Boeing 787 : lessons learnt from global outsourcing

• Main Author: Ng, Elay
• Other Authors: David Lee Butler
• Format: Final Year Project
• Language: English
• Published: 2015
• Subjects: DRNTU::Engineering::Mechanical engineering
• Online Access: http://hdl.handle.net/10356/64912
• Institution: Nanyang Technological University

In 2007, the Boeing company announced their new commercial aircraft – the 787 Dreamliner. It was a breakthrough design using new composite material which offers 20 percent more fuel efficiency than its peers. Apart from the technological breakthrough, the Boeing company also decided to manufacture the 787 Dreamliner via a multi-tier outsourcing system, which resulted in more than 70 percent of the design and manufacturing works being outsourced. However, the first delivery, which was scheduled in year 2008, was delayed for three years, accompanied with several post-delivery technical issues. The Boeing company was affected in terms of financial cost, stock price and reputation. Questions and critics towards the newly implemented outsourcing system started to arise. A literature review was carried out to understand the historical development of industrial outsourcing, theories used for outsourcing implementation and lessons learnt from previous outsourcing examples, including Toyota’s extensive outsourcing. This report then performed a case study on the 787 Dreamliner program, including its outsourced manufacturing and suppliers system, delivery delays and problems as well as the impacts on the Boeing company. An analysis was done to study Boeing’s rationale for outsourcing the 787 Dreamliner program as well as the shortcomings and consequences of the program. Despite the delays and problems faced by the 787 Dreamliner program, this report found Boeing’s decision to outsource the program to be rationale given the strong competition that the company was facing from their direct competitor Airbus. Although extra cost and work were incurred, the 787 Dreamliner program did not put the Boeing company at a disadvantage in the aircraft manufacturing industry. However, the 787 Dreamliner’s outsourcing system was found to be inferior in terms of supplier assessment, communication and supplier relationship management. This report also found that it is important for a firm to move together with the market trend, to select an optimal point and to set a reasonable schedule when considering any outsourcing decision.