Supply Chain Dreamin' at Boeing

Coping with the multitude of challenges in extended supply chains can be daunting. For The Boeing Company (Chicago, www.boeing.com), its 787 Dreamliner project takes the best of current supply chain thinking and applies it from design through production of the new aircraft. The result is an unprecedented business model, says Tim Opitz, director production and support 787 systems integration.

Opitz describes Boeing's new supply chain structure as a breakthrough way of doing business that has led to major changes throughout the company and in the industry itself. He starts with the general concept behind the aircraft. The flying public, he says, is less interested in speed at a higher cost than it is in getting to the final destination faster. That means eliminating interim stops, which is why Boeing engineers designed the 787 to fly point-to-point nearly anywhere in the world.

With that concept in hand, Boeing would traditionally work out design details down to the minutia. Instead, Boeing has had its suppliers work on the design, build and validation of the parts and subassemblies that they will provide for the 787. Suppliers work internally and with other Boeing suppliers to design and assemble parts and components and deliver those assembled parts to Everett, Wash. Instead of one company working in a serial mode, the partners work with Boeing as one global entity. This, says Opitz, increases productivity, reduces cost and improves the flow time to the aircraft customer.

Boeing's traditional model was to let contracts to all parts and component suppliers and have those parts and pieces delivered to Boeing for final assembly. Need dates were part of the contract, and it was the supplier's responsibility to meet those need dates. Under the new structure, contracts are let to a supplier who may deliver parts to another supplier for assembly who tests and validates the end product before delivering it to another Boeing supplier or to Boeing itself for final assembly.

One important change supporting this shift is recognition that Boeing and its partners are operating in a global context, and they need continuous, real-time information to flow among the various suppliers and Boeing, many of which had never had to communicate with each other before. In many cases, delivery schedules, receipt of delivery and purchase order requirements that used to be handled through Boeing are now the responsibility of its partners. This includes when purchase orders were placed, when components and parts were planned, scheduled and required and when actual deliveries occurred. Not only did this mean total supply chain visibility, it also required real time access to overall demand schedules for daily management of the supply chain.

"Accomplishing this required an incredible amount of coordination, integration and understanding of how we do our business and when these activities take place," Opitz comments. "Partners have unprecedented responsibility for actual delivery of major portions of the aircraft."

The first flight of the 787 Dreamliner is scheduled for later in 2007, with the first customer delivery to follow in mid 2008.

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