OPER/014

IBS Center for Management Research

Lean Manufacturing Initiatives at Boeing

This case was written by K.Subhadra, under the direction of A. Mukund, IBS Center for Management Research. It was
compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either
effective or ineffective handling of a management situation.

2002, IBS Center for Management Research. All rights reserved.

To order copies, call +91-08417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally,
Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: info@icmrindia.org

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 OPER/014

Lean Manufacturing Initiatives at Boeing

“Our entire enterprise, will be a lean operation characterized by the efficient use of assets, high
inventory turns, excellent supplier management, short cycle times, high quality and low
transaction costs.”
- Boeing’s ‘Vision 2016’ Statement, in 2002.

BACKGROUND NOTE

The US - based leading airplane manufacturer Boeing Airplane Company (Boeing) was formed in
1916 by William Boeing (William) and George Westervelt (Westervelt) as the Pacific Aero
Products Company. The company’s name was changed to Boeing in 1917. Boeing began by
manufacturing aircrafts for the US military during the First World War. In 1922, Edgar Scott,
became the company’s president and during his tenure the navy awarded Boeing a contract to
build a primary trainer (planes for test flights). In 1927, the Model 40A mail plane, won the US
Post Office contract to deliver mail between San Francisco and Chicago. The Boeing Air
Transport (BAT) was formed to run the new airmail services. BAT also trained pilots, set up
airfields and provided maintenance staff for the new service.
However, Boeing realized that to grow, it needed to design and go in for mass production and sell
its own aircrafts. After the Second World War, the company shifted its focus from the defense
industry to commercial jets. In 1952, Boeing launched its first commercial jet, the Boeing 707, a
short-range jet. In 1960, William M. Allen (Allen) became the company’s CEO. The same year,
Boeing began manufacturing its first jumbo jet – the Boeing 747. During Allen’s tenure, Boeing
launched one of its most successful jets, the 737. In 1962, Boeing manufactured the Air Force One
for the American President’s use. In late 1969, Boeing entered the Spacecraft manufacturing
business by contributing to the Apollo program.
In the early 1970s, Boeing faced a host of problems due to the recession in the aviation industry.
When the Airbus Industrie1 was formed in 1970, Boeing’s market share (70% in the early 1970s)
began to decline. In the mid-1970s, Boeing launched long-range planes (the 757 and the 767). By
the mid-1980s, Boeing expanded its presence in the consumer electronics business through joint
ventures, mergers and subcontracting. In March 1984, Boeing took over the De Havilliard Aircraft
of Canada to enter the commuter planes market. In the early 1990s, Boeing completed the
manufacture of the 727 and the 737. By October 1994, the company launched the new 737 series,
the 737-800.
In the mid-1990s, Boeing’s revenues plunged and it had to retrench around 9,300 employees due
to the economic slow down. The company faced a 10-week strike in the fourth quarter of 1995. In
late 1996, Boeing and McDonnell Douglas2 announced plans to merge. In 1997, Boeing had
approximately 70% of the world market for passenger aircraft. By the end of 1997, Boeing was
1
Established in 1970, Airbus is the world’s second largest manufacturer of aircrafts, formed by a
consortium of British, German and French airplane companies backed by their respective governments.
The company was launched to challenge Boeing’s monopoly in the aviation industry.
2
McDonnell Douglas manufactured planes since 1920, and was one of the largest defense contractors in
the United States producing combat aircrafts, helicopters, missiles and defense electronic systems.

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 Lean Manufacturing Initiatives at Boeing

severely affected by the Asian economic crisis3 that put in doubt over one-third of the $1.1 trillion
projected commercial aircraft sales for the next 20 years. The company’s internal problems such as
bureaucracy, redundant manufacturing processes and an outdated information technology setup
further aggravated the situation. Boeing lost 17% of its market value as a result of the Asian crisis.
By 2001, Boeing had emerged as a $58 billion company operating in 145 countries with around
179,000 employees worldwide. The company was divided into six major units: Air Traffic
Management, Boeing Capital Corporation, Commercial Airplanes, Space and Communications,
Military Aircraft and Missile Systems, and Connexion by Boeing. The commercial aircraft
division contributed around 60% of the total revenues. Boeing’s manufacturing plants were located
at Renton, Everett (Washington), Wichita (Kansas) and Long Beach (California).

