When Supply Chain Strategy Does not Match Supply Chain Capabilities: Lessons that can be Learnt from the Supply Chain of Boeing 787

When Supply Chain Strategy Does not Match Supply Chain Capabilities: Lessons that can be Learnt from the Supply Chain of Boeing 787

Narasimha Lamba (University of Massachusetts, USA) and Ehsan Elahi (University of Massachusetts, USA)
DOI: 10.4018/978-1-4666-0065-2.ch008
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Abstract

During the early 2000s, the Boeing Company was experiencing a market shrink due to a downturn in the aerospace industry after the 9/11 terrorist attacks, as well as severe competition from its rival Airbus. To deal with the situation and salvage its market share, Boeing proposed the design of a new aircraft called Boeing 787 or the Dreamliner. This futuristic aircraft was received very well by the airlines. Very soon, it became the fastest-selling new airplane in the history of commercial aviation. Nevertheless, after the initial successful launch, the company faced many supply-chain-related problems, which resulted in repeated delays and huge extra costs. These delays (now more than two and a half years) could add up to as long as three years. In this research, the authors investigate how the mismatch between the supply-chain capabilities and the Boeing’s strategy for developing this airplane led to these delays and extra costs.
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The Dreamliner

Under the pressure of a weak market and severe competition from Airbus, during the early 2000s, Boeing proposed the design of two new airplane models: Boeing 747X and Sonic Cruiser. B747X was designed as an enhanced version of B747 to carry more passengers and Sonic Cruiser could travel at a speed close to the speed of sound, cutting down travel time. But by 2001, both the models had failed to make it from the design to the manufacturing stage. While the former fell behind in its competition with the rival airplane manufacturer, Airbus’ A380, the latter flopped due to the lack of demand for expensive jets with high operating costs, especially in the wake of a slump in air travel due to the 9/11 terrorist attacks.

To protect its market share, Boeing proposed the design of a mid-size, wide-body, twin-engine commercial aircraft which would address the market need for a fuel-efficient jetliner. The aircraft’s variants would carry between 210 and 330 passengers, and would be 20% more fuel-efficient than other commercial airplanes of a similar size. Thus, after almost a decade, since B777 was proposed, Boeing launched the development phase of a new aircraft: Boeing 787 or the Dreamliner.

The Dreamliner is the first commercial aircraft whose body is mostly made of composite materials. Traditionally, commercial aircrafts’ bodies are mostly made of aluminum. Table 1 compares the materials used in the Dreamliner and Boeing’s previous model, B777.

Table 1.
Material composition of B777 and B787
Material UsedB777B787
Aluminum50%20%
Composites12%50%
Other38%30%

Source: The Boeing Company

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