Building the Boeing 787 Case Study Essay Example | Topics and Well Written Essays - 4500 words

Building the Boeing 787 Case Study - Essay Example The initial developmental time for launch of Boeing was six years and overall development cost was estimated to be 10 billion dollars. With the introduction of the unconventional supply chain, the estimated development time reduced to 6 years and cost went down to 6 billion dollars. The manufacturing and supply cost was reduced and financial risk was spread among suppliers. The major advantage of outsourcing was gained in terms of expertise in areas of operations. Different parts of the aircraft were outsourced to those businesses which were expert in that area. This ensured production of best quality parts and maintenance of world standards. For example, most of the engines manufacturing were outsourced to General Electric and Rolls Royce, who have mastered the art of advanced engineering in the present competitive world. For Boeing 787, the company outsourced around 70 percent of its business which ensured a lot of cost savings. This cost was put into other areas such as marketing, brand building and launch campaigns for the aircraft. Most of the supplier’s relationship was based on contacts and Boeing had special contracts with tier-1 suppliers. A strict supplier relationship helped in maintaining the time frame for production and shipping of the parts, which helped in timely installation and development. Thus by outsourcing more, Boeing was able to reduce the development cost to a significant level (Wanke, 2004). This was done by leveraging the capabilities of the suppliers. In order to maintain coordination and collaboration between its suppliers, Boeing also established a web-based technology which helped in increasing supply chain visibility and improving overall integration and control of the supply chain business. Reduction in financial risks Most of the outsourced suppliers were in contracts with the company. The company also established risk sharing contracts with each of its suppliers. Under this contact, the final payment will be given only after the successful launch of