Lean Manufacturing Initiatives at Boeing
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Case Details:
Case Code : OPER014
Case Length : 12 Pages
Period : 1993 - 2002
Organization : Boeing
Pub Date : 2002
Teaching Note : Available
Countries : USA
Industry : Airplane Manufacturing
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Background Note Contd...
In the mid-1990s, Boeing's revenues plunged and it had to retrench around 9,300
employees due to the economic slow down. The company faced a 10-week strike in
the fourth quarter of 1995. In late 1996, Boeing and McDonnell Douglas2 announced
plans to merge. In 1997, Boeing had approximately 70% of the world market for
passenger aircraft. By the end of 1997, Boeing was severely affected by the
Asian economic crisis3 that put in doubt over one-third of the $1.1 trillion
projected commercial aircraft sales for the next 20 years. The company's
internal problems such as bureaucracy, redundant manufacturing processes and an
outdated information technology setup further aggravated the situation. Boeing
lost 17% of its market value as a result of the Asian crisis.
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By 2001, Boeing had emerged as a $58 billion company operating in 145 countries
with around 179,000 employees worldwide. The company was divided into six
major units: Air Traffic Management, Boeing Capital Corporation, Commercial
Airplanes, Space and Communications, Military Aircraft and Missile Systems,
and Connexion by Boeing. The commercial aircraft division contributed around
60% of the total revenues. Boeing's manufacturing plants were located at
Renton, Everett (Washington), Wichita (Kansas) and Long Beach (California).
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Manufacturing Practices at Boeing
In a traditional commercial aircraft manufacturing plant, the floor
layout was similar to a parking lot. The planes were docked in stalls –
six on the left side of the factory, six on the right side. Each plane
was surrounded by ramps and workers would go in and out to find parts,
install them.
Boeing had followed the above approach from the beginning and its
manufacturing practices did not change much over the years. According to
analysts, by the early 1990s, the company's operations had become
completely outdated... |
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