By Kevin Meyer
Boeing is in the news again, unfortunately announcing more delays with the 787 Dreamliner. We've talked for years about how the company's outsourcing of design and manufacturing has lead to innumerable problems, not to mention that Rube Goldberg contraption known as the Dreamlifter. The latest delay is design-related, however Boeing continues to have supply chain issues with key suppliers, and is now taking a "retro-innovative" (should I copyright that term?) strategy: insourcing.
Boeing Co. is in negotiations to purchase operations from one of its main suppliers, as part of an effort to gain more control over the supply chain of its troubled 787 Dreamliner program, according to a person familiar with the matter.
The company is close to announcing that it will buy a facility from Vought Aircraft Industries that makes sections of the 787 fuselage. The facility is located in North Charleston, S.C. The person familiar with the matter said negotiations have been under way for months.
That's all the more interesting as 18 months ago we wrote how Boeing should actually learn from Vought. The company has been working hard to improve their operations, which is also helping the division that makes assemblies for the 787.
Vought managers are implementing a "Vought Operating System" modeled on the legendary Toyota manufacturing system. Some Vought managers have visited Toyota plants to see the highly efficient automaker in action. Vought is implementing lean manufacturing practices on many programs as fast as workers can be trained and new tooling and machinery put into place.
The results indicate that this is real lean, not LAME.
Quality has improved sharply. The rate of defects has declined 25 percent companywide from 2006 and 35 percent from 2005. Defects have dropped about 10 percent at the Dallas plant and a dramatic 47 percent at the Marshall Street plant, which builds sections for Boeing airliners.
Inventories of parts and supplies are being used at a 28 percent faster rate, which means the company has less cash tied up in materials and lower costs.
The emphasis on people shows that they even understand the importance and value of people.
The credit, Doty says, goes to Vought employees who responded to the challenges facing the company. "When you look back at these numbers, they restore your faith in one thing: We've got great people here. They really want to be world-class," he said. "If you've got good, motivated people, which we have, all you have to do is provide good leadership, support and resources."
At the time Boeing was blaming Vought for some of their woes, but we thought that Boeing should learn something from them. Maybe they are.
The move [acquiring the Vought operations] would represent another admission by Boeing that it needs to take a more direct role in the manufacturing process of its marquee product. When Boeing first rolled out plans for its Dreamliner, it said that it was reinventing the way it builds commercial airplanes. Instead of manufacturing most of the plane at its Everett, Wash.m facility, many parts would be made by suppliers around the world.
Boeing, however, quickly discovered that keeping track of the different suppliers - and keeping the whole project on schedule - was more difficult than it had anticipated. Bringing more of the production in-house could increase Boeing's ability to manage the complex project.
Of course "in-house" is something of a misnomer. The Everett facilities have been decimated over the years, with tens of thousands of years of experience, knowledge, and creativity laid off in the name of "reducing cost." How's that working now? Will anyone be held accountable, or at least learn from, those decisions?
So "in-house" now mean's "Boeing East" in South Carolina, the Vought operations being acquired. At least it appears Boeing is smart enough to not lay off those experienced folks and try to move the "simple manufacturing" to Everett.
The move also potentially paves the way for a second 787 assembly line once Boeing is able to ramp up production, far from the current facility in Everett, an option Boeing officials have said recently they are exploring.
Boeing's outsourcing games have cost the company dearly, but hopefully this time the lessons will be learned. And there are a lot of others out there that should take a look at Boeing's experience and learn as well.