If you’ve been following the story of Boeing’s 787 Dreamliner development, you already know that the program is quite problematic for Boeing—to say the least. Boeing outsourced design and manufacturing to slash development costs for the 787 Dreamliner, which features all-new technology. One crucial problem has been that some of the suppliers have delivered parts that were not up to spec or failed critical testing, which further postpones the already delayed delivery of the aircraft.
A story that ran the other week on The Wall Street Journal’s Digital Network (WSJDN), reports that while Boeing’s customers remain flexible while they wait for the 787 aircraft, the company’s investors are still awaiting details of financial penalties that the company may face after a nearly three-year delay in its first delivery. Reparations, the story reports, are likely to involve a mix of cash penalties and nonfinancial “credits” such as subsidized freighter conversions or guaranteed future delivery slots. And a more recent report in the Seattle Times indicate that Boeing management is telling Wall Street that the two-dozen 787 Dreamliners already rolled out onto Paine Field are "in various stages of final assembly" and their delivery "will take longer than expected, particularly those with the Rolls-Royce engine."
That’s all interesting enough, but there’s something else that caught my attention. An Associated Press (AP) story reported that Boeing says it has now stopped receiving deliveries of big pieces of the 787 jetliner at its Everett, Wash., plant from a supplier in Italy. According to the story, the two-week pause is meant to give the supplier, Alenia, time to fix gaps in horizontal stabilizers it makes. This is the third time this year that Boeing has suspended shipments of 787 parts because of problems with components. It’s important to note, however, that Boeing has also asked other suppliers to slow their deliveries while Alenia gets back up to speed. What’s intriguing about this latest development isn’t Boeing’s woes, but rather instead, the ramifications for other members of the supply chain.
Since Boeing asked other suppliers to slow their deliveries, those companies may now need to revise their own production accordingly—and also perhaps ask their suppliers to temporarily slow delivery of parts or components as well. I have to wonder if these other companies are now slowing or stopping production, or simply continuing on as originally planned?
The answer, I suppose, will hinge to a certain extent on two key factors. The first is what they produce, and the second factor is whether they manage their supply chain using Excel spreadsheets, an ERP solution’s SCM suite or a comprehensive supply chain management application that enables them to effectively coordinate internal and outsourced operations. That type of comprehensive application makes it possible to create a supply chain plan, actively monitor performance to that plan and immediately coordinate a response when the plan is at risk.
Again, depending on what they produce and the length of their lead times, this may also be an ideal opportunity to use what-if? simulation technology. That will allow, for example, simulating the outcome of potential reactions to their customer’s request. Those simulations can then be quickly analyzed to determine which response—if any--best matches the operational and financial objectives. This type of simulation should be based on current MRP and MPS data from throughout the extended supply chain to ensure accuracy.
Furthermore, including internal and external participants will ensure complete stakeholder input on the simulations and end-decisions. What do you think? Are you involved in this situation? If so, how have you and your company been effected?