LEADING EDGE - LOGISTICS

Introduction(V)
• BOEING was incorporated in Seattle, Washington by William E. Boeing,
on July 15, 1916, as "Pacific Aero Products Co.“
• International headquarters has been in Chicago, Illinois, since 2001.
• Boeing is the largest global aircraft manufacturer by revenue, orders and
deliveries, and the largest aerospace and defense contractor in the world.
• It employs 157,500 people in more than 70 countries
• W. James McNerney, Jr., Chairman, President & CEO of Boeing since
2005.
• Products :
 Commercial airliners
 Military aircraft
 Munitions
 Space systems
 Computer Services
Boeing Assembly Plant :
• Seattle-Everett, Washington (747, 767, 777, and 787
Dreamliner)
• Long Beach, California (McDonnell Douglas aircraft
assembly and testing)
• Seattle-Renton, Washington (737 & former 707, 727 & 757)
• Philadelphia assembly site
• Seattle-Boeing Field, Washington (Flight testing for Boeing
aircraft except McDonnell Douglas-designed aircraft)
• North Charleston, South Carolina .
• Wichita, Kansas. Facility manufactures parts and components
for all aircraft types
Boeing's Commercial Aircraft Supply
Chain
 Boeing's supply chains across its business units are quite
complex and, more importantly, quite different from one
another.
 The operating model and supply chain network for Boeing
commercial aircraft is explored here in five main areas. These
are
– Orders by Channel,
– Order Fulfillment,
– Facilities,
– Customers and
– Suppliers.
Suppliers :
 The large commercial aircraft supply chain is broken down
into three main components. These are aero structures,
engines and avionics.

AERO STRUCTURES:
 Are structural assemblies that make-up the visible frame of
an aircraft Aluminum, titanium and, more recently
composite materials. Aero structures do not include engines
or avionics. These components have separate supply-chains
and are integrated into the aircraft after the main
components of the aircraft are assembled.
Contd…
ENGINES
 There are four suppliers of engines for Boeing commercial
aircraft. These are Rolls-Royce, Pratt & Whitney, CFMI
and General Electric. The industry practice for selecting
engines for aircraft requires the aircraft manufacturer to
certify with the regulating bodies .This selection process
creates the grounds for competition among the engine
manufacturers. Boeing has several engines certified for
most of its aircrafts
Contd..

AVIONICS :

 Boeing has substantial avionics manufacturing capabilities

on the military side as well as the commercial side. There
are also very strong suppliers in this sub-segment such as
Honeywell, Rockwell Collins and Thales SA. Currently,
Boeing supplies approximately 50% of the avionics on its
commercial aircraft. The remaining 50% is provided by
customer selected suppliers.
The Make vs. Buy Decision and Supplier
Selection :
• Five main factors: core competencies, costs, capital investment, labor
relations and market access
• Decisions are made on aero structures and avionics as Boeing does not
possess engine manufacturing capabilities. Boeing has been pursuing a
two-prong consolidation policy with regards to its 2nd and 3 rd tier
partners on the supply side.
• It is de-leveraging itself from component assembly operations and
hence reducing the total number of parts that is assembled in its
facilities.
• It is reducing the number of suppliers and selecting more capable ones
that can deliver more complex products to the assembly site.
• Lean manufacturing practices serve as selection criteria for supplier
selection. Those who can transform their operation to cater to Boeing's
lean operational flexibility and efficiency have a bigger chance of
continuing their relationship with the manufacturer.
 DEMAND PLANNING & FORECASTING
• Forecasting down the supply chain is also important for Boeing. For most
suppliers that deal directly with raw materials suppliers, Boeing tries to
produce accurate forecasts that would enable the component suppliers to
be more informative to the raw materials suppliers.7 3 This in turn, reduces
order lead time in an area where bottlenecks occur as all manufacturing
industries compete with the aircraft industry for resources.

