Executive summary

Boeing was founded in 1916 in Seattle, Washington and became one of the World’s largest and leading manufacturers in making commercial and military aircrafts. The company has been involved in acquiring international firms and making strategic alliances with many aerospace pioneers in the past. Some of the big acquired and merged aerospace companies are Hughes Space and Communications, North American Aviation, McDonnell Douglas, Rockwell International and Jappesen (Boeing, 2012).
The purpose of this report is twofold and accordingly the report is divided into two parts. The first part consists of a critical evaluation of the internal and external business environments of Boeing to find out to at what extent Boeing is strategically fit with its current business environment. In the second part, an improvement strategy will be recommended to the company to effectively manage its supply chain practices after critically reviewing the feasibility, acceptability and suitability of the strategy.

Contents Executive summary 1 Introduction to Boeing 787 Dreamliner 3 (PART A) 4 S.W.O.T analysis of Boeing 787 Dreamliner 4 Strengths: 4 Weaknesses: 5 Opportunities: 6 Threats: 6 Boeing 787 Dreamliner competitiveness 7 Business model of Boeing Dreamliner 787 9 B787 SYSTEMS AND EQUIPMENT: 9 MANUFACTURING/QUALITY: 9 Design and features of Boeing 787 Dreamliner: 10 Strategic alliance of Boeing 787 Dreamliner 12 Challenges posed by the business model: 12 Exostar’s Supply Chain Management Solution 13 Benefits of Strategic alliance and an effective manufacturing model 15 Recommendations and conclusion for Boeing 787 Dreamliner 16 References 17 Appendix 18

Introduction to Boeing 787 Dreamliner

Source: (http://wallpaperswide.com/boeing_787_dreamliner-wallpapers.html)

The 787 Dreamliner is Boeing’s new flagship large commercial aircraft. Boeing 787 Dreamliner is a long-range, mid-size wide-body, twin-engine jet airliner developed by Boeing Commercial Airplanes. Its variants seat 210 to 290 passengers. Boeing states that it is the company's most fuel-efficient airliner and the world's first major airliner to use composite materials as the primary material in the construction of its airframe. The Dreamliner's distinguishing features include mostly electrical flight systems, a four-panel windshield, noise-reducing chevrons on its engine nacelles, and a smoother nose contour.
The first 787 was unveiled in a roll-out ceremony on July 8, 2007, at Boeing's Everett assembly factory, by which time it had reached 677 orders; this is more orders from launch to roll-out than any previous wide-body airliner. The 787 Dreamliner was honored with the “Aircraft of Legend” award by the Living Legends of Aviation organisation on January 27, 2012, which debuted with an initial passenger flight in October of 2011.

(PART A)
S.W.O.T analysis of Boeing 787 Dreamliner

SWOT analysis helps the organizations to conduct strategic planning. It is also essential in terms of analyzing internal strengths and weaknesses of the firm as well as to identify potential opportunities and threats in the external environment (Sallis, 2002; Thomson and
Martin, 2010). The SWOT analysis of Boeing 787 Dreamliner is also based on finding of the aircraft strengths, Weaknesses, opportunities, and threats.
Strengths:

1. Supply Chain innovation - Boeing decided to outsource almost all the components of their 787 Dreamliner instead of building the aircraft from the ground up. Boeing would only do the final assembly of the completed subassemblies and test the plane before delivering to its customers. As a result they would reduce their inventory and the final assembly time down to 3 days and would employ about 1,000 people to join completed subassemblies and to integrate systems.
2. Environmental Performance –
a. Fuel Efficiency - Four key technologies contribute to an impressive 20% improvement in fuel use for the 787 Dreamliner as compared to today’s similarly sized airplane. New engines, increased use of light weight composite materials, more-efficient systems applications and modern aerodynamics each contribute to the 787’s overall performance.
b. Emissions Cut - As a result of reduced fuel use there is also an equivalent reduction in carbon dioxide emissions. The 787 is being designed such that it will not only be more than 30% better than today’s 767s but also be better than the future, more-stringent regulations being incorporated by the Committee on Aviation Environmental Protection (CAEP).
c. Less Manufacturing Waste - In comparison to today’s airplanes which are primarily made of
Aluminum (50%) the 787 is made of 50% carbon-fiber composite material, which produce less scrap material and waste.
d. End-of-Life Recycling - Boeing is already working with companies around the world to ensure
The processes required to allow the 787 to be recycled when it is eventually retired (after 30-40 years) are in place.
3. Quieter Takeoffs and Landings - The 787 Dreamliner uses acoustically treated engine inlets and chevrons and other special treatments for the engines and engine casings – to ensure that all sound of 85 26 decibels never leaves the airport boundaries. 787 has more than 60 percent smaller noise footprint than those of today’s similarly sized airplanes.
4. Point-to-Point Travel - The mission capability of the 787 Dreamliner allows airlines to offer more direct flights connecting mid-sized cities, eliminating the need for additional takeoffs and landings. Weaknesses:

