Boeing Executive Faults some 787 Suppliers

Sidney Vianna

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I guess that, if you were a Boeing executive and you heard that your suppliers were certified to a standard such as AS9100, you probably thought you were safe about your supplier's ability in delivering what they signed up for. I can easily see how some of these "lessons learned" might spill out onto the ICOP certification scheme.

https://seattletimes.nwsource.com/html/boeingaerospace/2004003350_boeing09.html

The new leader of Boeing's troubled 787 Dreamliner program has moved quickly to shuffle top management and reorganize responsibilities.
Among other changes, new 787 Vice President Pat Shanahan appointed an executive specifically to oversee one of the major supplier partners, Vought, which builds the airplane's two rearmost fuselage sections in Charleston, S.C.
The appointment is a clear indication that Vought is a weak link in the Dreamliner supply chain.
Boeing announced the leadership changes internally Thursday, a month after disclosing a delay of at least six months in delivery of the first 787.
A week after the delay announcement, Boeing transferred Mike Bair, head of the program for four years. He was replaced by Shanahan, who made a name for himself on the defense side of the company as a hotshot troubleshooter.
Shanahan's changes, focused on fixing current production issues and mitigating risk ahead, rearrange the executives who now report to him and divide key responsibilities into three major areas: airplane development, the supply chain, and final assembly and delivery.
"Pat sees this as giving the leaders clear direction to achieve the milestones ... of first flight, certification and first delivery, and then full-rate production ramp-up," said 787 spokeswoman Yvonne Leach.
Shanahan appointed Scott Strode, a vice president formerly in charge of 787 production, to oversee all development activities with Vought "to strengthen management of the supply chain," according to the internal memo.
Strode will give "special attention to 787 recovery and production ramp-up," the internal announcement said, though his oversight also extends to Vought's development work on the new jumbo-jet derivative, the 747-8.
Leach said other executives fulfill similar oversight roles with other 787 suppliers, including the Japanese and Italian partners. But those executives are not as high level as Strode.
"Given the importance of Vought to the 787 program and the challenges they are facing, we've put Scott in that assignment," said Leach. "It's key to the program."
Vought, which is owned principally by the Carlyle Group and is releasing its third-quarter results today, declined to comment.
Vought spokeswoman Lynne Warne said that "our CEO won't conduct any media interviews after our earnings call. Given that we're not a publicly held company, we're already disclosing much more than is necessary."
Shanahan also named leaders for each of the new 787 organizations.
Mark Jenks was promoted to head of 787 Development. He had been in charge of the 787 wing team. Jenks is responsible for airplane definition, certification and delivery of the first 787.
Bob Noble will continue as vice president responsible for relationships with Boeing's global partners, leading the organization now called 787 Supply Chain.
Steve Westby will remain as vice president for manufacturing and quality, leading 787 Final Assembly and Delivery.
Shanahan also appointed two leaders to oversee and support structures work and installation of airplane interiors inside the Everett factory.
Jeff Stone, most recently production operations leader on the F-22 Raptor jet-fighter program in Seattle, will support 787 Body Structures.
Kathy Moodie will lead the interiors installation and be responsible for preparing the airplanes for flight.
 

Wes Bucey

Prophet of Profit
I guess that, if you were a Boeing executive and you heard that your suppliers were certified to a standard such as AS9100, you probably thought you were safe about your supplier's ability in delivering what they signed up for. I can easily see how some of these "lessons learned" might spill out onto the ICOP certification scheme.

https://seattletimes.nwsource.com/html/boeingaerospace/2004003350_boeing09.html

Interesting. Should we know identity (if any) of the registrar which issued a certificate of registration to Vought?
 

Jim Wynne

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Interesting. Should we know identity (if any) of the registrar which issued a certificate of registration to Vought?

I think it's probably way too early to be questioning the validity of any Boeing supplier's registration. I have a strong suspicion that there's an Wikipedia reference-linkAbilene paradox situation involved, wherein Boeing was rushing the development process and Vought was caught in the vortex. I'm not suggesting that Vought or any other supplier doesn't bear some responsibility in the whole thing, but I've personally seen enough of this sort of thing--albeit on a smaller scale in fiscal terms--to have a strong sense that Boeing is doing some desperate OEM blame-shifting at this point.
 

Wes Bucey

Prophet of Profit
Regardless of anything else, I think the point we need to consider is "what exactly did Boeing use for criteria in selecting suppliers?" Apparently, either the criteria were lacking or the execution of the evaluation of those criteria was lacking.

Alternately:
Is it possible the supplier "bamboozled" Boeing into believing it was more capable than it was or did it start off good and deteriorate once Boeing started doing business [perhaps with some Boeing Supplier Quality Analyst "meddling" and forcing suppliers to meet criteria not listed in the original contract?]

Folks in automotive supply chains will recognize the propensity for OEMs to change the rules in midstream without renegotiating a contract.
 

Sidney Vianna

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In my experience, most supplier evaluation protocols normally focus on the supplier's ability to support stable, steady production work. Very few organizations have supplier evaluation processes sophisticated enough to delve, in depth, on the new product engineering & development processes.

Let's remember that the 787 brings a different program model for Boeing, with the partners and some suppliers bearing a much higher percentage of responsibility for component and system design.

We have been talking about the brain drain in the Aerospace industry for quite some time, now and the fact that the industry has problems attracting and retaining new talent and knowledge, due to it's acute business cycles. We have been warned time and time again about seasoned aerospace engineers retiring and leaving a knowledge vacuum behind. Maybe this situation exemplifies and add a dose of real world to a problem that many had not seen materialized yet.