MANUFACTURING PRACTICES AT BOEING

In a traditional commercial aircraft manufacturing plant, the floor layout was similar to a parking
lot. The planes were docked in stalls – six on the left side of the factory, six on the right side. Each
plane was surrounded by ramps and workers would go in and out to find parts, install them.
Boeing had followed the above approach from the beginning and its manufacturing practices did
not change much over the years. According to analysts, by the early 1990s, the company’s
operations had become completely outdated. Its operations were inefficient and characterized by
high costs and long production cycles. The main problem with Boeing’s production system was
said to be the variety of choices it offered to customers. Boeing’s customers had a wide range to
choose from – from the type of engine to the location of a small spring on the board in the cockpit.
As a result, the company had to keep track of every part that went into the plane. This was done
with the help of an operations system that used 800 different computers.
These computers frequently had serious co-ordination and communication problems. The system
was designed to keep track of the several million parts involved in the production of a plane rather
than the plane’s development. It also involved re-computing of parts requirements several times
during the construction of a plane. Each plane had a customer identification code and employees
spent several hours matching the designs with the customer identification codes.
The process worked well when Boeing manufactured large volumes of identical planes. However,
when it started manufacturing planes with different configurations, the process became
cumbersome. Due to this, its reputation for quality and on-time delivery suffered. The launches of
planes was frequently delayed and many planes had several technical snags. The company realized
that it would have to streamline its manufacturing activities to address the above problems. Thus,
Boeing began implementing a lean manufacturing process in 1993 and even benchmarked itself
against automobile major, Toyota, and developed a system, which tracked defects in its airplanes.
In early 1994, Boeing implemented a manufacturing process improvement initiative called Define
and Control Airplane Configuration/Manufacturing Resource Management (DCAC/MRM). This
improved the manufacturing process and reduced costs, cycle time and defects. DCAC also
simplified and improved Boeing’s internal processes for handling airplane customer configuration
data. MRM helped improve the manufacturing process based on airplane data. However, the
3
The Asian financial crisis started in early July 1997, when international currency speculators as well as
many Thai nationals were trying to sell Thailand’s currency, the Baht to buy US dollars, causing a flight
of capital out of the country. As a result, the capital became scarce and interest rates on borrowed money
rose sharply, leading to the Baht losing about 20% of its value. Then the Thailand stock and real markets
collapsed, pushing the country into its worst recession as production decreased, unemployment rose
sharply and businesses went bankrupt. The crisis spread quickly to other countries in the Southeast Asian
region like Indonesia, South Korea and Japan, significantly damaging the region’s economy.

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 Lean Manufacturing Initiatives at Boeing

DCAC/MRM initiative was reportedly so complicated that the executive in charge of it referred to
it as the ‘acronym from hell’. It took two years to implement it than originally anticipated.
Despite the above initiatives to implement lean manufacturing and improve operational
efficiencies, Boeing failed to reap benefits due to a host of internal problems. The old
manufacturing procedures and the company’s bureaucracy slowed down its operations. It was
reported that for even a minor alteration like changing the location an emergency flashlight holder,
consumed thousands of hours of engineering time, hundreds of pages of detailed drawings and cost
hundreds of thousands of dollars to execute.
The loopholes in Boeing’s manufacturing processes turned into a major problem in August 1997,
when it launched a price war to compete with Airbus. As a result of the price-cuts, the company
received several orders. However, it could not cope with the demand when it tried to increase
production. A number of problems such as raw materials shortage, parts shortage and productivity
inefficiencies associated with the recruitment of thousands of new employees soon surfaced. This
resulted in a serious disruption of process flows leading to late shipments of parts. This, in turn,
resulted in workers being forced to work overtime. Soon, the overtime costs increased to 30% of
the total labor cost even as Boeing saw its inventory turnover falling sharply.
Due to the above problems, Boeing was forced to close its two assembly lines manufacturing
Boeing 737 and 747 for a month resulting in a $1.6 billion loss. Boeing not only missed the
delivery targets, but also lost some of its customers to Airbus. The company realized that it had to
change its manufacturing process to compete with Airbus, which was rapidly eating into its market
share (Refer Table I).
Table I
Global Aerospace Industry – Market Shares
(in %)
Year Boeing Airbus
1995 70 15
1996 64 32
1997 60 35
1998 50 50
1999 45 55
2000 45 55
2001 47 53
Source: IBS Center for Management Research
It was at this stage that Boeing decided to refocus on the lean manufacturing initiatives that began
in 1993 to solve its problems (Refer Exhibit I for a note on lean manufacturing).

