Spencer Madden

4/23/17
Coach Sam
Operations Management Paper Boeing Company

For manufacturing companies that produce high value products, operations are the key to

their success, especially those involved in fields such as the aerospace industry. Boeing

Company, an aircraft manufacturer founded in Seattle, WA in 1916, is a company that

exemplifies the use of operations to create high quality products and remain profitable.

However, with this company being as large and diverse as it is, the organization has many

different operational departments. There are flight service operations, manufacturing operations,

government operations, engineering operations, and many more. This paper will focus on the

manufacturing element of Boeings operations because this represents how they are able to

produce hundreds of aircraft a year, as well as, ensure the highest safety with all their aircraft.

For the commercial aspect alone, Boeing is currently manufacturing five different main

types of aircraft. These aircraft are the 737, 747, 767, 777, and the newest addition. the 787

Dreamliner. Even though there are only five main categories, there are many different variations

for each class which will change the aircraft capacity, range, and equipment. (Boeing Company,

2017) Since each manufacturing plant produces not only different models, but also all the styles,

there is no room for error when it comes to equipping each aircraft with the correct variations.

The largest competitor for Boeing when it comes to commercial aircraft manufacturing is the

French company Airbus who continues to produce high quality aircraft like Boeing. However,

Boeing has consistently been able to produce more aircraft each year than Airbus. In 2015,

Boeing delivered a record number of aircraft at 762 which is roughly 100 more than Airbus was

able to produce. (BBC, 2016) This mark solidifies their title as the largest aircraft manufacturer

in the world.
 Boeing has production plants located all over the country that handle the final assembly

of these planes after all the parts have been delivered. The largest plant currently in operation is

in Everett, WA and is actually the largest building in the world by volume. The building takes

up over 13 million cubic meters and has around 30,000 employees. (Aversan, 2016) This plant is

responsible for the assembly of all commercial aircraft except for the 737. (Boeing Company,

2017) Since the 737 is the best seller for Boeing, it requires its own plant in Renton, WA that

solely makes that aircraft type. (Seeker News, 2016) With a production plant that large,

operations need to go smoothly at all times or it would become complete chaos.

First, lets take a look at one of the most difficult challenges that all aircraft

manufacturers face and that is capacity planning. The capacity represents the maximum level of

output that a process can produce. (Krajewski, Malhotra, & Ritzman, 2015) For Boeings Everett

factory, this is about 22 planes a month, but these planes are all wide-body planes that are much

larger than the 737 narrow-body. The Renton, WA factory that builds 737 models completes

around 42 aircraft a month. (Seeker News, 2016) These combine to make up the roughly 64

planes a month that Boeing completes in total. For assembling an extremely complex aircraft

with millions of parts, completing a little over two planes a day seems like a strong rate, and it is.

It should be noted that Boeing does not complete two aircraft a day from start to finish. They

have just perfected their operations so the planes move to a new stage each day, and at the end of

every day, roughly two planes are completely assembled. (From start to finish, the full assembly

takes about 80 days depending on the aircraft type.) The issue is that the orders for these aircraft

come in at a much higher rate than Boeing is able to produce them. In March of 2017, Boeing

had its highest production month ever with 74 completed and delivered aircraft, however there

was a total of 140 orders that month as well. (Boeing Company, 2017) This is an ongoing issue
that happens every month that has brought Boeings total backordered aircraft log number to

5,744. (Boeing Company, 2017) Although this seems like a major issue for Boeing, European

competitor Airbus is facing a similar issue and their backorder log is even longer and the

company produces less planes a year. As can be seen, capacity planning is a major constraint on

companies such as Boeing because demand is higher than total capacity. However, as seen in

March of 2017, Boeing was able to exceed its usual capacity which was a sign of hope for the

company to increase its capacity.

Right now, the estimated wait time from when a Boeing plane is ordered until when it is

delivered to the airline is around 3 years for narrow-body 737s and around 5 or more years for

the wide-body planes. When it comes to most industries this would be completely unsustainable

and the company would tank, but in this industry it is the norm. Airlines expect the deliveries to

take this long and are able to plan their maintenance on older planes accordingly. Even though

Boeing is still very successful with these wait times, they are expecting orders to continue to

increase and have decided to continue the expansion on many of its plants, including the already

enormous Everett factory.

