International Operations Management Strategy of Term Paper

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For example, the company has consistently focused on identifying the optimal source for its aircraft components. To date, the company has outsourced more than 50% of its total manufacturing needs to overseas suppliers, resulting in $600 million in cost savings annually. The parts needed for a given aircraft are then delivered to the company's Everett plant where just-in-time principles reduce inventory levels and provide further cost savings. This approach has been met with some protests from Boeing workers, though, but the company counters that it is not possible to remain competitive without using this outsourcing strategy. Moreover, in many cases, when foreign countries purchase aircraft from Boeing, one of the stipulations includes that at least some of the work on the aircraft will be performed in that country (Heizer & Render, p. 27).

The supply chain managers at Boeing therefore have their job cut out for them when it comes to bringing the enormous range of parts needed to make a complex aircraft such as their 777 model. As can be seen from the list in Table 1 below, Boeing has forged strategic relationships with numerous suppliers from a number of countries.

Table 1

Representative international suppliers of components for Boeing 777s

Company

Country

777 Parts

Alenia

Italy

Wing flaps

Aerospace Technologies

Australia

Rudder

CASA

Spain

Ailerons

Fuji

Japan

Landing gear doors; wing section

GEC Avionics

United Kingdom

Flight computers

Hawker de Haviland

Australia

Elevators

Kawasaki

Japan

Fuselage section, cargo doors

Korean Air

Korea

Flap supports

Menasco Aerospace

Canada

Landing gears

Messer-Bugatti

France

Landing gears

Mitsubishi

Japan

Fuselage sections, passenger doors

Short Brothers

Ireland

Land gear doors

Singapore Aerospace

Singapore

Landing gear doors

Smiths Industries

United Kingdom

Electronic systems

Source: Heizer & Render, p. 26

As can be readily discerned from the countries listed in Table 1 above, bringing all of these components together from these geographically diverse locations for a single aircraft model is a significant logistical challenge, but the supply chain managers at Boeing have succeeded in developing a streamlined, just-in-time approach to their manufacturing processes that accomplishes just that (Carney 2001). Moreover, because these countries have a vested interest in the 777, Boeing has found that they are more likely to purchase these aircraft, making for a win-win situation (Heizer & Render, 2011). Furthermore, the company has not limited its lean manufacturing approach to the 777 model. For instance, Bowander and his associates note that, "Boeing is using lean development for its 787 Dreamliner. The 787 team learned the approach from Toyota and intends to reduce its assembly time from 21 days to 3 days" (2010, p. 20). These are ambitious goals, of course, but Boeing's track record of success indicates that the company is up to the challenge.

Conclusion

A company does not become the largest manufacturer of aircraft in the highly competitive aerospace industry without some good reasons, and the research showed that Boeing has succeeded where others have failed due in large part to their informed approach to supply chain management and lean manufacturing. In the global marketplace in which Boeing competes, the company has drawn on the best available industry practices such as Toyota's lean manufacturing principles and applied them in innovative ways to extend the lifespan and profitability of their products as well as developing strategic partnerships with vendors and suppliers to reduce costs and increase efficiency. Because many of the company's supply chain partners have a vested interest in their aircraft, Boeing finds ready customers in many of the countries where it has outsourced its manufacturing needs. Taken together, the research showed that Boeing is well situated to continue this proven track record of success well into the 21st century.

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