Introduction Since the U.S. government deregulated air travel in 1977, more airlines have entered the market causing fierce price competition. As airfares continued to decline, the total number of...

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Read the case and write your report including:


- Description of the case


- The key issues and challenges


- The selected solutions


- Risk management strategies going forward


- Your assessment of the selected solutions


- Your recommendations for the company


Expectation about 3000 words with Times Roman Font 11. Citations using APA style.




Introduction Since the U.S. government deregulated air travel in 1977, more airlines have entered the market causing fierce price competition. As airfares continued to decline, the total number of U.S. passengers per year has risen from approximately 240 million to 640 million from 1977 to 1999. At the same time, U.S. commercial aircraft manufacturers have faced major competition from European companies. After losing market share to Airbus (owned by EADS) in the late 1990s, Boeing was under pressure to decide between two basic competitive strategies: reduce the costs (and the selling prices) of existing types of aircraft or develop a new aircraft to raise revenues through value creation. In 2003, Boeing decided to focus on creating additional value for its customers (airlines) and their passengers by developing an innovative aircraft: the 787 Dreamliner. (Throughout this paper, we shall use the term “787 Dreamliner,” “787,” and “Dreamliner” interchangeably.) First, Boeing's value-creation strategy for the passengers was to improve their travel experience through redesigning the aircraft and offering significant improvements in comfort. For instance, relative to other aircrafts, over 50% of the primary structure of the 787 aircraft (including the fuselage and wing) would be made of composite materials (Hawk, 2005). As compared to the traditional material (aluminum) used in airplane manufacturing, the composite material allows for increased humidity and pressure to be maintained in the passenger cabin, offering substantial improvement to the flying experience. Also, the lightweight composite materials enable the Dreamliner to take long-haul flights. Consequently, the Dreamliner allows airlines to offer direct/nonstop flights between any pair of cities without layovers, which is preferred by most international travelers (Hucko, 2007). Table 1 and Figure 1 (p. 75) compare the 787 aircraft with other popular aircrafts. Second, Boeing's value-creation strategy for its key immediate customers (the airlines) and its end customers (the passengers) was to improve flight operational efficiency by providing big-jet ranges to midsize airplanes while flying at approximately the same speed (Mach 0.85).3 This efficiency would allow airlines to offer economical nonstop flights to and from more and smaller cities. In addition, with a capacity between 210 and 330 passengers and a range of up to 8,500 nautical miles, the 787 Dreamliner is designed to use 20% less fuel for comparable missions than today's similarly sized airplanes. The cost-per-seat mile is expected to be 10% lower than for any other aircraft. Also, unlike the traditional aluminum fuselages that tend to rust and fatigue, the 787's fuselages are based on composite materials, which reduce airlines' maintenance and replacement costs (Murray, 2007). Table 2 provides a summary of the Dreamliner's benefits for both the airlines and their passengers. Due to the unique value that the 787 provides to the airlines and their passengers, the number of orders exceeded expectations. The Dreamliner is the fastest- To stimulate revenue growth and market response, Boeing decided to develop the 787 Dreamliner. The 787 Dreamliner is not only a revolutionary aircraft, but it also utilizes an unconventional supply chain intended to drastically reduce development cost and time. However, despite significant management efforts and capital investment, Boeing is currently facing a series of delays in its schedule for the maiden flight and plane delivery