Development of the 787 Dreamliner exposed significant weaknesses in the supply chain developed by Boeing to produce the groundbreaking composite-bodied aircraft.
“I think it’s a fair criticism that, particularly during 787 development, real-time visibility of the supply chain was not perfect,” Boeing CEO Jim McNerney said to investors recently.
And wow is that an understatement.
It’s curious because Boeing is one of the most respected of American companies from a management perspective, and even was considered a leader in supply chain management in some professional circles.
But Boeing made a major gamble with the 787 because of the enormous financial risk and daunting amount of work involved. It outsourced some 70 percent of the aircraft’s production to partners in Japan, Korea, Italy and elsewhere.
Boeing contracted with more than 50 suppliers, 28 of them outside the U.S. The airliner’s wings were going from Nagoya, Japan to Everett, WA. Fuselage Section 43 was going from Nagoya, Japan to Charleston SC, to Everett, WA. Fuselage Section 46 went from Grottagli, Italy to Charleston, SC, to Everett, WA, and so on.
Partners assumed financial risk for their parts of the project. At the same time, the 787 pioneered revolutionary materials’ technology, a dramatically expanded use of carbon-reinforced plastic for the fuselage and wings. Production equipment such as autoclaves had never been used on this scale before. Nothing close. A big yacht maybe, that’s it.
If there is one criticism, Boeing may have had too much hubris heading into this and has been battered by problems.
Here are the supply chain problems as reported by Design News:
- Shortages of standard fasteners slowed production of the very first test aircraft. Somehow Boeing’s supply chain managers were unaware that capacity to produce aircraft fasteners had been dealt a body blow by weak economic conditions dating back to 2002.
- Training and production got off to a slow start at a partner’s new Charleston, S.C. plant where the 787’s aft fuselage sections are manufactured. Boeing had to take over the plant to get back on track.
- Poor communications among partners resulted in delays in discovering serious design flaws. One example is the failure of wing joints on both sides of the plane to perform as predicted in virtual models. Teams of design engineers from Fuji, Mitsubishi and Boeing worked collaboratively to develop a fix, which involves18 small locations on each side of the airplane.
- Up to 30 percent of the nut plates used to fasten bundles of wires and other parts for 2007 through mid-2008 were defective because of poor supplier labeling and miscommunications about coatings. The problem was discovered at a Spirit AeroSystems factory in Wichita, KS.
- There have been a variety of serious problems with the Dreamliner partner in Italy, Alenia Aeronautica, which is manufacturing fuselage sections for the middle of the plane. Small wrinkles were discovered on the composite skin of fuselages early in the production process. A design fix was developed. Boeing also had problems with 787 horizontal stabilizers from Alenia, and may bring some of that work in house. The factory’s startup was delayed because of a requirement that olive trees on the site in southeastern Italy had to be replanted elsewhere.
- Some systems work that was originally planned to be handled by contractors was brought in-house because of supplier problems.
Dreamliner deliveries have been postponed seven times, resulting in a three-year delay as a result of supply chain, design, and labor problems. The first Dreamliner is due for delivery to All Nippon Airways in August or September.
Boeing is producing two Dreamliners a month at this time and expects to gradually accelerate output, moving to ten per month by late 2013.
Dreamliner executives-those still standing at least-are more humble in their public statements these days. ”We just booted it,” says McNerney. “Our only defense is that every industry I know boots that at least once, and then they learn. Unfortunately we paid billions upon billions in the learning process.”
OK, but I still really love this airplane. It shows American technology at its best. Brave-and world leading. Even the supply chain model was brave. Spread product development and risk around the world. And we’re not talking about something virtual or the size of a microprocessor. We’re talking about giant aircraft sections.
Boeing couldn’t fail on the 787. It threw resources after resources into the project to ensure its eventual success. Its future was on the line, both from a credibility and financial perspective. Thousands of suppliers of products ranging from titanium fasteners to interior components are following in the wake of the 787. It was too big to fail.
Boeing took a lot of butt kicking, but it led the way.