Boeing Case Study Essays - Boeing, Airbus, LATAM Chile,

Boeing Case Study Keeping Boeing Flying Higher and Higher Case Study Introduction Boeing has been building commercial airliners since 1927 with the first Boeing commercial jet airliner, the 7O7, introduced in l955. As discussed in the article on page 172 of the text. This success is even more remarkable when one realizes that the Boeing Design/ Build process had not changed very much during the past three decades. The system was antiquated, cumbersome, and inefficient creating production delays, increased costs, and spawning a huge bureaucracy simply to handle the paperwork. Boeing must clearly be motivated to bring this World War II era process into the 21st Century. Airbus Industries' increasingly larger share of the commercial airliner market was a major force instigating these changes. Airbus had the advantages of government subsidies to help defray the costs of implementing best design practices, as well as latecomer advantages. It learned from Boeing's, as well as Lockheed's and McDonnell Douglas', mistakes and it did not have 40 years of bureaucratic momentum to overcome. Other motivating factors include the need for Boeing to increase the income from the commercial aircraft division to offset the loss of revenue due to cutbacks in government defense and aerospace contracts. In this paper I will attempt to highlight those topics I think should be covered, suggestions, and background for those reasons. In this I will hope to show why the Boeing Company was in need of the much-needed overhaul of the design/build process at Boeing, the changes themselves as well as the methodology used in accomplishing those changes. The Commercial Aircraft Industry The last decade has seen the commercial aircraft industry dominated by two manufacturers: the Boeing Commercial Aircraft Company and Airbus Industries, with McDonnell Douglas, a distant third. Airbus Industries is a relative newcomer, but it has very quickly provided much competition to Boeing, surpassing McDonnell Douglas and Lockheed. Airbus Industries is a consortium backed by the British, French, German and Spanish governments. The great, and many say unfair, advantage that Airbus has over the competition is government subsidies allowing Airbus to operate in the red. Thus, Airbus can afford to develop new technologies without having to worry about passing on the costs to the customers and can price their aircraft very competitively to lure away airlines from Boeing. Cost cutting The effects of the changing airline industry resulting from deregulation in 1978 are still being felt in the commercial aircraft industry. The competition among airlines for passengers has resulted in a greater emphasis on cost cutting leading to mergers and bankruptcies. In addition, airlines modified their routing systems since they were not limited to certain routes, as was the case before deregulation, changing their buying patterns for aircraft accordingly. Airlines were now less concerned with having a technologically superior airplane and more concerned about the cost and efficiency of that airplane. Why Change.? The first question that comes to mind is why would the undisputed leader in the commercial airliner industry make such a risky, change?. In other words, doesn't the old motto If it ain't broke, Don't fix it apply in this case? Well according to many observers both inside and outside of Boeing, the system was 'broke'. To give an example of the inefficiency of the process that coordinates engineering and manufacturing, it used to take 800 different computer systems to manage it. This process has been around since Boeing was building the B-17 Bomber in World War II. The process of tracking parts in an airplane was called effectinitly and was done manually! A drafter required two years of training to fully understand the system, and still one-third of the paper work contained errors. This effectivity just doesn't make sense, and this process adds absolutely no value to their product and results in tremendous costs. Regardless of all the evidence pointing to flaws in the system, changing a successful company is not easy, especially if we consider the cost and the additional time involved. For the 777, the additional time is estimated to be six months over the normal 48 months to develop a new airplane. Getting a tremendously large bureaucratic system to move forward is a daunting task, especially while continuing to produce airplanes. The Changes; The changes to the Boeing Commercial Aircraft Company must encompass all fields.