LEAN MANUFACTURING AT BOEING

Boeing began implementing lean manufacturing principles in 1993. The company employed a
Japanese consulting firm to assist in the task at its commercial aircraft division. However, because
of Boeing’s decades-old operational inefficiencies, it failed to reap the benefits of lean
manufacturing.

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 Lean Manufacturing Initiatives at Boeing

Analysts felt that Boeing’s corporate culture was one of the reasons for the above failure. Though
executives knew about the manufacturing problems, the company-wide attitudinal problems
thwarted any corrective measures. This attitude was due to the environment in which the company
was doing business for a long period. Its major customers – mostly state owned airlines, protected
by regulation, and the free spending US Department of Defense – never cared about the prices.
Also, Boeing never had an efficient competitor challenging its market share. When Airbus came
into the picture, Boeing believed that Airbus was doing well because of the government subsidies
it was receiving from the European Union rather than its engineering efficiency.
The above circumstances had made the company complacent and its employees had become
averse to any kind of change. According to analysts, there was a strong company-wide feeling of
‘Why change?’ when the lean manufacturing initiatives were first introduced. However, when
Airbus market share went up at Boeing’s expense, the latter was forced to look at its production
process. Phil Condit who took over as Boeing’s CEO in 1996, outlined the following four-pronged
strategy for the company’s turnaround after the production problems in 1997 led to the closure of
two plants:
Fix the commercial aircraft division’s production problems.
Grow the higher-margin defense and space divisions.
Regain credibility on Wall Street.
Scrap Boeing’s paternalistic corporate culture.
To fix the commercial aircraft division’s production problems, Condit decided to refocus on lean-
manufacturing principles. The primary focus of these efforts was to eliminate waste in the
company’s business processes to maximize operational efficiency, improve quality/safety
standards, eliminate unnecessary motion and inventory and save time. Boeing also believed that by
refocusing on the lean manufacturing initiatives, it would be able to improve the employee’s
morale due to their increased involvement in manufacturing.
The exercise began with an assessment process in which representatives from all the functional
work areas evaluated their current business situation and performance. After the evaluation, an
implementation plan was formulated by using various tools and techniques of lean manufacturing
(such as value stream and employee involvement) to simplify and improve the business processes.
The plan ensured that employees made a step-by-step improvement in process efficiency and costs.
Boeing realized that the success of lean manufacturing would depend on employees who were
empowered to challenge and change the existing processes. For this, Boeing relied on the people
who worked closely with the processes and products, as they were the most reliable sources to
identify and remove the waste in manufacturing and support processes. Thus, the implementation
of lean manufacturing principles at Boeing was a co-operative process wherein managers at the
plants worked in co-operation with employees and encouraged them to introduce procedures to
reduce wastage.
As part of the lean initiatives, Boeing formed a production reform team in 1997. the team consisted
of around 2,000 people along with Robert Hammer (Vice-President, Production Process). The
team devised a plan that revolved around a simple notion that airlines should order airplanes the
way consumers order automobiles. According to the new plan, carriers were not offered unlimited
choices. They had to pick from a finite options package and special requests were handled at an
extra price.
The team discarded 400 computer programs which kept track of the parts’ list and sketches and
replaced them with four inter-connected software packages – one each to manage configuration,
manufacturing, purchasing, and inventory control. The team had devised only one list of parts for
each airplane, updated electronically throughout the production cycle. In accordance with the new