1. Lack of Control - The traditional way of manufacturing the parts with U.S. vendors gave Boeing a lot of control over the supply chain. Whereas in the new outsourced model the control has shifted to its suppliers. As a result their supply chain is susceptible to much higher level of risk.
2. Supplier Relationships - Traditionally Boeing used to make most of its components and did not depend on its suppliers. Going from no involvement to transferring all the responsibility to its suppliers to deliver a completed subassembly is quite a large leap and the suppliers have to take on a much higher risk than before without much compensation. Hence if some of the suppliers realize that they can’t make any money and decide to default during the production stage. Boeing could face more delays, which could lead to more order cancellations.
3. Over-dependent on technology for communication - Boeing decided to use the E20 open applications, implemented as on-demand services on the Exostar network, for multi-tiered supply chain functions.

Opportunities:

1. Pioneer Globalized Manufacturing -- As a model for other manufacturers (i.e. assembling the final product and outsourcing the manufacturing all over the world), it may be in keeping with the demands of globalization but is probably too risky for most American manufacturers. This is a debate about a revolutionary approach to cost savings vs. giving up control. If it works, Boeing will pioneer a new manufacturing model for globalized manufacturing.
2. First Mover advantage- in Airplane manufacturing using composites. Also Boeing is going to be first mover in many Sustainability and Environment friendly efforts as a result of this program. 3. Supplier Relationships/Partnerships - The 787 Dreamliner program provides Boeing with an opportunity to collaborate with its Suppliers in such a way that it can cement its relationships with its key suppliers for many future programs like this. Threats:

1. Very High Risk “New to the World” Product Development - To outsource a brand new airplane model based on composite technologies which has not been tried before is such a big risk not only in terms of being able to actually deliver but also in terms of meeting the aggressive timeline promised to customers.
2. Manufacturing Capability - Risk of sending the manufacturing capabilities out of home country forever. Airbus could use this knowledge for its A350 airline due to be released in 2014.

Boeing 787 Dreamliner competitiveness

According to Mintzberg et al (1998 and 2000), Porter’s five forces model of competition is primarily based on the idea that the long-term business strategy of the firm should meet opportunities and threats in the external environment. The five forces of Porter’s model are threat of new entrants, threat of substitute products, the bargaining power of suppliers, the bargaining power of customers, and rivalry among competitors (Johnson et al., 2008).
According to the competitive force model, the first point of the risk of entry by potential competitors is neither high nor low because a new company produces on a small scale even can’t cover the multiple-billions R&D, and Boeing already have accumulated experience, patents, or trade secrets that they are more effective than new companies (Hill & Jones, 2012); while the new “global systems integrator” strategy tends to create potential competitors such as China and Japan. Secondly, the commercial airline industry is a consolidated industry that the launch of A380 from Airbus directly affect the market share of Boeing in 2003, and the fixed costs in this industry is very high; thus, the rivalry among established companies is intensive.
Thirdly, A380, A350 etc. are the substitutes with similar basic needs, which are threats to Boeing 787 and leads to the operation risk. There are many substitutes of the airline such as trains, buses, cars, and cruises where trains are becoming faster, cheaper, and suitable source for travelling day-by-day. In terms of international travelling, due to the delays in the delivery of the commercial airplanes from Boeing Company, the World leasing industry starts to prefer with airbus in the Asian markets. Boeing has lost effective control over its suppliers as evident from recent delay of Boeing 787 Dreamliner (Cohan, 2011). At many occasions in the past, Boeing blamed its suppliers for delays in the delivery of the commercial airplanes (The Economist, 2011; Ray, 2012).
The bargaining power of customers is also low because there are only two major companies (i.e. Boeing and Airbus) in the global competition. For the customers, it is not an easy process to switch between the airlines because both companies are different in terms of their control systems and if the customer wants to switch between the airplanes, it might need extensive costs of training of pilots.
On the macro-environment, the economy of developing countries grows very fast that both Boeing and Airbus believed “the passenger traffic in China would surge over 8.0% annually” (Nolan & Kotha, 2005), which tends to ease competitive pressures within an industry; it also viewed as an opportunity. On the global market, Boeing is facing opportunities and meanwhile threats. Boeing’s global partners supply about 70% of the plane’s structures, and the shipping only takes one day and the final assembly only takes three days, which tend to be more efficient in both time and cost for Boeing.
The commercial airplane division is imperative for the Boeing because it is accounted for nearly 65% of its total revenue (Stock Analysis on Net, 2012) and losing the market share can leave deep impacts on the profitability of the company. Therefore, the competition with Airbus has great significance for Boeing (Hill et al., 2004) and can be considered as 4 to 5 on the ordinary scale. From past couple of decades, Airbus is making great efforts in conducting market research for the purpose of new product development. Table 1 in appendix A is presenting the summary of importance of each force in terms of its scale.

