The Seattle Post Intelligencer blog had a recent posting by Aubrey Cohen, titled Problems won’t reverse (Boeing) outsourcing. This posting comments on the ongoing outsourcing challenges that Boeing has been encountering on its 787 Dreamliner program. Readers of this blog are quite familiar with this topic, since we have featured various commentary of our own. The latest two postings came be found here, and here.
The Seattle PI posting quotes the practice leader of PricewaterhouseCoopers LLP aerospace and defense practice as indicating that this new experiment of large scale outsourcing within the aerospace industry was bound to have some growing pains. This same consultant further states that he doesn’t see any major reversal in the trend toward large-scale outsourcing.
What really surprised me regarding this commentary was a lack of acknowledgement as to “what has the industry, and specifically Boeing learned as a result of this chapter?” Obviously, that information will be an internal learning and guidepost for Boeing and other industry players for managing major outsourcing initiatives.
As a supply chain industry observer, I can offer some pointers as to what should be included in such learning.
- The notion of large-scale outsourcing involving multiple global players brings its own inherent risks. When you add revolutionary new technology of composite materials or innovation of new supply chain processes, it just adds more to the overall aspects of risk. Outsourcing processes need to include balanced risk.
- Supply chain wide visibility and transparent communications are essential. Too often, information that must traverse multiple organizational structures, program offices, functional stovepipes or teams causes that information to become pigeon holed. Outsourcing of major components often requires cross-functionally integrated teams, empowered to make required decisions on a timely basis. Late last week, Boeing seemed surprised over leaked news that in June, an Italian supplier, Alenia Aeronautica, had to stop work on 46 of the 787 carbon fiber barrel assemblies because of wrinkles in the carbon fiber skin. Boeing characterized the problem as “not serious” and of no impact. But the financial community reacting quite differently drove down Boeing’s stock. Trust and consistency in information is a very big deal.
- Suppliers who are empowered with the right collaborative tools and information streams. A supplier should be an extension of both your product management and production teams, and goaled on the same performance measures as the entire program management team. Similar to what Toyota has successfully taught, the success or failure of any individual supplier, is that of the team.
- A senior management structure that is highly engaged in the details, as opposed to insulated by organizational filters. When Airbus experienced its third major delay in expected deliveries of to its A380 customers, President and CEO Christian Streiff became actively involved in program leadership and stewardship. It astounds me that with all of the current delays and setbacks around the 787 program, that there has been no visible stewardship from the very top ranks of Boeing.
- Clear communication flow to all value-chain participants regarding delivery dates. Global based air carriers have much at stake in the scheduling and delivery of new aircraft. There are implications of significant financial, route scheduling, or customer service implications. The fact that in mid-August, Boeing has yet to definitively commit to 787 first test flight or revised delivery schedules does not
Yes, the problems encountered by the aerospace industry won’t reverse outsourcing, but those companies that excel will have addressed many of the lessons learned from current programs, especially Boeing.