Case1: Troubles with organization structure?

As a flight of imagination, Boeing’s 787 Dreamliner was an excellent idea:

made of composite materials, the plane would be lightweight enough to
significantly reduce fuel costs while maintaining a passenger load up to 290
seats.

Airline carriers chose options from a long list of unprecedented luxuries to

entice the flying public and placed their orders well ahead of the expected
completion dates. And then the problems started.
An airplane like the 787 has a design about as complex as that of a nuclear
power plant, and Boeing’s equally complex offshore organizational structure
didn’t help the execution. Boeing outsources 67 percent of its manufacturing
and many of its engineering functions. While the official assembly site is in
Everett, Washington, parts were manufactured at 100 supplier sites in
countries across the globe, and some of those suppliers subcontracted
piecework to other firms. Because the outsourcing plan allowed
vendors to develop their own blueprints, language barriers became a problem
back in Washington as workers struggled to understand multilingual
assembly instructions.

When components did not fit together properly, the fixes needed along the
supply chain and with engineering were almost impossible to implement. The
first aircraft left the runway on a test flight in 2009, but Boeing had to buy
one of the suppliers a year later (cost: $1 billion) to help make the planes.
The first customer delivery was still years away.

If Boeing and industry watchers thought its troubles were over when the first
order was delivered to All Nippon Airways (ANA) in 2011, three years
behind schedule and after at least seven manufacturing delays, they were
wrong. Besides the continuing woes of remaining behind schedule (848
planes have been ordered but only 6 percent have been delivered), Boeing’s
Dreamliner has suffered numerous mechanical problems. After the plane’s
technologically advanced lithium-ion batteries started a fire on one aircraft
and forced another into an emergency landing in January 2013, ANA and
Japan Airlines grounded their fleets. The FAA followed suit, grounding all
787s in the United States. The remaining 50 flying Dreamliners worldwide
were then confined to the tarmac until a solution could be found.
While Boeing’s CEO Jim McNerney says he is “confident we’ll identify the
root cause,” it is difficult to know what he thinks will fix the Dreamliner’s
operational problems, chief among them the battery crisis. On the one hand,
McNerney is a proponent of Six Sigma and other statistics analytics tools
used to streamline production to exacting standards, so it is conceivable that
he will try to apply standardization throughout the complex supply chain.
He may also decide, along with his engineering team, that the long list of
features complicates orders too much and therefore simplify the
manufacturing process by eliminating options. On the other hand, McNerney
may approach this as an organizational structure problem, both at corporate
headquarters
and abroad. While he has been meeting daily with his top executives, there
have been so many management changes during the 787’s history that it
would be difficult for him to identify responsibility for errors in order to
make changes in the team or the organizational structure.

For the work done abroad, McNerney might be looking to restructure

reporting relationships in favour of smaller spans of control to heighten
management accountability and tie suppliers to the organizational structure of
corporate Boeing. Or he might be considering “reshoring” to bring
manufacturing physically close to the final assembly site and under Boeing’s
control while centralizing the organization structure. If he does not do this for
all components, he may continue to allow local suppliers to manufacture for
Boeing, or he may follow current thinking that key components (generally,
the most complex parts) should not be outsourced. No matter what Boeing
and McNerney decide, it is clear that the company must produce reliable
aircraft consistently before worldwide government agencies will allow the
planes to fly, which may be long before the public will consider trusting the
safety of the Dreamliner.

Q1.) What type of executive management structure do you think would

be most conducive to getting the Dreamliner past the battery problem
and back in flight?

Q2.) What organizational structure would you suggest to effectively tie

in Boeing’s managers and suppliers abroad? Sketch your ideas. (Goals for
managers might include facilitating teams, coordinating efforts,
maintaining organizational transparency, and creating conversations.)