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 Lean Manufacturing Initiatives at Boeing

manufacturing procedures, the Boeing 777 was manufactured in a paperless way. Right from the
initial designing to the finalization of the design, it was done on computers using 3D-CAM4
software.
To tackle the challenge of production reforms, Boeing conducted a five-day workshop called the
Accelerated Improvement Workshops (AIW). AIW was a five-day workshop combining training,
planning, and implementation to make rapid improvements on the factory floor. During the AIW,
employees were allowed to make significant changes to work procedures, work rules, machines
and the flow of work. Due to AIW, the employees at factory building wings for 737 and 747
reduced the production time for some functions from 56 to 28. They moved machines, designed
new tools, and reduced unnecessary inventory.
One of the trouble areas for Boeing was its inventory management. The inventory turnover at
Boeing’s factories was only two to three times a year, while an efficient manufacturing operation
typically turned its inventory 12 times a year. According to analysts, Boeing held about $18 billion
in gross inventories, which was equal to 35% of the total revenue. To manage its inventory,
Boeing installed an inventory management system, ‘Cribmaster,’ in December 1997. The software
effectively monitored the tool inventory, tracked consumption and issued purchase orders.
Another area of concern for Boeing was maintenance of equipment. To improve maintenance of its
machines, Boeing conducted an Autonomous Maintenance Workshops (AMW). In the AMW,
operators and maintenance personnel were responsible for the daily care and critical component
checks of their equipment. Through small group activities, the performance of the asset was
continuously improved.
Boeing also conducted many Lean Manufacturing Assessments (LMA) and Production Preparation
Process (3P) workshops. In LMAs, representatives from every function identified improved
methods to do the same work, and developed an implementation plan for changing over to new
processes. The 3P workshops focused on redesigning the waste out of parts, equipment and
processes.

REAPING THE BENEFITS

As a result of the above initiatives, Boeing was able to reduce its inventory levels by $1 billion
since January 1999, and was also successful in reducing the manufacturing time by 60% and
manufacturing floor space by more than 50%. This helped the company to lower the production
cost and also freed the manufacturing capacity. Boeing utilized this opportunity by entering into
contracts with Delta Airlines and Alaska Airlines to manufacture replacement floor panes for their
airplanes.
Boeing was able to release tens of thousands of square feet of floor space for new business
production. It also eliminated hundreds of thousands of square feet of inventory space. The time
taken to produce individual parts and components was reduced by upto 95%. Also, the time taken
to fully assemble an airplane was reduced by 50%. According to company sources, the initiatives
resulted in saving millions of dollars. In the Renton plant, where wing parts were built, employees
could reduce the flow time on products from more than 9½ days to 5 days.
The flow time reduction efforts eliminated a second production line, which saved millions of
dollars. The lean principles also helped Boeing to reduce defects by 48%. Boeing gained a lot by
involving its suppliers in the implementation of the lean manufacturing initiatives through a web-
based procurement system. The system helped a supplier to know when Boeing’s inventories had
come down to the minimum level so that he could dispatch the parts automatically.

4
A computer aided manufacturing (CAM) software that supports spatial representations like the actual
world by using the three-dimensional (3D) mode.

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 Lean Manufacturing Initiatives at Boeing

This led to the inventory problems being solved to a great extent. The Cribmaster software enabled
employees to avoid entering each tool’s number manually into the computer. Instead, with bar
coding, tools were checked out in seconds using a wireless handheld scanner. This process saved
nearly 1,000 issues, returns and counts and a lot of time for the workers. All this resulted in the
inventory turnover increasing from 2 to 18 per year and the inventory of work in process reduced
from 100 pieces to 30.
Boeing’s employees were able to improvise on the machines they used due to the lean
manufacturing initiatives. They designed several new machines that replaced the existing huge,
costlier ones. For instance, a drill machine was built for 5% of the market cost; another component
was developed at two-tenths of the cost of the existing one. The improvement in efficiency could
be judged from the fact that a process that took 2000 minutes for a 100-part order was now
completed in 100 minutes.

