Boeing’s litany of supply chain woe is an inability to integrate product and process development across the supply chain. The FAA needs to pay attention. So do other firms that are outsourcing complex products.
Background: Sunday morning a Boeing 757’s engine covers flew off and hit the wing flap during takeoff from Denver. Last month a 737-800’s (not a Max by the way) exterior panel fell off during flight, a 777-200’s wheel fell off, and a 737 Max’s door plug blew out in January. And there is a litany of other incidents.
Zooming in: Many of these problems are supply chain related. The National Transportation Safety Board found in a preliminary report that the chain of events behind the door plug incident began with damaged rivets inside the fuselage manufactured by Spirit. Boeing technicians entered through the door plug and fixed the rivets but did not properly replace the bolts on the door plug afterwards. Clearly the techs didn’t understand how to mate the two parts up correctly.
Why this matters: Geoffrey Parker and I have been studying integrating outsourced product and process development across the supply chain since 2003. We’ve learned that:
Integrating the supply chain is incredibly difficult. It’s like throwing Humpty Dumpty over the wall and then trying to put him back together.
Big rewards if it’s done right. The automotive industry began doing this decades ago. Both researchers and automakers believe it has improved cost, quality, and functionality.
Lots of problems when done poorly. The problems are extremely difficult to even detect, let alone solve.
Integration problems aren’t limited to one product. They’re systemic, which is why the problems have shown up in multiple plane types. But Boeing also makes military aircraft, satellites, and even rockets for the lunar Artemis missions. Might they have the same problems?
The Big Picture: Ironically, Boeing was long known as the gold standard for integrating supply chains. But the necessary capabilities aren’t there any longer.
Systems engineering, creating specifications for parts and defining interfaces between them, is the key to integrating the supply chain. It requires four things: strong processes, excellent communication, clear documentation, and experts with lots and lots of experience (“grayhairs”). According to a February FAA report, all of these are poor.
Grayhairs: Developing “grayhairs” with deep experience of how to do things right and—often more importantly—what can go wrong takes decades to fix. Boeing has been disinvesting in systems engineers since the early 2000’s.
Inspectors: Manufacturing needs grayhairs too. Boeing let go of 900 quality inspectors in 2019, replacing them with tools such as Bluetooth-enabled wrenches. Then it sped up the assembly lines.
Bottom Line. Boeing has to stop eliminating experienced personnel. But more needs to be done.
Collocate personnel: One time-honored way to patch up supply chain problems is to collocate a firm’s and key suppliers’ development personnel in one place. (Currently, even Boeing personnel aren’t collocated.) Boeing should also collocate manufacturing personnel at suppliers and vice-versa.
Government must audit supply chain integration. The FAA has put into place a set of safety processes separate from Boeing’s other processes. It isn’t enough. The Department of Defense has used companies like The Aerospace Corporation to monitor integrating supply chains for military- and space-programs in the past. The FAA should do this with Boeing’s commercial arm as well.
Other firms need to take note. Boeing is not unique in outsourcing development. Hopefully, others firms can learn from it.