 CUSTOMER MANAGEMENT
• Boeing is divided into 4 categories large commercial airlines, national
airlines, large low-cost airlines, and small to medium airlines.
• Each segment has varying degree of negotiating power against Boeing in
price, delivery flexibility, maintenance terms and some other airlines
specific items. The large airlines as well as national airlines are powerful
enough to influence Boeing's design development for future aircraft.
Negotiating power for an airline in all fields decreases as the size of its
fleet decreases
 AFTER-MARKET LOGISTICS & SUPPORT
• The aircraft aftermarket logistics support is an area with very serious
competitive and operational implications for Boeing. This segment is
forecasted to have revenues that are 1.5 to 2 times that of the aircraft
manufacturing industry in the next 15 years. This ratio will increase as the
installed base of aircraft increases with healthy trends in air travel and air
cargo transportation.
• This area is treated as a separate business unit within the commercial
airplanes business unit. The aircraft that Boeing sells have a maintenance
warranty that covers maintenance costs several years after purchase.
Boeing has 9 service centers around the world with 3 of them offering
avionics maintenance services
• A large majority of Boeing's customers' needs are met by either in-house
maintenance facilities or through maintenance and repair organizations that
offer third-party services. These facilities are certified by the related civil
aviation organizations for maintenance service capabilities for each aircraft
type.
Supply-Side Business Processes -- Defining Lean
Through Lean Enterprise Self-Assessment Tool
(LESAT)
• Is a tool developed by Boeing to conduct a self-assessment of
the degree of progress they have made in evolving lean
enterprises.
• Definition of the Lean Transformation Leadership Process
reflects the strategic scope of lean processes and practices:
"Develop and deploy lean implementation plans throughout
the enterprise leading to
– (1) Long-term sustainability,
– (2) Acquiring competitive advantage and
– (3) Satisfaction of stakeholders.”
(V)
Boeing Criteria for 3PL :
• Boeing's top priority for selecting a 3PL in its Lean environment was
getting its warehousing off site.
• Boeing's corporate Lean initiative emphasizes & focuses on what it does
best—final assembly, test and integration—and outsources other areas to
experts.

• Boeing works with 9-12 "core" partners.

• A formal certification process that all 3PLs go through before being

considered by Boeing.

• Boeing's contract say no suppliers could operate in the union-run facility.

• 3PL locate its facility within 45 miles of Boeing's facility and within 20
miles of a hub airport.

• Another criterion in evaluating and selecting a 3PL was the provider's

ability to customize its solutions for Boeing's needs.
DIGITAL MODELING :
• In 1990, Boeing stunned the design world with the launch of its
Boeing 7E7 project.
• Using CATIA V4 from Dassault Systemes the company's
engineering group modeled the 777's parts as 3D solids, simulated
the geometry of the airplane's design on a computer, and thereby
avoided the time-consuming and costly investment in physical
mockups.
• The final assembly line included more than 10,000 parts.
• Boeing reports that using digital 3D models in the design phase
helped reduce the number of changes, errors, and rework by more
than 50%.
• Boeing in this bold digital project garnered the top manufacturing
prize in 1995 in the annual Computerworld Smithsonian Awards.
Contd..
• Boeing revolutionized the way it works with its partners - 7E7 Project
• Instead of some 10,000 items being assembled by Boeing at project's
end, Boeing assemble only 13 to 17 units at the end.
• Many of these subassemblies is wholly designed by partners hailing
from various parts of the United States and from around the world.
– Vertical fin - Boeing's Frederickson, Washington, facilities;
– Fixed and movable leading edges of the wings- Tulsa, Oklahoma;
– Flight deck and forward fuselage section - Wichita, Kansas;
– Movable trailing edges - facilities in Australia;
– Wing-to-body fairing - Winnipeg, Canada.
• Boeing supply 35% of the structure of the aircraft, rest different parts
come from other areas within the United States.
Contd..
• Partners working on 7E7 structure include Japan's Fuji Heavy
Industries, Kawasaki Heavy Industries, and Mitsubishi Heavy
Industries. Vought Aircraft Industries of Dallas and Alenia
Aeronautica of Italy are also involved.
• Boeing and Dassault Systemes have created the GCE (Global
Collaborative Environment).
• Through the GCE, all of the partners on the project use the same set
of tools, all of the appropriate project data reside in the GCE.
Software Use By Boeing :
 Software for aircraft design and simulation was all internally
developed.

 Boeing developed FlyThru, a high-performance CAD visualization

system.
 Used to "preassemble" the Boeing
 Help engineers in determine the geometric relationships and mechanical
interferences between parts. Based on digital mockup

 Boeing developed Easy5 a set of engineering analysis software tools

used to model, simulate, and analyze dynamic systems.

 Voxmap PoinShell evaluates part proximity and part interferences.

detected over 10,000 part interferences in the initial.
Contd..
 Boeing perform noise protection modeling & Hydraulics analysis
by using commercially available software.

 Structural analysis - Elfini (finite element analysis  system) from

Dassault Systemes and Nastran

 Catia 5 & BCSLIB-EXT, a utility for engineers to view up to 500

parts at a time and electronically assemble major airplane sections.