to customers. This paper analyzes Boeing's rationale for the 787's unconventional supply chain, describes Boeing's challenges for managing this supply chain, and highlights some key lessons for other manufacturers to consider when designing their supply chains for new product development. Managing New Product Development and Supply Chain Risks: The Boeing 787 Case 74Supply Chain Forum An International Journal Vol. 10 - N°2 - 2009 www.supplychain-forum.com Christopher S. Tang and Joshua D. Zimmerman1 UCLA Anderson School [email protected] [email protected] Commented by James I. Nelson M.S. MBCP, CORP Business Continuity Services Acknowledgments: We would like to thank William Schmidt of the Harvard Business School and one anonymous reviewer for their constructive comments on an earlier version of this paper. 1. This research is supported by the UCLA Edward W. Carter Endowment Fund. selling plane in aviation history with carriers attracted to its new largely composite design and innovative next- generation jet engines that will allow the wide-bodied plane to fly further on less fuel. The Dreamliner program has been considered a model endeavor combining novel technology and production strategies. As of November 16, 2008, Boeing (Too early to talk about delay here.) www.boeing.com) received orders from more than 50 airlines for a total of 895 Dreamliners. The overwhelming response from the airline industry about Boeing's 787 has forced Airbus to quickly redesign its competitive wide-bodied jet, the A350, to make it even wider, which was later re-released as the A350XWB as an “extra wide body” (Wallace, 2006). Boeing is currently the second-largest global aircraft manufacturer (behind Airbus) in terms of revenue and deliveries (though having received more orders than Airbus), the second- largest aerospace and defense contractor in the world (behind Lockheed Martin), and the single-largest exporter in the United States. Sales in 2007 amounted to $66.4 billion with a net income of $4.1 billion. Besides sales, the stock market responded favorably when Boeing launched its “game-changing” 787 Dreamliner program in 2003. As shown in Figure 2, between 2003 and 2007, Boeing's stock price increased from around $30 a share to slightly over $100 a share. However, Boeing announced a series of delays beginning in late 2007 and the market has reacted negatively (Figure 2). The negative market response is somewhat expected as publicity of Boeing's supply chain problems have become increasingly evident. As shown in Figure 2, Airbus shared a similar fate after announcing a series of delays for the delivery of its A380 in early 2006 (Raman et al., 2008). Despite significant capital investment and management effort, Boeing is currently facing continual delays (for more than two years) in its schedule for the maiden flight and plane delivery to customers as of this writing (Sanders, 2009c). After numerous failed attempts to get its 787's composite rear fuselage supplier back on track, Boeing finally decided to acquire Vought's South Carolina facility at a cost of $1 billion on July 8, 2009 (Sanders, 2009a). This occurrence motivated us to examine the underlying causes of Boeing's challenges in managing its 787's delivery schedule. In this case study, we shall examine Boeing's rationale for the 787's unconventional supply chain. The next section presents our analysis of the underlying risks associated with its supply chain. Then we describe Boeing's risk mitigation strategies to expedite its development and production processes. We conclude with some key lessons for other manufacturers to consider when designing their supply chains for new product development. 75Supply Chain Forum An International Journal Vol. 10 - N°2 - 2009 www.supplychain-forum.com Managing New Product Development and Supply Chain Risks: The Boeing 787 Case Table 1 Comparison of select Boeing and Airbus aircraft Figure 1 Dreamliner and A380 size comparison 2. Measured in terms of typical seat configuration. For example, the total number of seats can be higher if more space is allocated to the economy-class cabin and less space to the first and business class cabins. 