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COMM 449
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Boeing caseModel Outsourcing the manufacturing of the airplane more extensively than any earlier models Outsourced 90 of the engineering manufacturing and integration including all composite sections to outside suppliers remained the only major part which was design and manufactured directly by BoeingBoeing is doing only design and assemblySupplier must invest its own money and perform the engineering development and integration of the outsourced parts government helpSuppliers receive part of the revenue of selling 787 as their payment share Boeings risk in success or failure of the programProblemShortage of fasteners After terrorist attack the industry experienced an overall decrease in the capacity of fasteners production Capacity cannot keep up with demand leads to a general shortage787 requires fewer fasteners the relative small volume orders did not stir active response from suppliers who prefer to exploit limited capacity to large quantity to benefit from economy of scale Lost priority Incorrect installed fastenersThe procedure to install these fasteners is new and Boeing claimed unclear specifications on how to installTravelled workSuppliers who cannot complete parts according to specified requirement passed on incomplete sections to Boeing Boeing has to include travelled work into its tight production schedule require workers incorporate additional effortProblematic subsuppliersSupply chain with more subsuppliers Boeing is not ready to deal with such a complicated supply chainSubsuppliers are not ready to meet Boeings high standardsLabor strikeProblems of global supply partners approachBoeingLoss core competency the knowledge of designing and manufacturing airplanes should the core competency of Boeing Not the management skills supply chain structure is more complexBoeing has to share knowledge and technologies with suppliersAdvantage of steep learning curve and the corresponding high valueadded functions are passed to suppliersLower innovation capacity innovate 787 through past experience limit competitiveness in introducing future generations of composite airplaneMore challenging trouble shooting and future modification Suboptimal supplier selection To participate in the program investment becomes an important consideration Some skillful suppliers may not be able to bear the investment Technical capability becomes secondFinancial risk V operational risk passed financial risk with suppliers at the beginning more complicated to manage increased operational risk along with financial risk extra costBoeing Know how to deigning but do not know manage Not able to address problem quicklyInsufficient communication and monitoring with suppliersSupplier has no incentive to perform the best guessing other suppliers level
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