Presentation is loading. Please wait.

Presentation is loading. Please wait.

Nahyun, An Jiyoon, Kang Soohwan, Kim Margeum, Kim

Similar presentations


Presentation on theme: "Nahyun, An Jiyoon, Kang Soohwan, Kim Margeum, Kim"— Presentation transcript:

1 Nahyun, An Jiyoon, Kang Soohwan, Kim Margeum, Kim
The Dreamliner :for Boeing’s New Future Nahyun, An Jiyoon, Kang Soohwan, Kim Margeum, Kim

2 Agenda 787 Project 787 Project Problems & Solutions New Challenges
Business Objectives Boeing 787 Dreamliner 787 Project Problems & Solutions Problems and Reactions Lessons Learned from 787 Project New Challenges Competing against Airbus Competing against New Entrants What’s Next for Boeing after the 787? Market Forecast and Strategic Direction

3 787 Project

4 787 Project BUSINESS OBJECTIVES

5 Business Objective Our objective here is to: Regain our position as an industry leader in the commercial aircraft industry, by delievering our customers innovative aircrafts faster than our competitors and offering them after service of quality

6 Business Objective

7 787 Project BOEING 787 DREAMLINER

8 Challenges for aircraft manufacturers
Boeing 787 Dreamliner By launching 787, Boeing aimed at obtaining market leadership under changing Environment. Change in the airline industry World airline fleets to double The number of airline companies increase → Fierce competition Needs of a differentiated aircrafts Cutting the price? Creating new value? Improve end-user comfort Improve flight operational efficiency Change the supply chain Challenges for aircraft manufacturers OUTSOURCING PRODUCT INNOVATION

9 GLOBAL COLLABORATION Master Planner Boeing 787 Dreamliner OUTSOURCING
Boeing’s role changed to serve as a master planner leveraging its knowhow in order to respond the market request. OUTSOURCING PRODUCT INNOVATION Change in OUR ROLE: Assembly Integrator Master Planner INNOVATION THROUGH GLOBAL COLLABORATION How to Implement: Managing GLOBAL SCM Leveraging Customer Knowledge

10 Boeing 787 Dreamliner BEFORE 787 AFTER 787
Boeing’s supply chain has been different with 787 project as the starting point. BEFORE 787 AFTER 787 Outsourced 35~50% of Process Outsourced 70% of Process Parts Parts Sections Parts Sections Customers Customers Parts 30days for final assembly Sections 3days for final assembly Parts Parts Thousands of Suppliers : Build to detailed print by Boeing Boeing as a Final Manufacturer :Assembling all the parts *Major Role *Relationship Traditional Supplier Relationship : Fixed-Price Contract based *Major Role Tier2 : Producing parts for Tier1 Tier1 : Developing and producing sections Boeing as a Master Planner :Coordinating sections snap-together *Relationship Strategic Partnership : Risk-sharing Contract based

11 787 Project problems & solutions
PROBLEMS AND REACTIONS

12 Problems and Solutions
Boeing suffered from delays in production. DELAYS in production due to problems in Global Supply Chain First Flight Aug-07 Mar-08 June-08 Oct.-Dec.-08 Apr.-June-09 Dec-09 Succeeded Original TImeline Repeated delays First Delivery May-08 Nov.-Dec.-08 Left open Jul.-Sep.-09 Jan.-Mar.-10 Nov.-Dec.-10 (expected)

13 Problems and Solutions
Categories addressed below are major reasons for delayed schedule. DELAYS PROCESS SUPPORTING SYSTEM PARTNERS BOEING INTERNAL LEADERSHIP CUSTOMER DISTRUST

14 Problems and Solutions
Process System DELAYS PROCESS SUPPORTING SYSTEM CUSTOMER DISTRUST PROCESS SUPPORTING SYSTEM PARTNERS BOEING INTERNAL LEADERSHIP

15 Problems and Solutions
Causes, actions taken and further suggestions related to process supporting system are shown below. Cause Actions Taken Further Suggestions Improvement of EXOSTAR Adoption of RFID PROCESS SUPPORTING SYSTEM Inefficiency of Information System Risk Sharing System - Financial Contract - Moral Hazard Financial Aid (Spirit) Introduction of Incentive System

16 Problems and Solutions
Partners DELAYS PROCESS SUPPORTING SYSTEM CUSTOMER DISTRUST PARTNERS PARTNERS BOEING INTERNAL LEADERSHIP