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Business model of Boeing Dreamliner 787

Boeing’s business model for aircraft design and production shares design and production Responsibility with numerous suppliers. A perception occasionally associated with the B787 is that subcontracting various parts of the airplane to other companies resulted in a deficient or subpar product.
B787 SYSTEMS AND EQUIPMENT:

Boeing gave suppliers a larger role in developing, testing, and certifying integrated systems for the B787. The assessed integrated systems components found no evidence the B787 business model directly contributed to the underlying causes of the in-service issues. Instead, the causes were typically linked to basic communication and coordination issues encountered with any large and complex new airplane development program. Additionally, it was found that although there were individual issues with parts of certain B787 systems, the systems were found to have robust architecture and adequate redundancy, which enabled them to continue functioning safely following component failures.
MANUFACTURING/QUALITY:

The B787 introduced novel manufacturing and assembly processes to the manufacturing environment that were unprecedented in scope and scale. Boeing’s implementation of new manufacturing and assembly processes during the B787’s design and production created unanticipated manufacturing challenges. During the B787’s development, the supply chain faced a learning curve as suppliers discovered how to work with interfaces for the new processes. In addition, late engineering changes during the B787 build process affected the suppliers’ ability to meet Boeing’s specified production rates for components.

Without increased support from Boeing, some suppliers had difficulty meeting their schedule commitments and integrating the late engineering changes. This resulted in a high amount of incomplete airplane elements shipped to Boeing for final assembly, part shortages, and non-conformances in the initial build phase.
Boeing’s production system and supplier management have improved significantly over the past 2 years. Boeing has invested considerable resources to align supplier performance with necessary expectations to support the B787, and continues to have a major presence at select supplier sites. The production along the entire supply chain is maturing. This is evidenced by the reduced number of interventions, negligible changes to the current processes, and higher quality of output coupled with an increased production rate.
Boeing’s B787 program was not initially set up to manage unanticipated challenges from suppliers unfamiliar with the new manufacturing environment. Additionally, Boeing did not intervene early enough in the process to assist the suppliers. However, Boeing has since increased supply chain support to assist struggling suppliers, and this has mitigated many supply chain issues.
Design and features of Boeing 787 Dreamliner:

Boeing has designed the future of airliners with their new 787 Dreamliner. With new improvements, better environmental aspects, and an overall futuristic feel, the Dreamliner will be exactly that, the future. Many airline companies have seen this and are pouncing at the chance to have their piece of the pie and add this beauty to their fleet. The 787 will be used for a multitude of reasons, but one the largest reasons will be a better fuel efficiency.
Boeing has included many new improvements in the 787 design. One of them that really seems to stand out is the cabin pressure. Due to the composite airframe, the aircraft allows “lower than normal cabin pressure or altitude”. Instead of the normal 8,000 feet cabin altitude, the 787 will be capable of flying at 6,000 feet cabin pressure. This is important to passengers as it will help with lightheaded feelings and headaches normally associated with flying in pressurized cabins. (Myers) To help reduce the feeling of jet lag, Boeing has designed a cabin lighting system that will subtlety change colors on those long flight across the seas.

