Lean Manufacturing Initiatives at Boeing
| Case Code: OPER014 Case Length: 12 Pages Period: 1993 - 2002 Pub Date: 2002 Teaching Note: Available |
Price: Rs.300 Organization: Boeing Industry: Airplane Manufacturing Countries: USA Themes: Production management, manufacturing |
Abstract Case Intro 1 Case Intro 2 Excerpts
"Our entire enterprise, will be a lean operation characterized by the efficient use of assets, high inventory turns, excellent supplier management, short cycle times, high quality and low transaction costs."
- Boeing's 'Vision 2016' Statement, in 2002.
Background Note
The US - based leading airplane manufacturer Boeing Airplane Company (Boeing) was formed in 1916 by William Boeing (William) and George Westervelt (Westervelt) as the Pacific Aero Products Company. The company's name was changed to Boeing in 1917. Boeing began by manufacturing aircrafts for the US military during the First World War. In 1922, Edgar Scott, became the company's president and during his tenure the navy awarded Boeing a contract to build a primary trainer (planes for test flights). In 1927, the Model 40A mail plane, won the US Post Office contract to deliver mail between San Francisco and Chicago.
The Boeing Air Transport (BAT) was formed to run the new airmail services. BAT also trained pilots, set up airfields and provided maintenance staff for the new service. However, Boeing realized that to grow, it needed to design and go in for mass production and sell its own aircrafts. After the Second World War, the company shifted its focus from the defense industry to commercial jets. In 1952, Boeing launched its first commercial jet, the Boeing 707, a short-range jet. In 1960, William M. Allen (Allen) became the company's CEO. The same year, Boeing began manufacturing its first jumbo jet – the Boeing 747. During Allen's tenure, Boeing launched one of its most successful jets, the 737. In 1962, Boeing manufactured the Air Force One for the American President's use. In late 1969, Boeing entered the Spacecraft manufacturing business by contributing to the Apollo program. In the early 1970s, Boeing faced a host of problems due to the recession in the aviation industry.
When the Airbus Industrie1 was formed in 1970, Boeing's market share (70% in the early 1970s) began to decline. In the mid-1970s, Boeing launched long-range planes (the 757 and the 767). By the mid-1980s, Boeing expanded its presence in the consumer electronics business through joint ventures, mergers and subcontracting. In March 1984, Boeing took over the De Havilliard Aircraft of Canada to enter the commuter planes market. In the early 1990s, Boeing completed the manufacture of the 727 and the 737. By October 1994, the company launched the new 737 series, the 737-800.
n 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 Douglas 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 crisis 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. 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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