Boeing Examines Supply Chain for Weak Links

30 Dec

The unit of European Aeronautic Defence & Space Co. is in the process of hiring a total of 70 specialists who are “trying to get a smell of what’s going on in the suppliers,” Mr. Williams said.

Some smaller aerospace vendors face trouble financing their expansion due to the economy’s woes, according to Mr. Williams and other industry officials.

“We’re definitely seeing tension in the supply chain,” including longer lead times for ordering parts, Marc Ventre, deputy chief executive of French jet engine supplier Safran SA, told analysts recently.

At Vaupell in Seattle, Mr. Jahn said his company has been working with Boeing to find a replacement for a material used in some Boeing window shades that Dupont Co. has decided to stop manufacturing.

Boeing’s intensified reviews are helping Vaupell stay on top of its game, Mr. Jahn said one morning as he walked across the Seattle plant’s shop floor, where some workers wear dust masks as they polish luggage-bin trim, air nozzles and other airplane components.

Boeing has been conducting roughly four-hour-long monthly and quarterly assessments of Vaupell’s ability to speed up production, along with annual reviews that can take two to three days. A Boeing employee is at Vaupell’s factory almost daily, compared with about once a week in the past, Mr. Jahn said.

Airplanes are one of the biggest and most complex industrial products. Jets like the Boeing 777 contain several million parts. Problems far down in the supply chain, such as shortages of machines used to mold certain components, can cause delays that ripple across the industry.

Boeing is trying to heed lessons from its past that some executives commonly refer to as “scars” on their backs. In the late 1990s, Boeing had to temporarily shut some of its assembly lines, and took billions of dollars in charges, when bottlenecks and quality issues arose after it tried to expand production too quickly. More recently, in 2008, inadequate training of new mechanics and supply-chain glitches led to quality problems at its 737 plant.


In the past, “We had much more of an attitude [with suppliers] of: We’ll set the requirements and you have to go do your job,” said Beverly Wyse, vice president and general manager for the Boeing 737, the company’s top-selling jet. Now Boeing is using “a fundamentally different approach” by regularly verifying that suppliers have the right skills.


Boeing, which relies on more than 1,200 direct suppliers for its commercial jetliners, points to some specific benefits already. For instance, the number of parts shortages at its 737 plant is the lowest in five years, according to company officials.

Boeing is close to being able to increase the output of 737 planes at its Renton, Wash., plant to about 35 a month from 31.5. It plans to boost the volume to 38 planes in 2013 and to 42 in 2014. The seven extra jets could mean an additional $6 billion a year at list prices.

By comparison Airbus has made its competing A320s at a rate of 38 a month since August, with plans to reach 42 a month a year from now.

Meanwhile, Boeing faces its toughest test at its wide-body jet factory in Everett, north of Seattle. That’s where the company aims by late 2013 to produce 10 of its new 787 Dreamliner jets a month, up from just 2½ a month today.

Boeing executives say their heightened sensitivity to the supply chain stems partly from the many troubles Boeing had in producing its first 787 Dreamliners, which depend more heavily on parts made outside of Boeing than other jets. Boeing delivered the first of the new jets more than three years late, partially because of its failure to carefully manage its supply chain early on.


Under its more vigilant approach, Boeing is communicating more often with suppliers and sharing more information about its own forecasts and production plans, according to executives at the company and several of its suppliers.

Boeing says it also has increased its scrutiny of how its suppliers are evaluating their own vendors.

That’s a big shift for Exacta Aerospace Inc., a Wichita, Kan., firm that makes metal brackets and other components for Boeing jets, said Casey Voegeli, Exacta’s director of business operations.

“It’s a culture change,” he said. “They want us to prove to them that [our suppliers] have the capacity to keep up.”


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