Boeing 787: The Dreamliner Seattle, April 17 th 2010.
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Boeing 787: The Dreamliner Seattle, April 17 th 2010
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Transcript of Boeing 787: The Dreamliner Seattle, April 17 th 2010.
Boeing 787: The DreamlinerSeattle, April 17th 2010
“ Twenty years from now I believe that rainy day… will be viewed as
one of the most important on the history of this company and commercial aviation. It… will always be remembered as a day that fundamentally changed the way airplanes are built and how people travel. And it would be seen as a day when Boeing once again proved the kind of company it is: a company of vision and achivement- a company that does great things”
- Jim Albaugh, chief executive and president, Boeing Commercial Airplanes
The 787 Challenge
– Facts and features
– Outsourcing strategy:• Supply chain problems• Potential risks
– The new strategy gidelines
– Partnerships analysis
– The last steps of our masterpiece
• Revolutionary aircraft• 851 orders from 50 clients• Main challenges
– Design outsourcing– 50% composite materials
• Main features– 20% less energy consumption– 20% less environmental pollution– Electric systems consumes 35% less
power from engines– 30% less maintenance costs– 450 new city pairs connected
Boeing 787: Facts & Features
787 is the result of Boeing’s efforts to regain aerospace industry leadership
The 787 Challenge– Facts and features
– Outsourcing strategy:• Supply chain problems• Potential risks
– The new strategy gidelines
– Partnerships analysis
– The last steps of our masterpiece
Outsourcing Strategy: Supply Chain Problems
• Documentation inefficiencies– Shortage of fasteners
• Integration challenges– Underestimated computer
code (Honeywell International)
• Supplier coordination & design– Wing Box: Mitsubishi
• Workforce experience– Charleston
• Coordination problems– Charleston– Spirit Aero Systems
• Job security concerns– Union Strike: Boeing US
Delay of Boeing 787
Outsourcing: Potential Problems & Risks
Outsourcing
Political Instability & Regulation
Quality Control
Know-how transfer
Strong R&D dependence
Macroeconomic factors
Strikes & Labor Laws
The 787 Challenge
– Facts and features
– Outsourcing strategy:• Supply chain problems• Potential risks
–The new strategy gidelines
– Partnerships analysis
– The last steps of our masterpiece
The 787: A shift from traditional strategies787 Planes Structure Supply
• Strong Manufacture & Design Outsourcing- Suppliers financing their own R&D
expenses.- Great incentives for costs reductions.
- Market assistance to Boeing• Air Transportation as a key advantage
- Lighter & advanced composites- Over 20%- 40% cost reduction per day
• Global Integration of suppliers- Project life cycle management system.- Reliance on outside suppliers for
assembly (over 70%)
Strategy Guidelines
Internal assembly at Boeing
Outside assemby
Boeing Vision for 2016: “From a wrench-turning manufacturer to a master planner, marketer, and snap together assembler of high tech planes”
The 787: A shift from traditional strategies787 Planes Structure Supply
• Strong Manufacture & Design Outsourcing- Suppliers financing their own R&D
expenses.- Great incentives for costs reductions.
- Market assistance to Boeing• Air Transportation as a key advantage
- Lighter & advanced composites- Over 20%- 40% cost reduction per day
• Global Integration of suppliers- Project life cycle management system.- Reliance on outside suppliers for
assembly (over 70%)
Strategy Guidelines
USA 35%
Japan 35%
Boeing Vision for 2016: “From a wrench-turning manufacturer to a master planner, marketer, and snap together assembler of high tech planes”
Other countries 4%
Italy 26%
The 787 Challenge
– Facts and features
– Outsourcing strategy:• Supply chain problems• Potential risks
– The new strategy gidelines
–Partnerships analysis
– The last steps of our masterpiece
The Boeing 787 & Main Suppliers
Outsourcing Strategy: Partnership Analysis
• Lack of expertise regarding assembly of components.
• Inexperienced workforce in design and assembly
• Weak direct communication between partners.
• Potential future competitors- Risk of feeding future competitors
through know how transfer.
• Highly experienced partners- Well known for their aircraft components
manufacture & design.- Highly technologically based- Strong investments in R&D- Industry leaders
• Consolidate relationship- Mitsubishi, Kawasaki & Fuji played a key role
during the Boeing 777 project.- Alenia participated in the Boeing 767
manufacture- Rolls Royce & GE as traditional partners for
engines.
• Big corporations located in solid economies- Low macroeconomic and political risks
• Consolidated corporations in terms of market share, profits and quality.
Positive Aspects Negative Aspects
The 787 Challenge
– Facts and features
– Outsourcing strategy:• Supply chain problems• Potential risks
– The new strategy gidelines
– Partnerships analysis
–The last steps of our masterpiece
The Boeing 787: On schedule• Extend control & coordination of the outsourced supply
chain– Acquisition of North Charleston factories to meet committed
deadlines
• New assembly line under construction– The production of 787 will go up to 10 planes/month in 2013– The production of the derivative 787-9 on schedule
• Technical problems solved– Composite materials behavior under flight stress proved to be
reliable.– Wings, fuselage, electronic systems performed excellent during
the test flights.
• Low likelihood of Union Strikes– High involvement of machinist & engineers (e.g.: First Flight)– Higher compensation and other benefits
Time commitment
Long-term strategy
• General view
• Where are we now?
