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-Dec. 20, 2007

 
 

Supply Chain Graphic of the Week – Boeing's Risky Outsourcing Strategy

 
 

Use of Suppliers for Assembly of Major Sections of the Dreamliner 787 Offered Promise of Cost Savings and Cycle Time Reductions; Supplier Challenges have Forced Delay of Scheduled Launch of Hot Selling New Aircraft

 
 

By SCDigest Editorial Staff

 
 

As SCDigest reported this week, Boeing has had major problems with its strategy to outsource substantial portions of the design and manufacture of components for its new Dreamliner 787 airplane (see For "Want of a Nail," and Supply Chain Outsourcing Expertise, Boeing's Dreamliner Continues to Face Schedule Woes.)

In the past, Boeing would either directly manufacture most components or outsource only individual parts that Boeing would then assemble itself. As shown in the graphic below, for the 787, Boeing outsourced large sections of the airplane to tier 1 suppliers, who in turn outsourced significant portions of their work to tier 2 suppliers. Boeing's strategy was to serve as the final assembler of these large sections, reducing the historical production time in Boeing's Seattle factory from a month for large aircraft to just 3-4 days.

Source: Wall Street Journal from Boeing Sources

Was it too much outsourcing too soon? With significant schedule delays due to parts shortages, and $2 billion set aside to expedite supplier parts production, it certainly seems the answer is Yes.

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