EXTENDING LEAN MANUFACTURING

In 2000, Boeing introduced an innovative manufacturing technique called ‘Moving Line’ that
further improved its production efficiency and quality levels (refer Figure II). Though Boeing had
used this technique earlier, the new aspect of this technique was the fusion of the moving line
techniques with the lean manufacturing techniques. Under this, a continuous moving assembly line
moved planes from one assembly team to the next place slowly, keeping production at a steady
pace. It also allowed employees to monitor the production status anytime which reduces the
amount of work in process inventory.
Figure II

Moving Line Assembly

Source: BusinessWeek, June 04, 2001.

In the Boeing 737 moving assembly line at the Renton plant, unfinished planes moved along the
assembly line at a rate of two inches per minute. As the planes moved, mechanics added the
components without leaving the assembly area surrounding the planes. They were given the
required parts and tools by a set of support people, who communicated with them through two-way
radios or through various visual signals. Workers were empowered to stop the assembly line when
it fell behind schedule so that the managers could track the schedule by monitoring the plane’s
position in relation to the time marking taped on the floor. This enabled the managers to know
exactly where the planes were in the assembly process at any given time.
The company arranged more than 30 feeder lines that worked parallel to the main assembly line
where the components were pre-assembled. This saved both time and cost. For example,
previously the mechanics needed 42 hours to install 204 parts for an assembly that went into the
737. The feeder lines enabled the assemblers to install only 14 parts and the job was completed in
just 16 hours.

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 Lean Manufacturing Initiatives at Boeing

The complete conversion of both the 737 and 757 factories to the moving line setup was expected
by end 2002. According to company sources, when these moving lines are fully operational,
Boeing would be able to reduce the final assembly time by 50% with the lines moving
continuously at a rate of about one half inch per minute. Company sources feel that over the next
five years, all the assembly lines would be converted to the moving line. With this, Boeing aims to
reduce the average time from order to delivery to six months. Analysts opine that once this
initiative is completed, Boeing would find it comparatively easier to stay ahead of Airbus.

QUESTIONS FOR DISCUSSION:

1. Explain the circumstances that made Boeing adopt the lean manufacturing practices in the late
1990s. What were the factors that hindered the implementation of the system? What according
to you are the pre-requisites for the successful implementation of lean manufacturing in large
organizations?
2. Define lean manufacturing and discuss the various tools and techniques that are involved in
the successful implementation of the system?
3. Explain the lean manufacturing initiatives undertaken by Boeing and explain its approach.
Analyze the methodology and the process in implementing it? What are the factors that
contributed to its success in the second attempt?
4. What were the benefits derived by Boeing as a result of adopting lean manufacturing
practices? Do you think the company’s decision to implement the moving line technology for
aircraft manufacturing was a wise move? Give reasons to support your answer.
5. Do you think Boeing would gain a competitive advantage over Airbus after implementing
lean-manufacturing practices at all its locations? Do these practices offer it a potential to
regain market share and restore profitability levels?

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 Exhibit I
About Lean Manufacturing
The concept of lean manufacturing can be traced back to Japan after the Second World War,
when Japanese manufacturers were facing a decline in human and financial resources. These
circumstances forced Japanese manufacturers to develop a new, low cost, manufacturing
technology. Toyota was the first company to implement this practice. The company developed
various disciplined processes such as Just-In-Time and Kanban, which collectively came to be
known as the ‘Toyota Production System,’ or ‘Lean Production.’ The main focus of this system
was to minimize the consumption of resources that were not of any value to a product. By early
1980, US automakers had also begun adopting the lean manufacturing concepts.
In lean manufacturing, it requires that instead of being pushed to the market, products are
produced according to customer needs and with shorter lead times. The major difference
between lean manufacturing and traditional manufacturing was that lean manufacturing worked
on the concept that production can and should be driven by real customer demand. Thus, lean
manufacturing can be seen as a system that focuses on continuously improving manufacturing
processes and driven by customers, both internally and externally. Typically, the lean
manufacturing initiatives in any organization consist of six major tenets that are supported by a
set of strategic initiatives (Refer Figure II).
Figure I
Building Blocks of Lean Manufacturing