17 Problems and Solutions
Causes, actions taken and further suggestions related to partners are shown below. Cause Actions Taken Further Suggestions Part Shortage - 1st tier’s lack of capability - 1st tier partners’ arbitrary contracts with unqualified nd and 3rd tiers Heightened Level of Control - Acquired Vought - Sent Boeing engineers to partners’ sites Involvement in 2nd and 3rd Tier Selection PARTNERS YET, Benefits: Qualified partners, Network with potential buyers & Tech learning effect Improvement of Information System - Overcoming Language problem (ex. Codes) - Education of IS and Sharing Boeing Global SCM culture Inefficiency in Outsourcing Overseas - Problems in comm. (Language & Culture)

18 Problems and Solutions
Causes, actions taken and further suggestions related to partners are shown below. Cause Actions Taken Further Suggestions Does Boeing have the right partners? Part Shortage - 1st tier’s lack of capability - 1st tier partners’ arbitrary contracts with unqualified nd and 3rd tiers Heightened Level of Control - Acquired Vought - Sent Boeing engineers to partners’ sites Involvement in 2nd and 3rd Tier Selection PARTNERS No : Lack of Capabilities and Ownership YET, Benefits: Qualified partners, Network with potential buyers & Tech learning effect Has too much been outsourced overseas? Improvement of Information System - Overcoming Language problem (ex. Codes) - Education of IS and Sharing Boeing Global SCM culture Inefficiency in Outsourcing Overseas - Problems in comm. (Language & Culture) No : Adjustable Inefficiency vs. Huge Benefits

19 Problems and Solutions
Boeing Internal Leadership DELAYS PROCESS SUPPORTING SYSTEM CUSTOMER DISTRUST BOEING INTERNAL LEADERSHIP PARTNERS BOEING INTERNAL LEADERSHIP

20 Problems and Solutions
Causes, actions taken and further suggestions related to Boeing internal leadership are shown below. Cause Actions Taken Further Suggestions Difficulties in Timeline Management - Risk in Global SCM - New technology Appointed Pat Shanahan Adjusted Product Features Feasible Timeline for Next Product Development BOEING INTERNAL LEADERSHIP Increased Wage Drew a limit in Degree of Outsourcing Labor Problem - Job security issue Convincing Employees of the Needs for Outsourcing Delving into a Win-Win Solution

21 Problems and Solutions
Customers’ dissatisfaction and distrust would be resolved by executing followings. PROCESS SUPPORTING SYSTEM PARTNERS BOEING INTERNAL LEADERSHIP CUSTOMER DISTRUST DELAYS Given that No further delays promised, Penalty paid, and Spare airplane during delay provided, Actions below would be of help to convince customers: Sharing Information on System Improvement Visibility: Real-time Tracking System

22 787 Project problems & solutions
LESSONS LEARNED FROM 787 PROJECT

23 Lessons Learned from 787 Project
We could make it obvious what are our core competencies. Huge volume of sales Proves the customer oriented approach based on Customer Knowledge is the right thing to do. Problems caused and our solutions MUST Dos: More control on partners Efficiency in information flows Guarantee of open communication Obtain knowhow in System Integration CUSTOMER KNOWLEDGE SYSTEM INTEGRATION Condition for being core competence Can make a disproportionate contribution to ultimate customer value 2. Can provides potential access to a wide variety of markets 3. Should be difficult for other competitors to imitate CORE COMPETENCIES

24 New challenges

25 NEW CHALLENGES COMPETING AGAINST AIRBUS

26 Competition AIRBUS CHINA JAPAN
It is expected that a current major competitor, Airbus, and new market entrants would drive competition. AIRBUS CHINA JAPAN BOMBARDIER EMBRAER

27 Competing against AIRBUS
AIRBUS announced the launching of A350 which is in the same segment with 787 and is a test model for more aggressive outsourcing strategy than ever. AIRBUS CHINA JAPAN BOMBARDIER EMBRAER A direct competitor of 787 (Same segment) Stretched outsourcing

28 Competing against AIRBUS
From A350, Airbus has assigned more roles to its strategic partners while increasing the number of global outsourcing partners. AIRBUS: Supply Chain AIRBUS’ Factories in 4 European Countries Final Assembly lines In France and Germany Strategic Partners 2nd Tier AIRBUS’ Factories in In France and Germany and China More Outsourcing to Strategic Partners Less Reliance on In-house Production

29 Competing against AIRBUS
Boeing’ competitive advantages over Airbus would be process efficiency. VS. CUSTOMER KNOWLEDGE SYSTEM INTEGRATION Process Efficiency obtained through Boeing’s global collaboration model

