to
serve as a system integrator without informing Boeing” (Tang & Zimmerman, p. 79). In some
cases Tier 1 suppliers and Boeing had difficulties in responding to Tier 2 and Tier 3 suppliers in
a timely manner because of culture differences. “Due to cultural differences, some Tier-2 or
Tier-3 suppliers [did] not often enter accurate and timely information into the Exostar system”
(Tang & Zimmerman, p. 80). In another instance Boeing workers (who saw increased
outsourcing) in 2008 went out on strike as they were concerned about job security. Spirit
Aerosystems (Spirit), a key supplier of Boeing, reacted by reducing their workforce. “Spirit
anticipated that the strike at Boeing would trigger order cancellations and delivery delay of
certain Boeing aircrafts” (Tang & Zimmerman, p. 80).
The Opportunity
Despite Boeing’s setback with the 787 Dreamliner, it may benefit the company to push
forward with their strategic partnership agreements. Customers are looking for better travelling
experiences and the airline companies look towards ways that they can reduce costs. The 787
Dreamliner offers a quieter ride, more carry on space, more cabin space, larger windows, better
lighting, and a better smell. According to CNN (2011) “it is 60 percent less noisy than other
planes of its size and capability” (para. 7). In addition to high efficiency particulate air filters, the
787 Dreamliner are “equipped with gas filters designed to remove odors, ensuring that
passengers don’t have to endure the smell of unpalatable airline meals for too long” (CNN, para.
26).
Airline companies are attracted to the 787 Dreamliner’s sustainability and fuel efficiency.
There is less scrap metal as major components of the 787 Dreamliner are constructed of carbon
7. BOEING᾽S STRATEGIC PARTNERSHIPS FOR THE 787 7
fiber composite material (Air Transport Action Group, n.d., para. 3). “Composites, which make
up 50% of the aircraft’s structure, are lighter, stronger, more resistant to impact, as well as more
resistant to corrosion and fatigue than aluminum alloys” (Air Transport Action Group, para. 4).
In addition, the 787 Dreamliner is expected to “reducing fuel consumption and greenhouse gas
emissions by 20%” (Air Transport Action Group, para. 1).
According to John Heimlich, chief economist at Airlines for America (a major airline industry
lobbying group in Washington) “fuel costs make up about 35 percent of airline operating costs”
(Yamanouchi, 2012, para. 4). It appears that during the last twenty years the total consumption of
fuel (measured in gallons) has been about the same from year to year, but the cost of fuel has
skyrocketed. The following charts illustrate the consumption of fuel in the U.S. and the costs
from 1993 through 2013 (Bureau of Transportation Statistics, 2014, para. 1):
8. BOEING᾽S STRATEGIC PARTNERSHIPS FOR THE 787 8
This data suggests that airline companies will have a strong desire to acquire fuel efficient
commercial airplanes now and in the future. Savings from fuel costs will most likely help Airline
companies be more competitive and increase future revenues and profits.
Boeings Future and Why Strategic Partnership Makes Sense
Boeing’s main competitor is European based Airbus. According to Boeing’s forecast the
regions that are expected to see the largest demand of new airplanes is the Asia Pacific and then
followed by Europe (Boeing Commercial Planes, 2013, p. 6):
The 787 Dreamliner is very significant as the middle size airline segment is expected to
account for roughly twenty percent of sales over the next twenty years. A strategic alliance with
companies like Kawasaki, Mitsubishi, and Fuji of Japan and Rolls Royce of the United Kingdom
may prove valuable in obtaining contracts within the Asia Pacific and Europe. According to
(Cateora, Gilly, & Graham, 2013) “[t]he Japanese consumer has been the hardest to please; the
demanding customers are the reason that the highest-quality products and services often emanate
from that country” (p. 344). John Newhouse (2007) argues that Boeing’s role as “being a
9. BOEING᾽S STRATEGIC PARTNERSHIPS FOR THE 787 9
systems integrator means shifting the financial risks to suppliers, especially those who, like the
Japanese and Italians, are subsidized by their governments” (para. 9). Newhouse also entertains
the idea that companies who have received Boeing’s proprietary technology plans in Japan could
turn around and create their own airplane building company. Newhouse dismisses this idea
because the Japanese companies “have a lower risk and more lucrative role as subcontractors to
Boeing” (Newhouse, para. 13). Intervention on behalf of Boeing is apparent when the Vice
President of Airbus aired “we have discovered that [Mitsubishi Heavy Industries] has on
occasion pressured JAL [to buy from Boeing] when its airplane was competing against us”
(Newhouse, para. 26).