In any manufacturing process, there is something called the theory of constraints and

within that there is a step known as the bottleneck. The bottleneck is a capacity constraint that

poses the longest delay for a process and can cause the production system to not meet its

demand. (Krajewski, Malhotra, & Ritzman, 2015) When it comes to manufacturing aircraft, the

bottleneck is attaching the wings to the fuselage. The wings are the heart and soul of any

aircraft. An aircraft without engines is still able to glide through the air, however an aircraft

without wings will fall out of the sky. This means that this is the most important step in the

manufacturing process and must be done with complete precision. This process takes around 12
hours for each plane, which is by far the longest single process when it comes to assembling the

aircraft. (Seeker News, 2016) However, once the wings are on, the rest of the process begins to

move along much quicker. Manufacturing companies are always looking for ways to reduce

bottlenecks to increase capacity, but Boeing believes they have the process as time efficient as

they can without eliminating safety precautionary steps.

The most important area of operations when it comes to aircraft manufacturers is the

ability to ensure quality in their products. The largest plane that Boeing currently offers is the

747-8 which can carry anywhere from 400 to 660 passengers and crew depending on how its

equipped. In addition to the massive amounts of people on these planes, when an aircraft

crashes, the results tend to be catastrophic and almost ensure fatalities. This means that aircraft

must be built to the highest quality or they risk putting millions of people in danger every year.

Boeing has always made reliable and safe planes, but that does not mean that they have not had

any quality issues in the past. In fact, the most recent new model aircraft that Boeing has in

service is the 787 Dreamliner has had its share of quality issues as well. When the plane was

first coming into service in 2009 it suffered major issues with batteries, electrical systems, and

oil leaks. The issues caused many fires and grounded all 787s for over 3-months until the

problems were able to be identified and fixed. The halt in production and problem solving

costed Boeing around $600 million plus addition compensation to airlines who had to lease other

aircraft. (Scott, 2013) Since the 787 quality issues, Boeing has changed its subcontractors, who

they blamed the issues on, and is now focused on continuing to produce high quality aircraft. A

statement released from Boeing after the 787 incidents read, Boeing employees are focused on

producing quality work the first time, every time, because lives often depend on the products and

services they produce. (Boeing Company, 2010) This statement is now published on their
website to show their dedication to producing quality aircraft. By getting it right the first time,

the manufacturer also boasts about its ability to increase efficiency and decrease wastes.

Through its use of good operational practices, Boeing is able to add extreme value to its

products and its yearly revenue. Airlines who purchase from Boeing know that they will receive

a high quality, American-made aircraft in the quickest time possible for the industry. Having

this great reputation and turnover time has helped Boeing to continue to dominate the industry,

generating a higher revenue than Airbus by roughly $30 billion last year. At the end of 2016,

Boeing was able to post an astonishing $94.5 billion revenue figure and this is thanks to its great

operational procedures that assist them in being successful in an extremely demanding market.

(Yahoo: Finance, 2017)

Works Cited
Aversan. (2016). The Boeing Everett Factory: An Inside Look. Retrieved April 24, 2017, from
Aversan: Aviation & Defense: http://www.aversan.com/the-boeing-everett-factory-an-
inside-look/
BBC. (2016, January 7). Boeing delivers record number of aircraft in 2015. Retrieved April 23,
2017, from BBC News: http://www.bbc.com/news/business-35257479
Boeing Company. (2010, August). Quality Performance. Retrieved April 24, 2017, from Boeing:
http://www.boeing.com/news/frontiers/archive/2009/august/aug09frontiers.pdf
Boeing Company. (2017). Commercial Airplanes. Retrieved April 23, 2017, from Boeing
Company: http://www.boeing.com/history/products/
Boeing Company. (2017). Everett Production Facility: Overview. Retrieved April 23, 2017, from
http://www.boeing.com/company/about-bca/everett-production-facility.page#/facts
Boeing Company. (2017, April 18). Orders & Deliveries. Retrieved April 24, 2017, from Boeing:
http://www.boeing.com/commercial/#/orders-deliveries
Krajewski, L., Malhotra, M., & Ritzman, L. (2015). Operations Management: Processes and
Supply Chains. Boston: Pearson.
Scott, A. (2013, April 18). The Dreamliner Debacle Has Already Cost Boeing $600 Million.
Retrieved April 24, 2017, from Business Insider:
http://www.businessinsider.com/dreamliner-trouble-has-cost-boeing-600-million-2013-
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Seeker News. (2016, November 7). Here's Why Wings Don't Fall Off Airplanes. Retrieved April
17, 2017, from Youtube: Seeker: https://www.youtube.com/watch?v=jMsoKy_MV6w
Yahoo: Finance. (2017, April 24). The Boeing Company (BA): Financials. Retrieved April 24, 2017,
from Yahoo: Finance: https://finance.yahoo.com/quote/BA/financials?p=BA