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Boeing Takes Supply Chain Action

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There has been some significant supply chain news and blogsphere commentary relative to Boeing’s ongoing challenges to get its 787 Dreamliner plane into full production. 

Yesterday, Jon Ostrower’s FlightBlogger broke the news that Boeing is set to announce its intention to acquire the North Charleston South Carolina based 787 fuselage manufacturing operations currently operated by Vought Aircraft Industries.  Cudos to Jon on an informative and well written posting. The story was also reported in today’s Wall Street Journal (subscription required).

According to FlightBlogger, as well as the WSJ article, this move is an acknowledgement that Boeing needs to take a more direct role in both the current supply chain and manufacturing operations of the 787 program.  Both point to speculation that Boeing may well be considering opening a second final assembly manufacturing operation at this Charleston facility.

Supply Chain Matters has had multiple commentaries related to the ongoing supply chain challenges of Boeing, the latest being Yet Another Setback at Boeing. In that post, my observation was that Boeing management should learn from its outsourcing snafus related to the 787, and it was time to move on and correct the problem.  This pending announcement seems to be a step in the right direction.

Similar to Airbus and other complex manufacturers, the notion that a company can simultaneously outsource major materials and structural design, as well as production operations to suppliers without comprehensive coordination and program management is a misnomer.  Jason Busch on SpendMatters notes that:  .. “Boeing has learned the hard way that being a guinea pig for incorporating unprecedented amounts of new materials (e.g. titanium) into certain supplier-produced parts/components (e.g. fasteners) introduces significant new supply chain risk into the sourcing equation.”  Lisa Reisman noted on her MetalMiner blog that the latest structural problem found during static testing will now require even closer collaboration among supply partners Mitsubishi and Fuji Industries with Boeing engineering.

I myself feel that Boeing needs to dramatically step-up efforts in the transparent flow of two-way communications among its senior management and program teams.  It seems to be that old adage of “tell them what they want to hear” rather than “tell them what they need to hear” is again at play.  Then again, perhaps senior management had too many filters in place.

This new development is a more positive step for Boeing in fixing its supply chain outsourcing issues. While some of Boeing’s backlogged customers remain disappointed in multiple delivery setbacks, it is far better to have a technologically advanced as well as a structurally safe aircraft that future flyers can admire.

 Bob Ferrari

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  1. Bob Ferrari says:

    A quick update on my previous posting on Boeing. Financial news media reported on July 8th that Boeing has indeed agreed to acquire the North Charleston South Carolina manufacturing operations of Vought Aircraft Industries. Boeing will pay $580 million in cash, as well as forgive $422 million in previous cash advances paid to Vought for work on the 787.

    With a cost of nearly $1 billion, Boeing has now taken a second significant step in taking over control of the 787 Dreamliner supply chain.

    Bob Ferrari