Formerly located in Seattle, Washington, but now headquartered in Chicago, Illinois, Boeing is the world’s largest and perhaps

most well-known aerospace firm. According to its Web site, the company operates in three principal segments -commercial airplanes; military aircraft and missiles; and space and communications- and currently employs nearly 171,000 people in more than 60 countries. The commercial airplane division consists of the 717, 737, 747, 757, 767 and 777 families of jetliners and the Boeing business jet. In fact, the company has more than 14,000 commercial jetliners in service worldwide, or roughly 75% of the world fleet. Nevertheless, Boeing faces stiff competition from international aerospace companies seeking to increase market share, the most prominent of which is Airbus, the European consortium that recently restructured itself as a corporation. Given these competitive pressures and its need to maintain its preeminent position in the global aerospace industry, Boeing continually seeks to improve its manufacturing processes to increase operational efficiencies and shorten production cycles. Aircraft Manufacturing Commercial aircraft manufacturing is a tremendously complex undertaking that requires vast outlays of human, financial and intellectual capital. Indeed, construction of a modern airplane often requires upfront expenditures in excess of $1 billion and entails marshalling the labor of literally thousands of line workers, subcontractors and management professionals. Despite the difficulty of coordinating the design, installation and testing of thousands of components and subcomponents, aircraft manufacturing still remains a labor-intensive industry. Moreover, further analysis of the aircraft manufacturing industry reveals that: Aircraft construction requires assembly of thousands upon thousands of high-quality components and subcomponents sourced from a vast network of suppliers. Not only are small parts subcontracted to outside manufacturers, but also entire sections of the airplane are outsourced to third parties. This contributes to long lead times and complicates the project management control process. Production volumes are very low compared to other manufacturing sectors. As a result, customers are able to pursue aggressive pricing strategies that tend to reduce the profit margins of aircraft manufacturers to a bare minimum. In order to meet this challenge, aircraft manufacturers continually seek to enhance productivity. Aircraft manufacturing remains a predominantly labor-intensive industry. Because of the specialized knowledge needed to fabricate modern aircraft, armies of highly specialized and well-trained technicians, scientists and engineers are needed at every step of the product design and development process. This need for specialists makes it increasingly difficult to employ labor-saving machinery, particularly as low production volumes make such devices extremely cost-prohibitive in many instances.

In an effort to ameliorate financial and technological risk, many aircraft manufacturers enter into collaborative arrangements to outsource the design and manufacture of major substructures. Reference is made to Aeritalia and the Japan Aircraft Development Company (JADC), both of which assisted Boeing with the design and development of major sections of the 767 family of airliners. More specifically, Boeing assembled all of its 767 aircraft at its gargantuan facility located in Everett, Washington. Subsection assembly was located on one side of the huge building; the other side was used for final assembly, which employed a line manufacturing process. Every four days, partially completed aircraft would move between each of the seven workstations, where highly skilled teams would undertake the laborious task of putting the aircraft together. Despite the inherent challenges of the aircraft manufacturing industry, Boeing was able to capitalize on the success of its family-of-aircraft approach, which allowed the company to assemble one base model of aircraft that could be modified in a variety of ways to meet the needs and requirements of different customers. Besides its adaptability, the family concept allowed the company to rapidly accumulate a base of knowledge that could be applied to future generations of aircraft, obviating the need to reinitiate the learning curve every time a new project was rolled out. Project Management Successful project management was at the core of Boeing’s 767 development program. Indeed, without an effective method for planning, scheduling and controlling the thousands of activities required to assemble an aircraft as large and complex as the 767, it would have been virtually impossible for this program ever to take off the ground. According to one of Boeing’s project management Web sites, the aerospace giant utilized a variety of tools and methods to monitor and control project performance: SEMP - A Systems Engineering Management Plan was developed at the start of the project to define how the project would be managed. The plan defined the detailed activities required to execute the program through its life cycle. IMP / IMS - An Integrated Master Plan and Integrated Master Schedule were developed to monitor important milestones. CAIV / DTC - Cost As an Independent Variable and Design To Cost analysis were used to optimize aircraft design in terms of costs and performance. TQM / CPI - Total Quality Management and Continuous Process Improvement techniques were utilized to refine processes with respect to technical performance and efficiency. GBAP – The Global Business Acquisition Program provided strategic tools for fulfilling the needs of customers and successfully submitting, winning and executing contracts. MS Project – Microsoft Project scheduling, tracking and resource allocation software was used extensively throughout the Boeing 767 project.

