You're Only As Strong As Your Weakest Link
Managing Supply Chain Risk
Supply Chain Experts motto is that you are only as good as your weakest link, weak supply chain links have cost Boeing, the worlds largest airline manufacturer, billions of dollars and caused years of delays in their Dreamliner program. Today, as Boeing's new 787 Dreamliner program is progressing toward its first delivery, the jet maker is still working to repair its weak supply-chain links.
At the same time, overall jet sales for the year are way down. As of May 2009 the Boeing web site reported 60 new orders and 60 cancellations for the year so far. In dollar terms, the tally remains negative. Most of the new orders are for smaller 737s, while all but one of the cancellations are for more expensive wide-bodies, including 57 of Boeing's 787 Dreamliners. The market value of the new orders for the year, based on pricing estimates by aircraft-valuation firm Avitas, is about $4.4 billion. The corresponding value of this year's cancellations is about $6.6 billion.
Rival jet-maker Airbus had won 30 new orders and canceled 19 previous orders for a net total of 11 as of the end of last month.
At an investor conference in Washington, D.C., Boeing CEO Jim McNerney said the Dreamliner is Boeing's "Priority No. 1." The 787 is running about two years behind schedule after four major delays, prompting penalty payments to customers. Scott Francher, the 787 program chief told investors there are "no major issues that we can see impacting first flight". Asked to identify the remaining critical points of concern in the supply chain, Fancher singled out the Global Aeronautica plant in Charleston, S.C., a joint venture between Boeing and its Italian partner Alenia that is the 787's major assembly site outside the Puget Sound region.
Global Aeronautica assembles the 84-foot-long midsection of the Dreamliner fuselage, joining together pieces from Japan and Italy. Fancher said Boeing is studying the design of the tooling used to hold the pieces in place as those complex joints are made, and Boeing has no less than seven distinct improvement plans under way to improve the work flow in Charleston.
Boeing has had to help out 787 suppliers that were failing to perform, either because they were financially stressed or else unable to handle the technical demands. Sometimes that has meant providing money, but more often it's a question of sending in Boeing technical help. As a result of the unprecedented delays to the program Boeing is re-evaluating its global supply chain approach for future programs.
Boeing has said repeatedly, without giving specifics, that the first deliveries will be at zero margin, or unprofitable, because of the delays and penalties caused by weak links in their supply chain..
Your company may not be Boeing, however, you still face considerable supply chain risk as you shift to adjust to the new economy. Boeing was under the impression that they didn't need help either; when the initial delays occurred. Their inability to recognize supply chain issues early and assign the appropriate risk extended the program delays from weeks, to month, and ultimately years. Supply Chain Experts can help mitigate that risk in your supply chain and insure you do not jeopardize your future as you make adjustments to react to the new economy.
If your organization is considering major supply chain upgrades, Supply Chain Experts can help you design a program that delivers both immediate and long term benefits to your organization. The program will be designed to shift your organizations thinking, improve innovation, and implement a program that will optimize operational performance and satisfy the requirements of your customers.
Dr. Edward F. Knab
Productivity Constructs, Inc
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
www.productivityconstructs.com
More Supply Chain Experts Blogs
Dr. Knab is an academic practitioner and seasoned supply chain expert whose company, Productivity Constructs, Inc., is focused improving global leadership and thereby creating more effective organizations and higher levels of job satisfaction. Dr. Knab can be contacted for speaking engagements, coaching, or consultation at efk@productivityconstructs.com, ed@ewardknab.com or www.edwardknab.com.
At the same time, overall jet sales for the year are way down. As of May 2009 the Boeing web site reported 60 new orders and 60 cancellations for the year so far. In dollar terms, the tally remains negative. Most of the new orders are for smaller 737s, while all but one of the cancellations are for more expensive wide-bodies, including 57 of Boeing's 787 Dreamliners. The market value of the new orders for the year, based on pricing estimates by aircraft-valuation firm Avitas, is about $4.4 billion. The corresponding value of this year's cancellations is about $6.6 billion.
Rival jet-maker Airbus had won 30 new orders and canceled 19 previous orders for a net total of 11 as of the end of last month.
At an investor conference in Washington, D.C., Boeing CEO Jim McNerney said the Dreamliner is Boeing's "Priority No. 1." The 787 is running about two years behind schedule after four major delays, prompting penalty payments to customers. Scott Francher, the 787 program chief told investors there are "no major issues that we can see impacting first flight". Asked to identify the remaining critical points of concern in the supply chain, Fancher singled out the Global Aeronautica plant in Charleston, S.C., a joint venture between Boeing and its Italian partner Alenia that is the 787's major assembly site outside the Puget Sound region.
Global Aeronautica assembles the 84-foot-long midsection of the Dreamliner fuselage, joining together pieces from Japan and Italy. Fancher said Boeing is studying the design of the tooling used to hold the pieces in place as those complex joints are made, and Boeing has no less than seven distinct improvement plans under way to improve the work flow in Charleston.
Boeing has had to help out 787 suppliers that were failing to perform, either because they were financially stressed or else unable to handle the technical demands. Sometimes that has meant providing money, but more often it's a question of sending in Boeing technical help. As a result of the unprecedented delays to the program Boeing is re-evaluating its global supply chain approach for future programs.
Boeing has said repeatedly, without giving specifics, that the first deliveries will be at zero margin, or unprofitable, because of the delays and penalties caused by weak links in their supply chain..
Your company may not be Boeing, however, you still face considerable supply chain risk as you shift to adjust to the new economy. Boeing was under the impression that they didn't need help either; when the initial delays occurred. Their inability to recognize supply chain issues early and assign the appropriate risk extended the program delays from weeks, to month, and ultimately years. Supply Chain Experts can help mitigate that risk in your supply chain and insure you do not jeopardize your future as you make adjustments to react to the new economy.
If your organization is considering major supply chain upgrades, Supply Chain Experts can help you design a program that delivers both immediate and long term benefits to your organization. The program will be designed to shift your organizations thinking, improve innovation, and implement a program that will optimize operational performance and satisfy the requirements of your customers.
Dr. Edward F. Knab
Productivity Constructs, Inc
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
www.productivityconstructs.com
More Supply Chain Experts Blogs
Dr. Knab is an academic practitioner and seasoned supply chain expert whose company, Productivity Constructs, Inc., is focused improving global leadership and thereby creating more effective organizations and higher levels of job satisfaction. Dr. Knab can be contacted for speaking engagements, coaching, or consultation at efk@productivityconstructs.com, ed@ewardknab.com or www.edwardknab.com.
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