The windows on the Dreamliner are yet another noticeable change. Now 60% larger than the average airliner window, passengers will feel more comfortable and not so closed in. (Mayerowitz) As Scott Mayerowitz said, “Passengers no longer need to hunch forward to see the ground. Those in the middle of the plane can even glance out part of the windows.” Due to the fact that the airframe has been constructed with more than 50% composite, the 787 is lighter than a conventional aircraft of this size.
The Boeing 787 Dreamliner has a lot of new improvements and additions in its technology and design that make the airplane safer, more efficient, and more comfortable. One of the main advances in technology that the 787 Dreamliner will boast is a one-piece fuselage section. This will eliminate 1,500 aluminum sheets and between 40,000 – 50,000 fasteners that were used to create the fuselage on older models (Boeing). The new wing design is supposed to improve airflow and reduce drag. The new engine being designed by Rolls Royce and General Electric will provide 8% of the increased efficiency of the airplane (Boeing). There are also a lot of new technologies that will help the pilot with his work. There are new electronic checklists that will eliminate the need for the pilot to carry around paper checklists. Boeing concept of fuel efficiency is helped by the design and build of the 787 Dreamliner.

(http://winncad.blogspot.com/2011/04/boeing-eyes-next-generation-composites.html)
Strategic alliance of Boeing 787 Dreamliner
The Boeing 787 Dreamliner represents a fundamental shift in manufacturing philosophy and approach for The Boeing Company. With 135 structural and systems partner locations around the world involved in the manufacturing and fabrication of the airplane, coordinating the end-to-end supply chain across these partners is paramount to the program’s success.
Challenges posed by the business model:
One of the biggest challenges in this production model is ensuring that all partners have access and visibility to the latest demand information from Boeing and that Boeing has visibility to the supplier’s ability to meet the delivery schedule. It is crucial that all of the major subassemblies arrive in Washington at the same time for final assembly. If a subassembly is late or missing, there is very little time or space for Boeing to store the other large components. If a partner cannot meet an expected delivery date then Boeing must adjust the schedule and potentially delay the arrival of the other assemblies.
Boeing and their partners needed a way to quickly identify potential problems across the supply chain and immediately assess their impacts on other partners or aspects of the manufacturing process.
Boeing is currently facing delay problems due to ineffective Supply Chain Information System (SCIS). After facing extensive delays in the delivery of a particular airplane model, the present Vice President of Boeing is currently looking to change the strategy of supply chain management. For implementing the new technology in designing and manufacturing 787 Dreamliner, Boeing is dealing with top high tech equipment makers all around the World. After selecting sophisticated suppliers, it is also essential to put maximum efforts to stay in touch with all the suppliers at the same time. According to Greeff and Ghoshal (2004), large enterprises often face problems due to cut in the communication patterns with different departments, suppliers, or manufacturers and thus this lack of communication results in delays in the production processes.

Exostar’s Supply Chain Management Solution

Boeing turned to Exostar for a solution to help manage processes executed across multiple tiers of their supply network. The Exostar Supply Chain Management Solution, powered by E2open software, is used to manage the complete order lifecycle and returns process across the multiple partner tiers, while also tracking planning schedules, consumption, and managing replenishment for the Boeing Partner Managed Inventory program with Tier 2 partners.
The Exostar solution is designed to allow Boeing and its partners to collaborate on planning schedules, issue purchase orders, track purchase order changes, exchange shipping information, manage returns, track shipments, and to manage inventory consumption across the multiple tiers involved in the manufacturing process. The system also monitors events and process exceptions that occur between partners and evaluates the impacts of these events against the master schedule using synchronized time-sequenced information. The solution includes reporting capabilities that allow Boeing and its partners to track overall performance of the supply chain.
Exostar’s Software-as-a-Service delivery model and existing network of connectivity into the A&D supply chain enabled Boeing to go-live with the solution in less than 90 days from project kick-off. Boeing was able to leverage its investment in enterprise systems to quickly connect to Exostar in order to enable its supply chain processes across the extended supply chain. Exostar’s solution was configured to meet Boeing current process requirements, and can evolve as process requirements or partners change over time.
The following highlights the solutions deployed by Boeing, Exostar, and E2open: I. Multi-Tier Order Management: * Manage the complete order lifecycle from order issuance through invoice and payment across partner tiers. * Align order information and partner commitments against planning schedules * Synchronize payment with consumption of partner managed inventory * Manage and track inventory through the returns process