As it relates to a QMS, one of the AS9100 requirements, beyond ISO 9001, dealing with the product review process states:
7.2.2 Review of Requirements Related to the Product: The organization shall review the requirements related to the product. This review shall be conducted prior to the organization’s commitment to supply a product to the customer (e.g. submission of tenders, acceptance of contracts or orders, acceptance of changes to contracts or orders) and shall ensure that:
a)
b)
c) [FONT=Arial,BoldItalic]and[/FONT]
[FONT=Arial,BoldItalic]d) risks (e.g., new technology, short delivery time scale) have been evaluated.[/FONT]
A simple requirement that is extremely hard to be assessed against, but very appropriate to the situation Boeing is faced up with, on the 787 program.
 
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Sidney Vianna

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Where does the buck stop?

https://seattletimes.nwsource.com/html/businesstechnology/2004005472_vought10.html

Boeing supplier getting its house in order
By Dominic Gates, Seattle Times aerospace reporter

The chief executive of one of Boeing's major 787 Dreamliner partners acknowledged Friday that his company is "among the riskiest, if not the riskiest, of the [airplane] structure producers."
He presented a picture of a supplier that 18 months ago, just as production work on the 787 began in earnest, was in bad shape and poorly positioned to provide what Boeing needed.
But Elmer Doty, CEO of Vought — which makes the 787 rear fuselage in Charleston, S.C. — said things are looking up.
"Our challenges are logistical rather than technical," Doty insisted in a teleconference with financial analysts to discuss third-quarter earnings. "We've got a game plan that meshes with everyone else's and we think we can execute on it."
Still, Vought now faces a cash crunch and is negotiating revised 787 contract-payment terms even as Boeing gives its supplier extra scrutiny.
Doty largely blamed Vought's subcontractors for the problems.
"Production of fuselage barrels is going very well, but it is our supply chain that has struggled to deliver parts," Doty said. "This challenge will be with us well into next year."
He said Vought has taken some parts work back in-house, which demands extra resources.
This week, Boeing appointed Vice President Scott Strode to oversee Vought's operations, particularly its 787 production.
Doty said Vought discussed the program with Boeing after Boeing brought in Vice President Pat Shanahan as 787 program chief.
"The big risk with us is we have a rate increase that happens in the first half of next year that we got to make," Doty said. "We asked for help."
He said Vought ended up in such trouble for three reasons:
• The company is by far the smallest of the partners.
• It faced a severe "liquidity crisis" 18 months ago that almost killed the company.
• When Vought took on the 787 work, it had to "reconstitute an engineering department" from disparate units that had been acquired separately, while at the same time "starting up a green field site in a remote location."
"Given those facts, I don't think you need to rely on rumors to assume that we are among the riskiest, if not the riskiest, of the structure producers," Doty said.
The original 787 contract assumed payment to partners such as Vought upon first deliveries of the aircraft, which are now pushed out at least six months.
Chief Financial Officer Keith Howe said cash is stretched tight and the company is negotiating revised contract payments with both Boeing and its own suppliers.
 
G

Geoff Withnell

I think you'd have to ask Mattel whether global outsourcing was a problem before you can say "It's funny how every other leading company can utilize a global Supply Chain for best competitive advantage." with impunity.

I note one item in in the "woulda, coulda, shoulda" category that seemed to echo a Toyota concept - that of having the suppliers locate or create a facility close by the main final assembly site. I'd be willing to speculate that concept at Toyota was the result of similar supply chain problems to those being experienced by Boeing and the "manufacturing village" of Toyota was more a Corrective Action (after the problems arose) than a Preventive one (anticipating and preventing problems BEFORE they were experienced.)

Boeing's hubris may have been thinking they were in the AIRPLANE business, rather than in the TRANSPORTATION business. Thus they figured solutions achieved by auto companies had no relevance for them.

What is it that folks say about history? Something like, "They who fail to study history are condemned to repeat it."

I would note that like many "Toyota" concepts, having suppliers locate close to the main final assembly site was NOT original with Toyota. Witness Buick City in Flint, MI as an early example. Of course, Toyota (at least to date) has been doing a better job on management commitment.

Geoff Withnell
 

Wes Bucey

Prophet of Profit
Boeing supplier getting its house in order

In referencing Sidney's thread with the quoted article headlined "Boeing supplier getting its house in order" - it may be well to understand many supply chain professionals for the last 40 years in my experience have put a lot of emphasis on the "BIG C's" in evaluating prospective links in their supply chains:
  1. Capability
  2. Capacity
  3. Capital
  4. Character
  5. Credibility
Capability - can the supplier actually produce the product or service to meet requirements (considering equipment and talent or skill of personnel?)
Capacity - does the supplier have sufficient available time and capacity of equipment and personnel to produce the product or service in the time window required (without shutting off existing customers?)
Capital - does the supplier have sufficient financial wherewithal to carry the production until it receives payment (including buying and maintaining materials and equipment and payrolls?)
Character - does the supplier have a good reputation among BOTH customers and its own suppliers for fair and honest dealing?
Credibility - does the sum total of information about the supplier pass the "sniff test?" Is it reasonable,for example, for a supplier whose biggest deal in the past has been a one-year, one million dollar contract to be suddenly capable of handling a five-year fifty million dollar contract with all the attendant changes, regulations, and logistical problems such large contracts normally entail?

Almost always, breaks and SNAFUs in supply chains can be traced back to a lapse in judgment about one or more of the
C 's and rarely to some major "force majeure" which even the planned and acceptable capacity of the supplier was unable to withstand. (The kind of force majeure which is in the realm of "fantastical" rather than "possible" might include a terrorist attack like New York's 9-11 or a devastating hurricane like Katrina which overwhelmed all the political infrastructure [roads, utilities, etc.] necessary for an orderly recovery.)
 
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