30 NEW CHALLENGES COMPETING AGAINST NEW ENTRANTS

31 Competing against New Entrants
China and Japan are said to be new entrants. AIRBUS CHINA JAPAN BOMBARDIER EMBRAER

32 Competing against New Entrants
China and Japan emerged as future competitors due to the global collaboration strategy of Boeing and willingness to forward integration. Global Collaboration Strategy of Boeing Willingness to Forward Integration - Experience learned from outsourcing partnership - Open structure enabled by Boeing’s global collaboration model Any parts and components are now available on market: All you need to do is assembly. China: Government driven Japan Kawasaki Heavy Industries(KHI) Mitsubishi Heavy Industries(MHI)

33 Competing against New Entrants
China and Japan has future plans leverage their strengths as below. CHINA: Low labor cost (20-25% lower than developed countries) Huge domestic demand AS-IS : Concentrating on producing parts : Producing regional jet ARJ21 TO-BE : By 2016, planning to produce C seat, big aircraft JAPAN: Knowhow to producing AS-IS : Producing 35% parts of B787 include important part - wings TO-BE : Kawasaki Heavy industries(KHI) to enter the large civil aircraft Mitsubishi heavy industries(MHI) to enter the regional market

34 Competing against New Entrants
Bombardier and Embraer are also said to be new entrants. AIRBUS CHINA JAPAN BOMBARDIER EMBRAER

35 Competing against New Entrants
Canadian and Brazilian aircraft manufacturers, who are now focusing on regional jets, are possible entrants into larger airplane market. Canada: Bombardier AS-IS : 4th largest commercial aircraft manufacturer (Yearly delivery) : Focused on business jets : Mainly 50 to 100-seat airplanes TO-BE : By 2013, planning to produce 149-seat airplane Brazil: Embraer AS-IS : 3rd largest commercial aircraft manufacture (Yearly delivery) : Commercial, military, and corporate aircraft : Focusing on 50 to 120-seat airplanes TO-BE : Possible to enter larger airplane market

36 Competing against New Entrants
Boeing’ competitive advantages over new competitors lie on its ability to read and satisfy customer needs and wants as well as brand equity and loyalty. CHINA JAPAN Canada: Bombardier Brazil: Embraer VS. CUSTOMER KNOWLEDGE SYSTEM INTEGRATION Brand equity and loyalty from product and service quality Product concept development based on customer knowledge

37 What’s NEXT for boeing after the 787?

38 What’s NEXT for boeing after the 787?
MARKET FORECAST AND STRATEGIC DECISION

39 Market Forecast and Strategic Direction
Market trend reports that there would be considerable needs for small-sized and efficient products from quality brands. Market Trend End Users’ needs: Point-to-point travel Airlines’, needs: Efficient operation Considerable needs for small-sized and efficient aircrafts

40 Market Forecast and Strategic Direction
Market competition map now and strategic direction for Boeing is as below. Design Range, (nmi) Long-haul aircraft No. of Seats 250 150 50 550 450 350 Short &Medium-haul aircraft Airbus320 Boeing 767 Airbus330 Boeing 777 Boeing 747 Airbus 380 Bombardier, Embraer, Boeing737 Leverage customer knowledge and brand equity based. Produce efficient both in function and price based on system integration. Take first-mover’s advantage in the competition with airbus in this segment

41 Market Forecast and Strategic Direction
Financial forecast says that entering new market shall pay off in 2 years when 200 orders are taken. + Breakeven point : 200 aircraft, 2 years : No. of orders is assumed on the basis of past data of current regional jet manufacturers. No. of orders for breakeven Breakeven Point

42 Thank you for listening.

43 Appendix

44 Appendix Things needed to more explain
The 787 project : why Boeing start it? Product differentiation : How Boeing serve what customers want? Outsourcing 1 : outsourcing way Boeing did before 787 Outsourcing 2 : changed outsourcing way Boeing doing now Causes of delay : what cause delay in new outsourcing process? Core competencies : condition for core competencies and analyze Boeing’s the one Manufacture line : what Boeing and competitors produce Breakeven point 1 : basic info about breakeven point in regional jet market Breakeven point 2 : Info about how Boeing’s breakeven point calculated

45 Industry Rivalry Supplier Power Buyer Threat of Entry Substitute
The 787 Project To obtain market leadership, Boeing launched new aircraft model, 787. Changes in Industry Dynamics Midium-low Fewer manufactuere choices (Still chance to bargain with Airbus) High High technology (difficult to duplicate) Industry Rivalry Supplier Power Buyer Threat of Entry Substitute High - Boeing vs. Airbus: Not much differentiation in terms of the competencies between the two players. Competiting on price and technology - Future competition expected with Canada, China, Japan and Brazil Low Buyer propensity to substitute (no alternative) Price and performance (no alternative) Midium-low Forward integration threat by suppliers Canada, Brazil, China… Still, high entry barrier due to safety regulations, high switching costs, high capital requirement, and high economics of scale

