Boeing: When Your Suppliers Fail You, Buy Them!

There are some times when you read a news story that you know that you're only get part of the truth -- and that the real scoop is locked away somewhere. Such is the case of a recent Aviation Week story which profiles how Boeing is purchasing a division of one of its suppliers that failed them with the 787 project. According to the story, "Pending regulatory approval, Boeing is to acquire Vought Aircraft Industries' 50% share of the Italian-American fuselage builder Global Aeronautica (GA) in North Charleston, S.C. That removes Vought from the managerially challenging role of an airframe/systems integrator and shifts it back to the more straightforward task of building the aft fuselage."

But the story gets more interesting. "Global Aeronautica assembles seven composite fuselage assemblies into two barrel sections that represent the entire fuselage aft of the aircraft's nose. Those assemblies, which include contributions from Japanese manufacturers, are supposed to arrive at Boeing's 787 final assembly factory in Everett, Wash., fully 'stuffed' with wiring, hydraulics, floors and systems ... That they haven't been is a big reason why the Everett staff has undertaken major amounts of "travel work" -- the company's term for playing catch-up on tasks its suppliers were supposed to accomplish."

What's the lesson here? For one, when suppliers fail you in the middle of a giant, multi-billion dollar project, it's essential to take all actions necessary to shore up control of the situation -- even if that means stepping in and getting creative on the financing side of the equation. But perhaps a more subtle learning from this is that the chances of supplier disruptions and related challenges increase by an order of magnitude when you transform a business model from one of making to one of buying. Even if you've taken what appear to be all of the precautions necessary up front, you should always be prepared for the unpredicted worse case scenarios.

- Jason Busch

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