I have written hundreds of blog posts on just about every angle of lean manufacturing, and my normal routine is to read dozens of articles from publications all over the world just about every day to find worthwhile fodder for each blog post. Having read so many thousands of lean articles, I thought I had seen – or read – it all. Then along comes Boeing, the most schizophrenic lean manufacturer of them all, and lean takes on a whole new absurd dimension.
According to a fellow by the name of Scott Strode at Boeing, this, and two more just like it, is "the foundation of [Boeing’s] lean, global production system":
That’s right, it is an airplane – but not just any airplane. This is a Large Cargo Freighter, which is a modified Boeing 747 and its purpose is to haul stuff from round the globe to Boeing’s assembly plant in Washington. Yep – it’s sole purpose is to serve as an outsourcing powerhouse.
It can be difficult to put an airplane against a backdrop of clouds in the proper perspective. To help you understand the Large Cargo Freighter, it has about the same interior space as this 8,000 square foot Mississippi plantation home.
That’s right. Slap a pair of wings and a monstrous GE engine on this mansion – three of them, in fact – and you have the foundation of Boeing’s lean, global production system.
The purpose is to be able to outsource components, like the wings for the new 787, to places like Asia and Europe. How bad does manufacturing have to be in Everett, Washington to make it a good idea to build three plantations with wings to haul airplane wings from Asia, instead of making them there?
I have high hopes for the new Boeing guy at Ford because Boeing does some pretty good lean stuff, but as this debacle shows, some things they do in the name of lean are almost insane. I sure hope Ford got the guy who is sending teams of Boeing folks to the Lean Accounting Summit, or the guy who provided leadership to the SME/AME/Shingo Prize lean certification effort; and not the guy who decided to call three dedicated outsourcing Large Cargo Freighters the foundation of Boeing’s lean system.
Andy Wagner says
I don’t like doing this, because I agree with you on principle, but I’m going to defend Boeing on this one.
The reason for this freighter, and hauling parts from Japan, is not lower manufacturing cost. The reason is that Wall Street won’t loan them the money to design an entire new airliner by themselves (manufacturing being such an obsolete, low return activity) so they need to enlist “risk sharing partners.” Those partners can’t be US partners, because that would violate anti-trust law.
As a result, Boeing has partnerships with companies like Kawasaki and Mitsubishi to reduce their development costs. In exchange for that, Boeing has to give them a share of the work.
A side benefit is that the Japanese government encourages Japanese airlines to buy their own products (with Boeing’s name on them).
In my opinion the blame goes to the investment community more than Boeing management. They’re making do in a tough environment.
-Andy
John Hunter says
I believe there are complicated agreements with governments that airline manufacturers deal with. Because of the huge cost of airlines the government require certain percentages to be produceed in their country (for nationalized airlines or I would imagine for all sorts of complex financing arrangements).
I agree it is a lame practice I just think airline manufacturing has some extra complications that impact outsourcing.
Barry "aka the Hillbilly" says
Based upon the comments Bill, there may be more that could be dug up on this story. I for one would like to hear more of the nitty gritty of what was involved in Boeing’s lean conversion. Call me old fashioned, but I for one consider it a failure when you outsource the manufacturing of key parts (Such as Wings) of your business to someone else. Pretty soon you are just assembling other folks parts and loose a lot of the knowledge of the technology involved. If you have the time, could you provide some more insight into the Good, the Bad, and maybe the Ugly of what Boeing has done. Has Wallstreet contorted this lean effort as the posts suggest ?
Andy Wagner says
Personally, I *am* worried about how much of its technical effort Boeing has outsourced. They have struggled to make carbon fiber parts for military contracts internally, failing dramatically on the JSF. Now their new aircraft are all composite, designed and built by others. They are becoming a systems integrator and final assembler only. Risky business.
Ironically, they sold the plant that makes aluminum fuselages for the 737, not because it wasn’t lean, cost effective, etc, but because aluminum is on the endangered species list for commercial airliners.
Thomas says
Barry, I would use caution in possibly confusing Boeing’s ‘lean conversion’ and their business decisions. A few points to keep in mind: 1) They have stated that their goal is to be ‘Large Scale Systems Integrators’ as opposed to manufacturers. i.e., they have thoroughly bought the line that The Money is in ‘moving up the value chain’. Neither good nor bad as business goes, simply a choice that will drive other choices/actions. 2) They have a history of passively supporting true lean efforts, then crowing about the successes in order to get the highest bid from potential buyers. Exhibit the Triumph Group, formerly Boeing Spokane, makers of aircraft floor panels. They had worked on their processes to a point where they were one of the lean benchmarks inside Boeing, only to be sold off. Also look at Boeing Wichita, as mentioned by Andy, another case of serious and successful lean production efforts being rewarded with a sale, albeit with standing contracts. And your mention of the wings is big – the wings were long considered to be Boeing’s true core competency, a competitive advantage, but business considerations led them to change their minds.
In my time at Boeing Commercial Airplanes, I rarely saw more than passive acceptance of real lean efforts. There were exceptions, certainly, and some names come to mind, but there was in my view a lack of solid top-down demand for real change and accountability. Some of the exceptions were/are very advanced, applying lean principles in areas others would consider out of the question, but doing that in an organization that thinks of itself not as a manufacturer but as an integrator just sets you and your contributions up for off-load.
Boeing has also long practiced ‘off-set’, where countries agree to but products, either military or commercial, only if they are given contracts as suppliers (typically to commercial programs) to offset the cost of the purchase. While this is understandable, considering the $numbers involved, it drives it’s own set of issues with extended supply chain, purchase decisions based on factors other than Cost/Quality/Delivery, and the possible creation of an entitlement feeling that interferes with the partnership for success that should exist between suppliers and customers.
Sorry for the long (but not necessarily complete) reply, but they taught me better than to be happy with what they were/are doing.
Barry "aka the Hillbilly" says
Thanks for the information Thomas. It will be interesting to see what transpires at Ford now that they have Boeings former leader.
Eric H says
I think Andy’s observations on risk-sharing are partly correct, but we might as well face the political reality: in no sense does Boeing sell a product that is traded on a free market. When they sell a plane, it is usually to some national airlines or at least to a heavily regulated company (much as the CAB controlled civil aviation here 30 years ago). The national airlines are controlled by bureaucrats and politicians who are also being wooed by Airbus, a wholly owned subsidiary of France and Germany. France and Germany can make all kinds of trade and other concessions that no company can make. Boeing plays this game by outsourcing parts to other countries in exchange for them subsidizing the part production, subsidizing the airlines, and possibly even granting overflight rights to Boeing products (the Hong Kong market was opened to New York flights when Russia started granting overflight rights because, believe it or not, that is the shortest route – guess who makes planes that can fly safely for 19 hours?). Unfortunately, realpolitik trumps lean every time.
Clint says
It’s not only for reasons of risk sharing, but for reasons of market and competition. By sharing work with overseas partners they gain considerable political clout that influences purchases. This has had a big impact with the asian buyers, especially since Airbus cannot move parts from Japan and China to France as easily as Boeing can to Seattle.