46 Product differentiation
With their detail customer knowledge ability, Boeing serve exactly what immediate and end customers want Feature Values to Airlines (Immediate Customers) Value to Passengers (End Customers) Composite material Faster cruising speed, which enables city-pair nonstop flights Fuel efficiency 20% (lighter material lowers operating cost) Corrosion resistance (lower maintenance cost) Stronger components that require fewer fasteners (lower manufacturing cost) Higher humidity in the cabin air is allowed, which increases comfort level Modular design that allows for two types of engines (General electric Genx and Rolls-Royce Trent 1000) Flexibility to respond to future circumstances (market demand) at a reduced cost) Simplicity in design allows for rapid engine changeover - Cost savings with cheaper and faster engine changeover may be passed on to passengers Large and light sensitive windows - Lower operating costs due to less ened for interior lighting - « Smart glass » window panels work like transition lens – controlling the amount of light automatically – decreasing glare and increasing comfort and convenience Redesigned chevron engine nozzle (serrated edges) - Reduction in community noise levels - Reduction in interior cabin decibel level Easy preventive maintenance - Boeing provides service so planes are in operation for longer periods of time - Fewer delays due to mechanical problems Supply chain forum vol.10 N.2

47 Outsourcing 1 Before 787project, Boeing assembles all ‘parts’ from thousands of suppliers Supply chain forum vol.10 N.2

48 Outsourcing 2 After 787 project, Boeing assembles semi-manufactured from 1st tier suppliers Supply chain forum vol.10 N.2

49 Causes of Delay

50 Core competencies Condition for core competence and analyze the Boeing’s one on the basis of that Condition for core competence - good for customer - can be adopted to other area - hard to imitate Analyze Boeing’s core competencies System integration - with cost saving and innovation Boeing can bring better services - can be used to produce any other segments - it need big risk taking which we can lost technology advantage, no one can imitate easily 2. Detail Customer Knowledge - reason we can serve exactly what customers want - can be used to variety area wherever it is need to meet customer’s needs - It is not just one system or department, it begins from mindset. So it can not be imitated easily

51 Manufacture line Specification of aircrafts of 4 major players in the market BOEING Line 737 747 767 777 B / 400 ER LR Seats 85~ 96 97~ 124 366~452 412~496 416~524 181~224 218~350 245~375 301~400 365~550 Max. Range (nmi) 1540 1900~2300 5300 6850 6700 7260 3950 6590 5975 5625 5235 7700 9380 6015 7930 Source:http://www.boeing.com AIRBUS BOMBARDIER EMBRAER Line A320 A330 A380 Seats 150~180 253~293 295~335 525~ 853 Max. Range (nmi) 3200 6750 5650 8200 C Series CS100 CS100ER 100~ 125 2200 2950 E-Jets E-170 E-190 80 110 1800~2100 1800~2400 Source:http://www.airbus.com/ Source:http://www.bombardier.com Source:http://www.embraercommercialjets.com

52 Appendix for Breakeven 1
Basic info about breakeven point of regional jet market <Development cost> Before Global collaboration After Global Collaboration Ratio B787 case $ 10 billion $ 6 billion 0.6 CRJ700 case *1 $ 1.5 billion $ 0.9 billion *2 *1 : one of Bombardier aircraft, in here used as a standard *2 : we calculate it by using ratio Resource : * Magazine aerospace America * Article ‘managing new product development and supply chain risks : the Boeing 787 case <Breakeven point> In Regional Jet Market, breakeven point is usually 200 Proof : CRJ700’s cost = 24m, price = 32m revenue = 8m 1.5 billion / 8 million = 187.5

53 Appendix for Breakeven 2
Info about how Boeing’s breakeven point calculated Calculating Boeing’s breakeven point <expected demand by size 2009 to 2028> Size New airplane Value Large 740 220 Twin aisle 6700 1510 Single aisle 19460 1420 Regional jet 2100 70 Total 29000 3220 Resource : Boeing home-page During 5 years after they received orders about B787, they got 850 orders. This is 48 percent of expected orders. Take the fact that regional jet market is four times smaller than twin aisle market into consideration, we assume that we will get 12% of all expected orders per years.


Download ppt "Nahyun, An Jiyoon, Kang Soohwan, Kim Margeum, Kim"

Similar presentations


Ads by Google