Boeing's New Dreamliner Supply-Chain Strategy: Redundancy and Revenge

Without having yet flown, Boeing's 787 Dreamliner has already become a legendary case study in supply-chain-management debacle. The most recent chapter could be titled, "Duality" for both supply-chain redundancy and the two principal reasons it's being implemented.

Tuesday's Seattle Times reports, "The company said Monday it plans to use suppliers to replicate production of all 787 parts produced in its Puget Sound-area factories -- in Auburn, Everett, Fredrickson -- and in Portland, so that a second final-assembly line being established in North Charleston, S.C., can operate independently. The plan includes setting up a second Boeing facility or finding a supplier to build the vertical tail fin, now made in a state-of-the-art composites-manufacturing center in Frederickson, near Tacoma." Says Tom Wroblewski, president of the International Association of Machinists (IAM) District 751, "Which part of that airplane has come in on time or ahead of schedule and at or under cost? It's the vertical fin ... that's been designed and engineered and built by Boeing workers here in Puget Sound."

So why is Boeing targeting Puget Sound? According to the Times, "Boeing spokesman Jim Proulx cited strikes in the Puget Sound region as a major factor in the decision. With a second supplier for every part, Boeing potentially could continue producing Dreamliners in South Carolina even if the Machinists went on strike here [Puget Sound]."

"Repeated labor disruptions have affected our performance in our customers' eyes … We have to show our customers we can be a reliable supplier to them. The second production line has to be able to go on regardless of what's happening over here," said Proulx.

With many of the world's airline’s contemplating the replacement of their aging, inefficient fleets, Boeing seems to have settled upon a strategy that balances both labor and supply risk to bolster its competitive edge, and to prove to would-be buyers that it's regained control of production. And in the bargain, "Boeing continues to turn the screws on the Machinists union after their two-month strike in 2008."

According to the Times, "Ray Conner, vice-president and general manager of supply-chain management and operations sent a message Monday informing all Boeing Commercial Airplanes managers of the dual-sourcing decision. 'We will immediately begin identifying, selecting, and contracting with suppliers to stand up fully operational coproduction by 2012.’“

By placing a new level of trust with suppliers, perhaps Boeing is tacitly accepting responsibility for its supply-chain failures to date.  

William Busch

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