Aerospace Industry: Boeing Airplane Company’s Attempt to Utilize the Outsourcing Method

As with any business model, the aerospace industry strives to lower costs and increase profits. With this objective in mind, the practice of outsourcing has become increasingly popular.

The concept of outsourcing the manufacture, production and design engineering to low-cost countries in order to reduce cost and increase profits has, in some cases resulted in the opposite effect. This study will explore the Boeing Airplane Company’s attempt to utilize the outsourcing method for its new 787 Dreamliner program. A final evaluation or hypothesis will be formed based on the success and failures of the program. The growth of global outsourcing has created a new paradigm for management.

Boeing’s 787 aircraft program will be focused to investigate and evaluate the effects of relying on a global supply chain of vendors and suppliers in order to reduce costs and maintain aerospace superiority.

By collecting data from Boeing Company reports, academic studies, and industry business sources, this paper will attempt to show the reader the merits and disadvantages experienced by Boeing by relying on the outsourcing of a majority of the aircraft.

The researcher will utilize a quantitative methodology by applying the grounded theory approach of data collection.

Keywords: Merits of outsourcing, global supply chain management, quantitative methodology

Chapter 2: Introduction

The objective of this research paper is to collect and analyze data for the purpose of evaluating the merits and/or failures of outsourcing in the aerospace industry, with a particular focus on Boeings’ new 787 Dreamliner aircraft. A brief history of the practice of outsourcing by the Boeing Company will be followed by Boeing’s current practice of global outsourcing along w...

... middle of paper ...

... profit losses stemming from the delays in production (Hart-Smith, 2001).

On-site support for its suppliers was a necessary activity for Boeing, to maintain coordination between the sub-contractors. Boeing sent hundreds of its engineers to the sites of various Tier-1, Tier-2, or Tier-3 suppliers worldwide to solve various technical problems that appeared to be the root cause of the delay in the 787′s development. Ultimately, Boeing had to redesign the entire aircraft sub-assembly process, which generated massive additional expenses that should have been planned for and included in the project’s costs from the beginning (Denning, 2013).

In order to avoid costly issues of late delivery, supply chain managers must build and constantly improve their relationships throughout the supply network, while maintaining operational transparency and visibility (Behrens, 2010).