Busn427 Case Study Week 6: Closing Case- Building the Boeing

Closing Case- Building the Boeing

Summary

Boeing has created the aircraft of the future, the 787 jet. It is designed to fly long-haul point-to-point routes, equipped with 250 seats. 80% of the materials used are composite materials. This makes the plane 20% lighter then the traditional aircraft. This translates to savings in jet fuel consumption and cost.

The design and creation of the jet was a major technological gamble. To cut costs to minimize financial risk, Boeing outsourced 70% of the content of the 787 to other manufacturers. The partnered manufacturing companies contributed $8 billion in development cost and added in the expertise of experts, further lowering the costs and increasing sales in the partnering countries.   17 partners in 10 countries were selected.

Delays and complications arose in 2007. There was also a $2 billion increase in development cost.  These setbacks were due to key partner not being able to meet Boeing’s delivery schedules. Many of the early prototypes did not meet quality standards. Despite setbacks, Boeing stayed committed to outsourcing learning much closer management is required and to cut back on outsourcing, specifically with key components towards competitive advantage.

Questions

1. What are the benefits to Boeing of outsourcing so much work on the 787 to foreign suppliers? What are the potential risks? Do the benefits outweigh the risks?
2. In 2007 and 2008 Boeing ran into several publicized issues with regard to its management of a globally dispersed supply chain. What are the causes of these problems? What can a company such as Boeing do to make sure such problems do not occur in the future?
3. Some critics have claimed that by outsourcing so much work, Boeing has been exporting American jobs overseas. Is this criticism fair? How should the company respond to such criticism?