• Long-term strategy drivers– Redefinition of the core business– International markets– Integration, innovation & coordination
Long term strategyObjective: “At Boeing, we aspire to be the strongest, best and best-integrated aerospace-based company in the world—for
today and tomorrow.” (AR 2009)
“People working together as a global enterprise for
aerospace leadership” (Vision 2016)
• Strengths
• Weaknesses
• Opportunities
• Threats
Where is Boeing now? Boeing aspiration
• Redefine Boeing’s Core Business: R&D• International markets: New clients• Greater supply chain intergration
How?
Long-term strategy
• General view
• Where are we now?
• Long-term strategy drivers– Redefinition of the core business– International markets– Integration, innovation & coordination
Where are we now? Strengths & weaknesses
• Most part of Boeing`s revenues derive from a limited number of clients.
• Difficulties to meet plane delivery deadlines; high dependence on:
- Suppliers- Subcontractors- Regulatory cerifications
• Experience and reputation
• The capacity to anticipate to new market trends.
• Good international relationships
• High technical knowledge that allows constant product innovation
Boeing’s future strategy must retain the company’s strengths … … and turn weaknesses into opportunities
Where are we now? Threats & opportunities
• Provide new services (i.e. maintenance)• Explode new markets
- Asia-Pacific• New trends:
- Low operating costs- Environmental friendly airplanes- More cargo capacity- …
• Outsourcing of R&D
• Transfer of knowledge: actual supplies may become future competitors
• Lose of control and quality standards
• Possible new comptetitors
Boeing’s must learn to avoid current threats … … and concentrate efforts on actual opportunities
Boeing long-term strategy drivers
- Most part of Boeing`s revenues derive from a limited number of clients.- High dependance on: supplier, subcontractors and regulatory certifications- High dependence on market conditions
- Outsourcing- Transfer of knowledge- Lose of control
- Experience and reputation - Capacity to anticipate to market trends - Good international relationships - High technical knowledge that allows constant product innovation
- New geographic market: Asia-Pacific- New trends:
- Low operating costs- Enviromental responsible products- More cargo capacity
Boeing long-term strategy drivers
- Most part of Boeing`s revenues derive from a limited number of clients.- High dependance on: supplier, subcontractors and regulatory certifications- High dependence on market conditions
- Outsourcing- Transfer of knowledge- Lose of control
- Experience and reputation - Capacity to anticipate to market trends - Good international relationships - High technical knowledge that allows constant product innovation
- New geographic market: Asia-Pacific- New trends:
- Low operating costs- Enviromental responsible products- More cargo capacity
• Redifine the core business: R&D• International markets: new clients• Greater supply chain integration
S
W
T
O
Long-term strategy
• General view
• Where are we now?
• Long-term strategy drivers–Redefinition of the core business– International markets– Integration, innovation &
coordination
Boeing’s core competence…
Integration, innovation and coordination in the aeronautic industry
Boeing: Integration, innovation & coordination
Boeing’s competitive advantage is based on its know how and its ability to predict market trends
Current 787 outsourcing strategy must be revised and redefined in order to gurantee the company’s sustainable growth
Outsourcing must be limited to manufacturing processes while
retrieving R&D inside the company.
Boeing: Integration, innovation & coordination
• Environmentally friendly production
• Longer distances: reduce operating costs
• Improve passenger experience at flight
• Greater cargo capacity
• Efficient fuel consumption
Innovation
• Suppliers working together: no delays, no communication problems…
• Higher supply chain integration will permit to satisfy the future demand efficiently.
• Small supliers should concentrate on the production of selected components
Integration & coordination
Transmission of value between Boeing and its suppliers creates a
win-win sountainable long-term relationship
Boeing & International Markets
Market growth ratesAsia
PacificNorth
America EuropeMiddle
EastLatin
America
Russia and Central
Asia Africa World
GDP growth rate 4,4 2,4 1,9 3,8 3,8 3,7 4,9 3,1Traffic growth rate 6,5 3,2 4,1 6,6 6,5 5,1 5,8 4,9Cargo growth rate 6,2 4,6 4,8 6,3 6,3 5,3 5,4 5,4Fleet growth rate 5,4 1,8 3,0 4,1 4,1 1,3 2,8 3,2
RPK Growth / GDP Growth 1,5 1,3 2,2 1,7 1,7 1,4 1,2 1,6
Asia Pacific region presents the greatest aerospace market and economic growth
Boeing & International Markets
Region Regional Jets Single-aisle Twin-aisle LargeTotal
deliveries
Asia Pacific 440 5.600 2.590 330 8960
Values in 2008 $B Regional Jets Single-aisle Twin-aisle Large Total Market Value
Asia Pacific $14 $420 $590 $110 $1.130
Boeing will have to concentrate its efforts in the development of the single-aisle and twin-aisle categories as represented by B737 and B787
Boeing & International Markets
• Commercial Aircraft Corporation of China– Direct competence: C919 (2016) for B737– Not total development until 10 to 20 years
• Get advantage of this margin• Create long- term relation through the mantainance and
update of the actual models
Boeing’s long term strategy: Integration, innovation & coordination
Where is Boeing now? Boeing aspiration
Long term competitive advantage:
• Focus on innovation: satifaction of current trends and forecast of future needs.
• Integration and coordination of the supply chain in order to repond efficiently to maket demand
• Capture international demand from new markets: Asia-Pacific
Boeing’s long term strategy
Conclusion
Q&AThank you!