Further Analysis
Boeing’s problems with the 787 Dreamliner could be seen as stepping stone to profitable
roads ahead. It is highly probable that Boeing has learned from its mistakes and has the ability to
fix the problems as they move forward with sales of the 787 Dreamliner. The company has had a
few years to address issues that includes supplier commitment levels and transparency problems
amongst Tier 1, Tier 2, and Tier 3 suppliers. Boeing has expanded upon the technology used in
the 787 Dreamliner by creating subsequent Dreamliner models. In 2014 Boeing received
approval by the U.S. Federal Aviation Administration and the European Aviation Safety Agency
for delivery of its new 787-9 Dreamliner. The 787-9 Dreamliner is a larger version of the
original 787 that has 40 more seats. Boeing Chief Executive Jim McNerney states “the larger
787-9 now accounts for 40% of Boeing's orders for the Dreamliner, with 413 reserved by
airlines, many of which have been shifting to the larger model” (Ostrower, 2014, para. 8). In
2018 Boeing is expected to unveil an even larger 787-10 Dreamliner that will seat 320
passengers (Ostrower, para. 8). The losses that Boeing faced amounted to roughly $2.9 billion of
10. BOEING᾽S STRATEGIC PARTNERSHIPS FOR THE 787 10
which they ultimately wrote off as a tax-loss. While this appears to be a great deal of money, it
may be viewed in decades to come as a small price that Boeing paid in creating what the future
of the airline industry looks like.
Conclusion
Boeing’s strategic partnership of the 787 Dreamliner was viewed as a corporate disaster. The
company suffered losses as there was a three year delay. Part of the problem was that Boeing’s
strategic partners were ineffective at teaming together in designing a cohesive 787 Dreamliner.
Boeing stepped through the process with their partners and ultimately created a sellable 787
Dreamliner. Data shows that airline companies are seeking higher fuel efficient airplanes. Fuel
costs are considered the highest proportion of airline company expenses. The strategic
partnership has allowed Boeing to lessen its investment and has created an incentive for foreign
suppliers to promote the 787 Dreamliner as they have a direct stake in the sales. Boeing has
taken proactive measures (e.g. tracking suppliers through Exostar software) in securing quality
and timely production. It appears that Boeing is moving towards profitably as they introduced a
second Dreamliner model (787-9) and have plans to introduce a third model (787-10) by 2018).
11. BOEING᾽S STRATEGIC PARTNERSHIPS FOR THE 787 11
Recommendations
1. Boeing may want to consider putting together a study of how many leases they sell versus
outright sales. Data suggests that airline companies have been leasing airplanes at higher levels
over the last 10-15 years. Boeing’s Dreamliner products are seen as a product that is more eco-
friendly and has higher fuel efficiency. Could this lead airline companies wanting to keep the
planes for a longer period of time by purchasing them. This could save resources (materials,
storage space, and less airplanes to build over the next 20-30 years).
2. Possible advantages of strategic alliance partners is securing a long term relationship and
securing resources. It may be to Boeing’s advantage to have a clearer understanding of who the
Tier 2 and Tier 3 suppliers are in securing resources.
3. Boeing may want to consider integrating Latin America and Middle East suppliers as “key
part suppliers” in their 787-9 and 787-10 models. Boeing’s projections illustrate that these two
markets combined will account for approximately 80% of the North America market during the
next twenty years.
12. BOEING᾽S STRATEGIC PARTNERSHIPS FOR THE 787 12
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