3. Other immediate customers include air freight logistics service providers such as Federal Express or DHL and aircraft operators such as Global Air. 76Supply Chain Forum An International Journal Vol. 10 - N°2 - 2009 www.supplychain-forum.com Managing New Product Development and Supply Chain Risks: The Boeing 787 Case Figure 2 Historical stock prices of Boeing and Airbus compared to the S&P500 Table 2 Dreamliner features with benefits for airlines and passengers The 787 Dreamliner's unconventional supply chain To reduce the 787's development time from six to four years and development cost from $10 to $6 billion, Boeing decided to develop and produce the Dreamliner by using an unconventional supply chain new to the aircraft manufacturing industry. The 787's supply chain was envisioned to keep manufacturing and assembly costs low, while spreading the financial risks of development to Boeing's suppliers. Unlike the 737's supply chain, which requires Boeing to play the traditional role of a key manufacturer who assembles different parts and subsystems produced by thousands of suppliers (Figure 3), the 787's supply chain is based on a tiered structure that would allow Boeing to foster partnerships with approximately 50 tier-1 strategic partners. These strategic partners serve as “integrators” who assemble different parts and subsystems produced by tier-2 suppliers (Figure 4). The 787 supply chain depicted in Figure 4 resembles Toyota's supply chain, which has enabled Toyota to develop new cars with shorter development cycle times 77Supply Chain Forum An International Journal Vol. 10 - N°2 - 2009 www.supplychain-forum.com Managing New Product Development and Supply Chain Risks: The Boeing 787 Case Figure 3 A traditional supply chain for airplane manufacturing Figure 4 Redesigned supply chain for the Dreamliner program Table 3 Comparison of Boeing's strategy for its 737 and 787 programs and lower development costs (Tang, 1999). Table 3 highlights the key differences between the 737's supply chain and the unconventional 787 supply chain. For instance, under the 787's supply chain structure, these tier-1 strategic partners are responsible for delivering complete sections of the aircraft to Boeing, which would allow Boeing to assemble these complete sections within three days at its plant in Everett, Washington (Figure 5). We now explain the relationale behind the 787’s supply chain as highlighted is table 3. Outsource more By outsourcing 70% of the development and production activities under the 787 program, Boeing can shorten the development time by leveraging suppliers' ability to develop different parts at the same time. Also, Boeing may be able to reduce the development cost of the 787 by exploiting suppliers' expertise. As Boeing outsourced more, communication and coordination between Boeing and its suppliers became critical for managing the progress of the 787 development program. To facilitate the coordination and collaboration among suppliers and Boeing, Boeing implemented a web-based tool called Exostar that is intended to gain supply chain visibility, improve control and integration of critical business processes, and reduce development time and cost Manufacturing Business Technology, 2007). Reduce direct supply base, delegate more, and focus more To reduce development time and cost for the Dreamliner, Boeing fostered strategic partnerships with approximately 50 tier-1 suppliers who will design and build entire sections of the plane and ship them to Boeing. By reducing its direct supply base, Boeing could focus more of its attention and resources on working with tier-1 suppliers (pre-integration stages) rather than with raw material procurement and early component subassembly. However, unless the supplier relationship is managed correctly, reducing the supply base can increase supply risks because of the reduced bargaining power of the manufacturer (Tang, 1999). The rationale behind this shift is to empower its strategic suppliers to develop and produce different sections in parallel so as to reduce
Answered 9 days AfterJul 24, 2021