Source: www.mamtc.com
Some of these major tenets, supporting strategies and concepts are defined below:
Quick changeover: Developing a production system that manufactures only what the
customer wants and when the customer wants it, leading to a strong, flexible manufacturing
system adaptable to changes. To improve the setup operations, a setup analysis is
undertaken. It videotapes the entire setup operation, asks the personnel about their work and
studies the time and motion involved in each step. The setup is then improved through
various setup reduction techniques.
Pull/Kanban systems: Companies need to design their operations to respond to customers’
requirements and Kanban helps immensely in this regard. Its literal Japanese meaning is
‘instruction card.’ These are generally manual pull devices, which allow the efficient
transfer of parts from one department to another and automatically put a purchase order for
products using minimum/maximum inventory levels. It thus acts as a signal to the manager
for replenishment of materials.
Contd….

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 Lean Manufacturing Initiatives at Boeing

Contd….
Workplace organizations system: Lean manufacturing cannot be a success in a
disorganized workplace. Poor working conditions lead to wastes that delay production and
increase defects. Good working conditions are essential for efficient production. Many
companies use the 5S system, which improves and standardizes the workplace environment
for safe and effective manufacturing practices.
Value stream mapping: Value stream mapping can be defined as mapping the production
path of a product visually. It is a starting point to help the management recognize waste and
identify its causes. This process focuses on the production flow beginning with acquiring
raw materials to the final production of the product. Value stream mapping helps an
organization understand the production flow.
Total Productive Maintenance (TPM): TPM can be defined as an initiative that
optimizes the effectiveness of manufacturing equipment. It is team based and involves
everyone in each function in the organization. TPM’s goal is to make the production
systems profitable and it requires organizations prevent breakdowns and defects in efficient
and economical ways. This is achieved through preventive, corrective, maintenance or
breakdown maintenance. Thus, TPM eliminates all accidents, defects and breakdowns.
Cellular manufacturing: Cellular manufacturing helps produce various products with
minimum wastage. Both equipments and workstations are arranged in a sequence to
support the flow of materials and components with minimal transport or delay.
Quality at source: Generally, in traditional manufacturing companies, quality checks are
done during the receipt of goods and through sampling at the product’s final assembly line.
In lean manufacturing, the inspection and product rework are done at any point in the
production. Quality at source is done through two systems viz., Zero Quality Control 5 and
Poka-Yoke6.
One-piece flow: This is a technique that aims at producing one part correctly all the time so
that the company can achieve its goals without unplanned interruptions and lengthy queue
times. It is also known as continuous flow manufacturing.
Takt time: It refers to linking production to the customer by equaling the production pace with
the pace of the actual final sales. Initially, the actual Takt times are calculated for each product
and part and then the time required for each product and part is used to determine the time to be
allotted to the actual process in the entire production chain. In simple words, Takt time is the
rate of customer demand and the frequency at which the customer requires a finished item.
Employee involvement: Lean manufacturing results in changed production methods. An
awareness about the changed production systems must begin at the top of the company and
establish a sense of urgency that will flow down to the next level and to the lowest level –
shop floor. When implementing lean manufacturing strategies, the management must
ensure that the people are fully trained and empowered to accept and implement the
changes. It should also ensure the presence of a widespread orientation about quality and
continuous improvement. The management should also create a common understanding
about the need to change to lean.
Contd….

