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Was Boeing 787's extensive outsourcing strategy really worth it?

Posted on January 19, 2013 at 4:58 PM





Boeing 787's design and manufacturing supply chain was much more than ever before for a Boeing plane spread across all continents and countries known to be major buyers of airplanes or manufacturers of plane parts, as described in the following article posted in the Resources page of this website:     

https://docs.google.com/viewer?url=http%3A%2F%2Fwww.atabkamprofessionalservices.com%2Fupload%2FBoeing%2520787%2520Outsourcing%2520article%2520-%2520Feb%25202011.docx  

This over-extended supply chain had very obvious marketing and sales benefits: 
The order book filled up very quickly, as airlines around the world rushed to order hundreds and hundreds of planes (well over 800, by many accounts), something really exceptional for a new plane. In the eyes of many, this was a smashing success for Boeing.   

But it all came at a very high cost: significant operational and quality risks
The plane's development was marred by delays upon delays. The first unit to come out of the poduction lines was more than three years behind schedule, causing Boeing to pay significant late delivery fees to its customers.. Recent battery problems resulting in the grounding of all 787 Dreamliners  for more than ten months also added a very public embarrassment and negative publicity to the long list of issues faced by Boeing.   

All this begs the question: Was such an audacious outsourcing strategy really worth it? Was trading quality and operational excellence for additional orders a wise decision? 

Only time will tell. The Boeing 787 dreamliner is now back in the air, cleared by the FAA to fly again. But the public's faith in the plane has been shaken to its core, all over the world, a faith that will take a long time to rebuild especially if new technical issues emerge. Over the long run, the cumulative effect of repeated operational breakdowns and quality issues may well seal the fate of this audacious outsourcing strategy.   

Please weigh in and let us know what you think!












Categories: Business Process Management (BPM)

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7 Comments

Reply easy business
2:41 PM on September 24, 2013 
Superb strategy about outsourcing! Whatever you have shared in here about outsourcing strategy that's all are very good to me and hopefully this will be helpful for everyone. So thanks mate.
Reply Dmitri Chavkerov
6:23 AM on January 11, 2014 
Production is the process where a complete sheet with all products and their specifications are there and time is also big issue to produce items on time for client.
Reply Alain Tabue, MBA, PMP
11:20 PM on January 17, 2014 
Dmitri Chavkerov says...
Production is the process where a complete sheet with all products and their specifications are there and time is also big issue to produce items on time for client.

Very much so! By outsourcing to untested and sometimes unreliable partners, Boeing left itself open to increased operational risks and quality issues (parts that do not fit, do not work properly, are unreliable, or do not arrive in time, etc.).
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