OPERATIONS MANAGEMENT ASSIGNMENT

WRITTEN CASE ANALYSIS OF BOEING

787:The Dreamliner

Submitted by:
Alina Parajuli (17021141119)
Nishan Neupane (17021141124)
Pallavi Priya (17021141128)
Niraj Thakur(17021141123)
Roshan Chaudhary (17021141127)
Overview

The Boeing Company is the worlds largest manufacturer of military and commercial
aircraft was founded in 1916 and operated three major groups of businesses with a total
of six subsidiaries: commercial airplanes; integrated defense systems subsidiaries
including aircraft weapon systems, network systems, support systems, and launch and
orbital systems; and the Boeing Capital Corporation. Boeing had dominated the
commercial airline industry since the introduction of the jet aircraft in the 1950s but in
2006, the European competitor Airbus took the edge over Boeing and officially became
the industry leader. Boeing acquired the McDonnell Douglas in 1997 and as aresult its
defense revenues exceeded its commercial airline revenues for the first time.

In order to regain its leadership role and with an intention of creating additional value to
its customers and their passengers, Boeing announced the launch of a new jetliner,
which it named the Dreamliner( initially known as Boeing 7E7) which was a much-
awaited new family of planes that was supposed to begin its operations in 2008. It
would be the 25th commercial airplane model unveiled by the western world and the 11 th
jet from Boeing or McDonnell Douglas. Boeings value creation strategy was to reduce
the time of journey and make their travel experience better by re-designing the aircraft
and offering new comforts. In view of that, in January 2003, Michael Bair, a 24-year
Boeing veteran with strong engineering and business backgrounds, was given
command for developing the business case, marketing and find a suitable assembly site
for the plane, and was also appointed senior vice president of the Boeing 787 program.

The case examines the reasons that prompted Boeing to initiate the 787 project. It
highlights the making of the aircraft, which was expected to change the dynamics of the
world aviation industry. This case also highlights the distinguishing features of the
aircraft and explains how it is more advanced than the existing aircraft. The case also
discusses about the various complex supply chains and outsourcing of the various parts
of the plane for integration and also the problems faced by 787 dreamliner after its
launch and its consequences.
Q) Evaluate the operation strategy at Boeing 787. Substantiate with detail
analysis.

With the aim of revolutionizing the airline industry, Boeing 787 is a dream project of
Boeing Company to cater the increasing threat from the competitor and recaptures its
market size. Boeing787: Dreamliner is highly anticipated aircraft in the history is
expected to radically change the commercial airplane business. It is promised to be a
long-range mid-size wide body with twin engine jet airliner and cater the demand for 200
to 300 seats. Its aim is not only to take over and replace existing airplanes. On April 26,
2004, Boeing announced the launch of 7E7 Dreamliner with a record order of 50 planes
from All Nippon Airways (ANA). The distinctive features of this plane is expected to:

20% less fuel than todays airplane of comparable size.

Increase cargo revenue capacity.
Quite takeoffs and landings.
Increase the travelling experience of the customers.

The operational strategy is developed with aim to cater all-round issues related
functioning of product i.e. product, logistics, IT, finance, marketing, supply chain issues,
strategic choices and many more. They are discussed below:

1) Product Content Differentiation: It has promised to offer a standard interface for two
types of engine- the GE Next Generation engine and the Rolls Royce Trent 1000
engine- allowing the new plane to be fitted with either manufacturers engine at any
point of time. The new design will also contribute to almost 8% increased efficiency
and provide 55,000 and 77,000 pounds of thrust. Also for the new plane structure, it
would use advanced composites and some new aluminum alloys.

2) Global and Strategic Supply Chain: In order to change it from wench-turning

manufacturer to snap together assembler of high-tech airplanes, Boeing would
gather parts or semi- finished parts from its global network of supplier and strategic
partners. This approach will also help to distribute the potential risks. It would supply
 35% of the planes structure, 35% Japan and 26% from Italy. Moreover, other
different structures would be supplied from different companies and SBUs. For
instance, the vertical fin from Frederickson, the fixed and movable leading edges of
the wing from Tulsa, Oklahoma, the flight deck and part of the forward fuselage
section form Wichita, and others from Australia, Canada, Japan, china, etc. These
structures will develop at different sites of the world and then transported to final
assembly plant in the United States.Also, suppliers are asked to fund their own
research and development (for the first time in Boeing history) which provide a
greater financial incentive to minimize the cost.

3) Connected Network: All Boeings partners would use the same project life-cycle
management (PLM) digital tools and work off the same database to ensure the
project could be completed on schedule and budget.

4) Location: With the help of extensive research to cut down the operational costs, the
company decided to assemble the final product at Everett, Washington. The benefit
from the tax exemption and incentives from the Federal Government, it will
drastically decrease the cost of production.

5) Time factor: In order to lower the cater the environmental change which will degrade
the metals, it is estimated to finish the final assembly within three days. Moreover,
Robots would be used to speed the process of assembling.

6) Logistics factor: Boeing would adopt air transportation as its primary method of parts
delivery to speed up the work for final assembly site. The expected delivery method
will exponentially decrease the time in parts delivery to one day in comparison to the
previous project. It will also lower the shipping cost by 20 to 40 percent.

All operational activities of Boeing 787 are designed to lower the cost of production by
$4 to $6 billion than that of previous planes. Moreover, with increasing demand for air
transportation with cost effective and lower pricing strategy, Boeing 787 will serve the
customers need for lesser price and direct flight to destination.