II. Reporting and Analytics: * Provide ability to report on key performance indicators and to track process against defined metrics. * Provide reporting on parts inventory, delivery performance, schedule changes, returns and replacements III. Community Management and Support: * Includes existing connectivity to over 23,000 companies and robust partner enablement program. * Supported 24/7 by call center, technical operations, and on-line training as outlined in industry leading service level agreements. IV. Multi-Tier Demand/Supply Synchronization: * Communicate planning schedules and changes across partner community * Evaluate impacts of partner commitments on delivery schedule to end customer. * Highlight demand/supply imbalances and schedule mismatches. V. Partner Managed Inventory: * Provide visibility to partner managed inventory balances, consumption, and replenishment plans. * Track projected inventory balances and supply availability against production schedules. * Measure supplier performance in fulfilling replenishment targets.

Benefits of Strategic alliance and an effective manufacturing model

Boeing again is leading the way in commercial aviation with the introduction of the 787 Dreamliner. By leveraging a world class, global team of partners, they are able to provide unparalleled value and advanced technology to their customers. By leveraging a world class supply chain management solution from Exostar and E2open, they are able to minimize waste in the supply chain while managing on-time delivery to the end customer. Following are the advantages of a good supply chain management system and an effective business model * Eliminate latency in communicating demand/supply changes across multiple partner tiers. * Ensure continuity of supply and minimize supply disruptions through the real-time synchronization of demand with available supply. * Improve cash flow for supply partners participating in partner managed inventory programs * Early identification of potential demand/supply imbalances and their impacts on other partners or aspects of the supply chain. * Improved on-time delivery to the end customer while minimizing logistics costs. * Eliminate many of the manual activities associated with communicating new delivery schedules and order changes across multiple tiers. * Reporting and analysis for continued process improvement over the lifecycle of the program.

Recommendations and conclusion for Boeing 787 Dreamliner
Boeing has made up for a lot of errors that caused the 787 a lot of delays and a potential threat of this project becoming a failure. However, effective planning and implementation of the plan lead to a whole new outcome. Today Boeing 787 Dreamliner is crossing all limits in terms of bookings from all over the world and Boeing has showed the world the future of flying.
From the result of strategic analysis of Boeing, it was concluded that company is currently facing the problem of delay in developing Boeing787 Dreamliner. The delay issue has been caused by supply chain management problems due to the outsourcing of both design and the manufacturing services in making 787 Dreamliner. Also, the company has made too many changes in implementing the new technology (i.e. using composite material) and designing new tools (Peterson, 2011).
In order to minimize or to eliminate the delay factor, an improvement strategy is recommended to Boeing after critically reviewing the feasibility, acceptability, and suitability of the strategy.
The recommended strategy is based on to improve Boeing’s current Supply Chain Information System (SCIS) using People, Process, and Technology strategy in order to develop effective control system to manage supplier relationships to overcome delay problems. For this purpose, Enterprise Resource Planning software is recommended as one of the best available programs today to manage organizational operations. The improvement of SCIS of Boeing will help the organisation to improve service delivery efficiency as well as to develop better internal and external communication plan.
In this research, there was no primary investigation was carried out. Also, due to the restricted access to the company information, there may be few limitations in our findings and recommended strategy but it is believed that company will get success if the general directions of the recommended strategy will be followed.

References
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Appendix
Fig1.
Supply chain network

Source: (http://img.deusm.com/designnews/141/141019-Several_different_companies_were_responsible_for_design_and_manufacturing_of_various_parts_of_the_Dreamliner_.gif)

Fig2:
Source: (http://www.executivejetco.com/wp-content/uploads/2011/05/Boeing-787-Dreamliner.jpg)

Fig 3.

Source: (http://www.whatsonchengdu.com/ent_images/4eaa20a93b81e_Boeing%20787%20Dreamliner%202.jpg)