1. The quote at the end of this case seems to suggest that the technology of getting this innovative aircraft to fly was the easy part. Discuss why Boeing’s real challenges lie in the future rather than in the engineering of a composite aircraft.

2. How does the use of greater than 300 critical global suppliers make Boeing’s commitment to lean production so difficult? If the coordination is done poorly, in what ways does Boeing end up seeing its costs skyrocket?

3. How do the philosophies of lean supply chains apply to Boeing’s 787 project? Discuss in turn the four keys: (1) transparent information, (2) performance monitoring, (3) lean logistics, and (4) full collaboration.

December 15, 2009, was a watershed day for Boeing, a world leader in the manufacturing of commercial aircraft. On this date, its long-anticipated 787, or Dreamliner, aircraft successfully completed its first test flight. Nearly two years delayed in development, the Dreamliner represented the leading edge of new technology. To maintain fuel efficiency and offer strong operating margins for airlines, the Dreamliner was constructed with carbon-fiber composite materials rather than with the traditional metal frames and outer surface. The innovative design and promised fuel efficiency have led to advance orders for 865 aircrafts from 56 airlines, with a total order book of US$144 billion, more than any other airframe in history. With an expected price tag of US$160 million per aircraft, the Dreamliner is a critical reason that Boeing has been able to maintain its edge in a highly competitive industry.  Furthermore, as a clear technological leap forward, Boeing had a great deal riding on the successful release of the Dreamliner, including future profitability and its reputation for quality.

The development of the 787 did not go smoothly. Delays in getting the composite materials and designs right, lead times for qualifying global suppliers, and assorted technological problems not only delayed the launch of the Dreamliner but also forced Boeing to take out-of-pocket losses of more than US$4 billion in the two years leading up to the first test flight. Missed delivery dates also led to automatic penalty clauses being imposed. Some of the airlines that had ordered the Dreamliner asked for price reductions to offset these delays.

Boeing’s manufacturing plans for the 787 were nearly as complicated as the aircraft. With greater than 300 global suppliers, Boeing has had to coordinate carefully its components for manufacturing and shipping to its assembly facilities in Seattle, Washington. Boeing’s decision to outsource most of the aircraft components, rather than to manufacture them themselves, complicates an already highly integrated, complex process. Huge component parts such as wing assemblies, fuselage sections, and cockpit electronics were manufactured by supply chain partners at plants in Korea, Japan, Italy, South Carolina, and Kansas and were flown or shipped by water to Seattle. Boeing had to coordinate the manufacturing of these components, verify quality, guarantee their on-time delivery, and assemble them in an efficient manner that minimized inventories and bottlenecks. The company’s managers projected a schedule in which seven planes a month were assembled. At that pace, it would have taken Boeing more than 10 years just to eliminate its current backlog of orders. Goodrich Corporation (Charlotte, NC) is one of Boeing’s key suppliers and the firm contracted to develop the aircraft’s brake and thrust reverser systems. The company’s CEO, Marshall Larsen, recently noted, “The critical issue is not that Boeing isn’t going to have a successful flight test. It’s that the Goodriches of the world successfully support Boeing in getting the aircraft into service.