CAP - Cost Account Plans were established to manage and track budgets for various segments throughout the life of the project. Earned Value was determined based upon achievement of project milestones. LCC - Life Cycle Cost estimates included Research, Development, Test & Evaluation costs (RDT&E), production costs, operating costs and support and disposal costs throughout the life of the aircraft. Beside LCC estimates, Boeing employed parametric cost techniques to evaluate the costs associated with developing a new airplane such as the 767. Although a detailed analysis of parametric cost techniques is beyond the scope of this analysis, parametric techniques utilize cost estimating relationships, statistical algorithms and specific product characteristics to develop accurate cost estimates (NASA Parametric Cost Estimating Handbook). With regard to the 767, Boeing was able to use parametric cost techniques to formulate an accurate estimate of total assembly hours required, thereby facilitating net present value (NPV) analysis of the project. Besides the above-mentioned tools and methods, Boeing also employed a variety of human resources to plan, schedule and adjust project performance: Audit Teams – Composed of seasoned Boeing managers, audit teams investigated every facet of the product development process including finance, manufacturing, technology and management. These teams promoted project development by catching errors early and directly reporting them to upper management for resolution. Management Visibility System – Schedules were prominently posted for review, and weekly status meetings were held in which department supervisors notified each other of their needs and potential problems. Standup Meetings – Supervisors were required to stand up at meetings and explain why they were unable to meet production goals. Managers were then entrusted with clearing all hurdles to achieving those goals. Production Change Board (PCB) – The PCB reviewed all engineering-related change requests and assessed their cost and schedule impact. A feasible implementation approach was then developed for each approved request. By resorting to a wide variety of technical and human resource planning and coordination tools and strategies, Boeing was able to tackle the 767 development project in a coordinated, intelligent and costeffective manner. Design and Engineering The final goal of this entire process was, of course, to develop a new generation of aircraft, the Boeing 767, which would benefit from the company’s past experience while capitalizing on the most advanced

technology of the present. To meld the two into a workable whole, Boeing researched and developed the latest technologies but implemented them conservatively and only after much consultation with scientists and engineers. As was the case with all of its families of aircraft, Boeing did not fabricate its own engines; instead, it purchased them from outside manufacturers: General Electric, Rolls Royce and Pratt & Whitney. As has been mentioned, outside suppliers were also responsible for large sections of the body, including the fuselage, as well as the avionics. Boeing, however, always built certain components, such as the nose section and wings. Moreover, by focusing its efforts on developing flexible airframe assemblies that could be easily modified to meet future needs, Boeing was concentrating on its core competencies while benefiting from the specialized knowledge provided by third-party vendors and subcontractors. With regard to the Boeing 767 in particular, the company: Opted for a 2-engine module to promote fuel conservation and efficiency Selected a larger wing size that could be used for both medium- and long-range travel Installed an advanced digital avionics system in the flight deck (or “cockpit”) Used lighter, more durable composite materials on secondary structures Decided to retrofit 30 Boeing 767 aircraft to accommodate a 2-person cockpit rather than the 3person arrangement originally contemplated In sum, much of the success of the Boeing 767 design and engineering effort is due to aggressively seeking new technologies and thoroughly researching them before adoption; modifying original designs in the light of new information; focusing on Boeing’s core competencies; and outsourcing components and substructures outside the company’s area of expertise. Lessons Learned The successful development of the Boeing 767 was a remarkable engineering achievement that brought with it a wealth of information that could be used to improve future generations of aircraft, such as the Boeing 7J7. Some of the “lessons learned” during the 767 project that would improve development and management of the Boeing 7J7 included: Customer Involvement – Although aircraft customers were somewhat involved in design and development of the Boeing 767, the 7J7 would benefit from much greater participation and feedback from users of the aircraft, such as airlines. Involvement of airline scientists and engineers at every step of the process –design, development and production- would help to ensure that the final product had the broadest application to the needs of the world’s air carriers. Also, by interacting with airlines, Boeing would have ready access to important market information that it needs to gauge future demand in the global aircraft industry.

Lean Manufacturing – As stated on one of its Web sites, Boeing would benefit from employing lean manufacturing techniques during development of the 7J7 family of aircraft. In fact, implementation of lean techniques (such as a moving assembly line and just-in-time inventory practices) could reduce labor hours, work-in-process inventories, assembly time and manufacturing space. In view of the intense price pressures faced by Boeing, it would make sense for the company to reduce waste to a minimum during development of the 7J7. Composite Materials – Because of safety and technical concerns, composite materials were not utilized in the Boeing 767’s primary structures, although they were incorporated into some secondary parts. In view of recent technical developments, Boeing would benefit from utilizing new lightweight and costeffective composite materials on the 7J7’s primary structures. These materials could help to reduce aircraft weight, as well as improve corrosion and fatigue resistance. International Collaboration – In view of the success of Boeing’s collaboration with Aeritalia and JADC, the company should continue seeking strategic arrangements with key aerospace companies and contractors to outsource a significant portion of the development and manufacture of components for the 7J7. By integrating its core competencies with those of dependable, cutting-edge suppliers, Boeing could reap a synergistic effect that would make the 7J7 a much more technologically advanced and costeffective aircraft than its predecessor, the 767.

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