Friday Rant: Boeing's Bad Outsourcing Dream
The Dreamliner delays illustrate the complexities of developing new technology, using suppliers for new product development to reduce internal costs, and the challenges that a huge company that has acquired other businesses can face. The cultural differences between the old McDonnell Douglas (now known as IDS or Integrated Defense Systems) and BCA (Boeing Commercial Aircraft) still remain. Supplier management reports at a high level at Boeing and is run by a senior vice president (although both IDS and BCA each had its own senior vice president of supply management). My opinions about Boeing, by the way, come from years of being a supplier to them and involvement with the supplier management people on their processes. Assimilating new acquisitions is always a bumpy process. And Boeing is no exception. I was told a story of the merger in 1967 of Douglas Aircraft and McDonnell Aircraft. It was the war of the pencils. After the merger, the McDonnell folks printed "McDonnell-Douglas" on their pencils with "McDonnell" nearest to the eraser. The former Douglas Aircraft contingent printed the logo so that "Douglas" was nearest the eraser. Now sharpen each pencil and think about which name disappears first!
When Boeing acquired McDonnell Douglas, MD was counter culture -- a bean counter culture. Their former CEO, Harry Stonecipher, was always looking at reducing costs, some say at the cost of innovation. Another characteristic of MD was its core competency in supplier management. It had a world-class supplier certification program -- the Preferred Supplier Certification (PSC) process, whose details are a topic for another time. The PSC required suppliers to undergo a very rigorous evaluation process to become certified and maintain certification. And, by the way, how suppliers managed their suppliers and handled risk management were part of that evaluation. The BCA supplier evaluation processes were not as rigorous as the legacy MD's processes, and BCA resisted adopting the PSC, partly due to a NIH mentality. Each division had its own supplier evaluation processes. Many suppliers had to host Boeing visits from the two different divisions. In the end, BCA won and the excellent PSC process from MD was shelved.
Boeing is always working on new, improved supplier management processes and was working on a less intensive process to replace the PSC. But when it came to the Dreamliner, I believe that not using the more rigorous PSC process hurt Boeing and was a contributing factor to the outsourcing process getting out of control.
It's a competitive assessment done by Airbus chief engineer which itself has been the subject of much controversy, but it does speak to the need for much better coordination (e.g., of dynamic engineering changes in an outsourced environment - and the importance of doing 'impact assessment' when looking at a proposed engineering change) and communications.
Communications is a very weak area for Procurement. My favorite thing is when a client of mine does an internal customer stakeholder survey and communications comes up as the top concern...and then Procurement analyzes it, dissects it, puts in 6 more steps to the sourcing methodology, etc. - but never gets back to the internal customer that it 1) heard the concern 2) acknowledges the problem, and 3) intends to work on the problem with the customer. Priceless!
“Americas Engineering Industries failure these past couple decades.”
A good business major can sell anything. Whether what they have sold is deliverable or not is the question.
In many instances these super-MBA Corp-Leaders throughout much of the engineering/manufacturing industries are actually long gone when the deliverables schedule in their business plan comes due.
These Super-MBA's go from Corp. to Corp. initiating their new business plans using their super-salesman/woman attribute skills.
This issue/problem is not just within the Boeing Co.
These MBA's are the best communicators in society, Sound great and Look great, which is fine for many industries, but not industries that are based on extensive technical engineering.
Until engineering / technical industries recognizing that the best candidate skill for selecting leaders is communication above technical skill, these leadership failures will continue. Communication skill is a key asset, but should not be above technical skill within the engineering industries.
Fact is, aerospace is a very tough industry, and a modern fuel-efficient jetliner is very tough to make. That's why any two-bit country can stamp out a crappy AK47, but only the first world can produce an airplane.
Throwing together a bullshit airframe is certainly much easier, especially if you copy someone else's (like the Russians used to do). Me, I'll ride an Airbus or a Dreamliner, you can fly Aeroflot.