Answer To: Introduction Since the U.S. government deregulated air travel in 1977, more airlines have entered...

Soumi answered on Aug 03 2021
128 Votes
Running Head: SUPPLY CHAIN MANAGEMENT                        1
SUPPLY CHAIN MANAGEMENT                                 13
SUPPLY CHAIN MANAGEMENT
Table of Contents
Introduction    3
Description of the Case    3
The Key Issues and Challenges    4
Issues    4
Composite Fuselage Safety Issues:    4
Engine Interchangeability Issues:    5
Computer Network Security Issues:    5
Challenges    5
Quality Control Challenges:    5
Communication Failure:    5
The Selected Solutions    6
Composite Fuselage Safety Issue- Solution:    6
Engine Interchangeability Issue-Solution:    6
Computer Network Security Issue-Solution:    6
Quality Control Challenge-Challenge:    6
Communication Failure-Challenge:    7
Risk Management Strategies Going Forward    7
Risk Factor    7
Pote
ntial    7
Influence    7
Mitigation Strategy    7
Assessment of the Selected Solutions    9
Recommendations for the Company    10
Conclusion    11
References    12
Introduction
Supply chain management is stated as the handling of entire production of commodities and services. It is started from the raw materials all the way to deliver the final product to their customers. The different network of suppliers is created by different companies that move the goods along from the suppliers of raw materials to those organizations that have the direct dealing with their users. The supply chain is comprised of all the individual and business contributors that are included in the creation of goods from raw materials to finished product.
The report is based on the case study of Boeing that is Aircraft Company established in 1916 at Washington State USA. It will demonstrate the description of the case study and the key challenges and issues will be discussed. Furthermore, it will outline the selected solutions for those issues that were identified in the case study. In addition to that, risk management strategies such as risk matrix and risk assessment will be explained. Finally, the assessment or critical evaluation will be carried out in the given study as well as the recommendation for Boeing Company.
Description of the Case
Boeing is the largest aircraft organization in the world, which was established in 1916 and it is headquartered in Puget Sound location in Washington D.C., the United States of America (Boeing, 2021). The company deals in manufacturing commercial aircraft, satellites, electronic, defense system weapons and military aircraft. Boeing is considered as the best aircraft organization in innovation and leadership to design the leading aircraft (Tang, Zimmerman & Nelson, 2009).
The advanced technologies are used by the company as a less inventive leadership to develop and design their products. It is the best in USA and universal allocating many further nations with military aircraft and profitable aircraft. To remain spirited and pioneering the company started to replace the Boeing 767 aircraft due to the slow sale rates (Tang et al., 2009).
The key focus of the company in building this plain is to diminish the timeline from 6 years to 4 years. Boeing decided to produce and develop the Dreamliner by using the unconventional supply chain new to the aircraft industry of manufacturing. It was going to contract out the part and issue sub-contracts to other organization other nations rather than contracting the plain from scratch.
As examined by Pandian, Pecht, Enrico and Hodkiewicz (2020), there is a requirement of labor and raw material during the process of production that takes times to manage and procure the firms to come up with the right products. There will be incurring of high costs of procurement and lot of management logistics in producing the 787 parts of Boeing. The company provides the nice way of out-sourcing in order to cut down the costs with the ability to enjoy the availability of raw materials and skilled labor in the outsourcing companies.
Boeing was going to create a relationship and market for the aircraft in other nations by outsourcing the other nations. It was going to be advantageous for assisting the organization to decrease the used time. Essential timeline for the different company products is production times that are normally book to be in the market.
Earlier the manufacturing of the plains was done within a period of six years and the decision of the outsourcing was 70% of the content for the production of Boeing. The company is also enjoying the availability of labor and raw materials as well as cutting down the cost. Unless, the relationship of supplier is maintained correctly while reducing the supply base it can give the rise to supply risk because of reduction in bargaining power of manufacturer.
However, the company noted the problems and challenges in supply chain management of Boeing that has the negative impact in the project results as the poor quality of work as well as delay in work. The primary challenges were tired around the Boeing’s supply chain management and threatening to collapse the project of 787 Boeing.
The Key Issues and Challenges
The 787 Dreamliners acquires the use of different unproven technologies that can create the issue. Boeing encountered the different technological problem that leads to the sequence of holdup of project. There are different issues and challenges in undertaking the project of Boeing 787.
Issues
Composite Fuselage Safety Issues:
The Dreamliners contains 15% of aluminum, 50% of composite material including Carbon fiber unbreakable plastic and 12% of Titanium. Based on this scale the compound materials by no means have been used and there is a sense of fear among everyone that while creating an airplane with this mixture of materials might not be practicable (Bilbao, 2019). Lightning strike is considered as the safety concern for the wings made out in this project.
Engine Interchangeability Issues:
Earlier engine interchangeability was considered as the benefit in 787 Model design concept. However, now, it is the major limitation and it occurs due to the Technical difficulties and part inappropriateness it would take the delay of 15 days to change the engine from one module to another one instead of taking 24 hours.
Computer Network Security Issues:
The current electronic configuration on the project of 787 Dreamliners put the electron entertainment of passenger on same network of computer as the flight control system. This will give rise to the security concern for terrorist attack (Sinha, 2019).
Challenges
Quality Control Challenges:
Quality control is considered as a major challenge while dealing with other companies to provide creation of material. There is an involvement of managing a supply chain making sure that all those companies were involved are complying with the quality measures that are laid down in the company.
According to Hassen and Kirka (2018), it is stated that this happens generally when the products that are formed might not be equivalent with the obligatory quantity or go add to other companies in order to meet up the...
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