 EPIC (electronic preassembly integration on CATIA) tests the fit of

components.
Benefits of Digital Assembly :
 Elimination of more than 3,000 assembly interfaces, without any
physical prototyping

 90% reduction in engineering change requests (6,000 to 600)

 50% reduction in cycle time for engineering change request

 90% reduction in material rework

 50% improvement in assembly tolerances for the fuselage

– The fuselage is 200-ft long. Alignment was off by 0.023 inch, in

previous aircraft the alignment is to within a half inch of each other.

– The wing tip was oil by 0.001 in. By comparison, the wing tip on
previous one was 4.0 in.
Boeing Tracks Parts with RFID Tags

• In 2004 Boeing and Airbus announced - Working together to issue

the RFID (radio frequency identification) requirements to their
suppliers.

• RFID, a technology capable of tracking a part from manufacture to

installation and beyond.

• Issue the RFID (radio frequency identification) for about 6 million

parts, to suppliers for easy tracking.

• Boeing selected RFID to track 1,700 to 2,000 mission-critical parts

particularly expensive or require frequent maintenance and
replacement.
Contd…
• Information stored on the RFID tag enhance parts traceability and
reduce cycle time to solve in-service problems by improving the
accuracy of information exchanged between customers and suppliers

• RFID tags :
– Easier to track and repair aircraft parts,
– Reduce data entry errors
– The risk that suspected unapproved parts (which range from parts that
simply have become separated from their documentation to a rare truly
counterfeit part) make it onto an aircraft.
BOEING 787:
GLOBAL SUPPLY CHAIN MANAGEMENT
• New Boeing super-efficient jetliner -787 Dreamliner.
– Uses 20 percent less fuel per passenger
– Designed for the environment with lower emissions

• Boeing established a core team to design key components of the

airplane. General Electric and Rolls-Royce to develop engines -8
percent (increased fuel efficiency).
• New Dreamliner - Completely new manufacturing model - majority
fabricated by global partners – delivered as subassemblies – Boeing
assemble and test Everett, Washington.
• More than 100 partners across 12 countries on 5 continents are
involved in the manufacturing and delivery process.
• 11 major subassemblies will be delivered to Everett, WA for final
assembly
Contd..

• Challenge: Manage a multitier supply chain for the new 787

Dreamliner.

• Solution: Exostar Supply Chain Management Solution, powered by

E2Open software.

• Results: Comprehensive management of supply chain processes—

from outgoing orders and payment of invoices to suppliers—and the
ability to track activities at all levels of a multitier supply chain.
Potential problem alerts are sent to top-tier suppliers, and to Boeing
when necessary.

• Benefits: Business greatly reduces opportunity for error by

minimizing inventory and handling in the supply chain, which allows
us to offer a better final product
• E2open software, is used to
manage the complete order
lifecycle and returns process
across the multiple partner tiers.

• Allow Boeing and its partners to

collaborate on planning schedules,
issue purchase orders, track
purchase order changes, exchange
shipping information, manage
returns, track shipments, and to
manage inventory consumption
across the multiple tiers involved
in the manufacturing process.

• The system monitors events and

process exceptions that occur
between partners and evaluates the
impacts of these events against
the master schedule using
synchronized time-sequenced
information.
Customer Value Chain :
• From state-of-the-art parts distribution center in Seattle & the
award-winning Boeing PART Page, customers have direct access to
Boeing’s extensive information and ordering system.

• Boeing’s PART Page is the most comprehensive web-based ordering

system - incorporated customer suggestions- easier to place an order
or track its status.

• The site provides up-to-the-minute information on millions of parts,

including price and availability.

• If Customer prefer the personal touch, representatives are available

around the clock.

• Advanced ordering system helps next-day shipping, helps lower

customer inventory holding costs.
Contd..
• Boeing, help customer develop a comprehensive spare parts list suited
to their aircraft.

• Boeing recommend a list of replaceable spare parts based on the

airplane’s specific requirements.

• Develop a customized provisioning schedule so that customer receive

parts just as their maintenance plan requires them.

• Boeing help reduce inventory holding costs without jeopardizing flight

and maintenance schedules.

• Work with customer to develop whatever level of materials

management they want.

• Global Airline Inventory NetworkSM —GAIN — supply a wide range

of expendable parts directly to the maintenance operations of major
customers, which reduces their inventory holding costs.
Boeing Honors Suppliers:
• 13 companies from 3 countries were honored
with Boeing's premier supplier award for their
commitment to excellence and customer
satisfaction.

• The 13 award winning Boeing Suppliers of the

Year were selected from a field of more than
10,900 Boeing suppliers in more than 66
countries .

• The winning suppliers in each category were

chosen on statistical measurements of quality,
on-time delivery, post-delivery support and cost
during the 12-month period. They also were
evaluated on their ability to anticipate and
respond to changing customer requirements.
Thank
you