5
Zero Quality Control ensures zero defects as the processing conditions are inspected for 100% of the
work, ideally just before an operation. If an error is discovered, the process shuts down automatically and
gives immediate feedback with lights and warning sounds.
6
Poka-Yoke is a quality assurance technique that aims to prevent defects as soon as possible. The Japanese
term literally means proofing. A poka-yoke device prevents incorrect parts from being manufactured or
assembled, and easily identifies a flaw or error.

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 Lean Manufacturing Initiatives at Boeing

Contd….

Standardized operations - Standardization is used to systematize a process including the

man-machine interactions and studies of human motion at shop floor. The standardization
of work should occur in the entire organization rather than in one department.

All the above building blocks help a company implement the lean manufacturing techniques
successfully. They also help organizations reap various benefits in the form of waste elimination and
lower inventory cycles. Lean manufacturing has an overall impact on the sales and customer service
in the form of shorter lead times, higher flexibility and increased sales. It also reduces the
requirement for space and work-in-progress and improves quality. The results, however, vary from
industry to industry. According to analysts, the typical benefits derived due to lean manufacturing
include:

Reduction in scrap and setup time by 90%.

Reduction in lead-time by 50%.

Achievement of 20-inventory turn over year.

Reduction in operating costs.

Improvement in productivity (10%-40%) and quality (25%-75%).

Though lean manufacturing had gained popularity in the late 1980s, only a few companies were
actually able to reap its benefits completely. This was because many organizations did not
understand clearly the philosophy behind the initiative. There was a lack of continuous
improvements to the process as well as a lack of employee involvement into the process.
Sometimes, labor unions misunderstood the initiative as the management’s way of reducing the
number of employees.

Comparing Traditional and Lean Manufacturing Techniques

Traditional Production Lean Production

Production schedules are Forecast – product is pushed Customer Order – product is

based on through the facility. pulled through the facility.

Products manufactured to Replenish finished goods Fill customer orders

inventory (immediate shipments)

Production cycle times Weeks/months Hours/days

are

Manufacturing lot size Large, with large batches Small, and based on one-piece
quantities are moving between operations; flow between operations
product is sent ahead of each
operation

Plant and equipment By department function By product flow, using cells or

layout is lines for product families

Quality is assured Through lot sampling 100% at the production source

Contd...

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 Lean Manufacturing Initiatives at Boeing

Contd...

Traditional Production Lean Production

Workers are typically One person per machine With one person handling
assigned several machines

Worker empowerment is Low – little input into how High – has responsibility for
operation is performed identifying and implementing
improvements

Inventory levels are High – large warehouse of Low – small amounts between
finished goods, & central operations, ship often
storeroom for in-process
staging

Inventory turns are Low – 6-9 turns per year or less High – 20+ turns per year

Flexibility in changing Low – difficult to handle and High – easy to adjust and
manufacturing schedules adjust implement

Manufacturing costs are Rising and difficult to control Stable/decreasing and under
control
Source: www.mamtc.com

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 Lean Manufacturing Initiatives at Boeing

Additional Readings & References:

1. Tully Shawn, Can Boeing Reinvent Itself?, Fortune, March 8, 1993.

2. Taylor Alex, Boeing Sleepy in Seattle, Fortune, August 7, 1995.
3. Engardio Peter, Roberts Dexter, Cover Story – Boeing, BusinessWeek, September 30, 1996.
4. Solovar Griffin Maura, Boeing’s Big Problem, Fortune, February 2, 1998.
5. Reinhardt Andy & Browder Seanna, Cleared For Takeoff: Another Turnaround,
November 9, 1998.
6. Labich Kenneth, Boeing Finally Hatches a Plan, Fortune, March 1, 1999.
7. Boeing Attempts a U-Turn at High Speed, BusinessWeek, April 16, 2001.
8. Boeing Goes Lean, BusinessWeek, June 4, 2001.
9. Wilhelm Steve, Boeing Thrives on Lean Effort, www.seattle.bizjournals.com, July 27, 2001.
10. Arnold V. Paul, Boeing Knows Lean, MRO Today, March 2002.
11. www.mro.com
12. www.boeing.com
13. www.mmatc.com

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