boeing 767 group2 secb

8/4/2019 Boeing 767 Group2 SecB

1/9

Operations Management The Boeing 767: From Concept To Production

1

OM I Assignment

CASE ANALYSIS

The Boeing 767: From Concept to

Production

Group 2Akashjyoti Suni PGP2011523

Ankita Srivastava PGP2011555

Bhavesh Karandikar PGP2011591

Keerthan G PGP2011688

Preeti Gupta PGP2011793

Rudranil Chakrabortty PGP2011836

Subrata Mondal PGP2011898


2/9


2

1.The Boeing CompanyThe sales leader in airframe industry and one of Americas leading exporters, Boeing earned $5.1 billion

from Boeing Commercial Airplane and $4.1 billion from other divisions-missiles, rockets, helicopters,

space equipment, computers and electronics.

1.1.HistoryFounded in 1916 by William E. Boeing, the Boeing Company built military aircraft, in its earliest days,

for use in World War I. It began to prosper in 1920s and 1930s when civil aviation market expanded

with increasing demand for mail carrying.

Its focus was on research, experimentation, adaption to production and prompt improvements. For

this, it originally relied on extensive vertical integration-manufactured planes itself, provided engines

as well as bought and flew then through various subsidiaries. Later, it became highly focused following

neardisastrous experiences with its first wide-bodied jet, the 747. When introducing the 737 as well

as the 747; management problems, declining productivity, steep development costs and unanticipated

problems plus cutbacks in commercial and government orders compelled the company to become

leaner and resolve problems with 737 and 747 programs. Eventually, Boeing emerged from the crisis,

where it no longer assumed all the development costs itself, nor did it fabricate entire airplanes.

Instead, it selected partners who were subcontracted portions of each plane and developed and built

parts and subassemblies that Boeing later assembled. The nose section and wings, however, were

exceptions that Boeing continued to build in-house.

1.2.Strategy Variations Boeing manufactured families of planes, creating several variations on the same

base airframe concept. It required

o flexible designs,o inherent growth potentialo modifications capability ( without need for wholesale revisions)

Manufacturing Benefits Producing a common family of planes on a common assembly lineaccumulated experience and ensured that learning does not get lost. It led to far-earlier break-

even points.

FacilitiesLarge centralized facilities were provided with sophisticated manufacturing systemsand project management tools.

Expertise in global marketing Technological leadership Customer support Production skills

As a consequence ofsuch strategies, Boeing emerged as the industrys low-cost producer.

1.3.CultureThe culture of Boeing has a distinct identity of its own and many practices of the company were seen

as characteristic of Boeing. Broadly, they can be understood as follows-

a) Teamwork Teamwork and cooperation were especially valued in the organization.


3/9


3

b) Inter-functional cooperation- Coupled with teamwork, inter-functional cooperation wasensured that was influential in addressing the very acute concerns of new plane programs,

which were a prime vehicle for management development.

c) Autonomy Considerable autonomy was given to teams but disciplined decision-making anddetailed planning were strictly expected.

d)Realistic schedulesHigh priority was placed on meeting schedules. Realistic schedules weredeveloped and monitored over time. This was done with help of certain tools-

Master Phasing Plan: mapped out entire development cycle for each new plane programParametric Estimating Techniques: estimated costs and established relationships between

critical sections of the schedule by using historical data drawn from earlier plane programs

Management Visibility System: surfaced problems before they became serious enough tocause delays

e) Regular Communication- encouraged ensuring prompt adaption and agility.

2.The 767 ProgramIn 1973, Boeing initiated a new airplane study, naming it the 7X7(X stood for development model)- todefine and, if approved, to develop, Boeings next generation airplane

2.1.Program Definition (From May, 1973 to December, 1977)During this period, Boeing worked the puzzle of market, technology, and cost.

Market assessment:

Market segments were defined by range of travel- short(less than 1500 nautical miles),medium(1500-3000 nautical miles), and long(greater than 3000 nautical miles)

Boeings expected forecast for 1990 was a total market of $100 millionConfiguration:

Market research indicated that the new plane should carry approximately 200 passengers; have a1-stop, U.S. transcontinental range; and offer minimal fuel burn

Technology:

Technology development was an ongoing process at Boeing, and included such areas asstructures, flight systems and aerodynamics

Audit teams:

Proper auditing was done by dividing the organization and giving each of the audit teams a properseparate reporting line

2.2.Cost DefinitionThe $100 million spent so far on 7x7 programme was regarded as part of ongoing research and

development. Now the critical decision at hand was to see decide whether Boeing should incur up-

front costs of several billion dollars.


4/9


4

First detailed cost estimates were necessary to be obtained to make such a decision.

2.3.Parametric EstimatesEstablishing the basic design, the costs of the plane could be predicted from design characteristics that

were known well in advance of production. The critical calculation involved assembly labour hours. For

every major section of the plane, the number of labour hours per first-unit was estimated, multiplied

by expected weight and then by historical experience-based adjustment factor. Totaling the results of

all the sections gave the number of labour hours required to build subsequent planes.

It was believed that these estimates remained valid for long periods. They were, however, carefully

fine-tuned to account for differences in plane programs, which in turn could go in either direction.

Several factors contributed to increase or decrease in the number of assembly hours and after such

adjustments, a final estimate for total assembly hours was obtained.

Similar process was used to develop the Master Phasing plan, which established schedule and

identified major milestones. The critical task was linking the schedules of interdependent groups to

avoid schedule compression and delays.

2.4.Go/No-Go DecisionThe board agreed to authorize the new plane, but only if two conditions were met: commitments to

purchase were received from foreign and two domestic airlines and pre-production orders totaled at

least 100 planes.

Full commitment was authorized after orders were received from United Airlines, American and Delat

Airlines.

2.5.Supplier Management A complete 767 consisted of 3.1 million parts, which were supplied by 1300 vendors But, Aeritalia, the Italian aircraft manufacturer, and the Japan Aircraft Development

Company(JADC), a consortium made-up of Mitsubishi, Kawasiki, and Fuji Industries, were the two

main program participants, who were contracted with in September, 1978

2.6.Technology transfer Italian and Japanese participants were asked to work together with Boeing engineers In 1978, Boeing established residence teams in Italy and Japan, consisting of some of Boeings best

operations people. The operations team evaluated and helped establish participants facilities,training, and manufacturing processes, and also certified their quality assurance processes


5/9


5

3.Production Management All 767s were assembled in Everett, Washington, in the same facility used for 747s. Half of the

building was devoted to assembly of major subsections; the other half to final assembly. In the

final stages of assembly, a line flow process was used, with seven major work stations

During the assembly, managers faced two critical tasks: Maintaining schedule, and ensuring thatlearning curve goals were met

3.1.Scheduling and change control Three general approaches were used: incorporating changes into the normal flow of production;

installing old parts as originally planned and then retrofitting new parts off-line, outside the

normal flow of production; and expediting changes by assigning additional workers, a process

known as blue streak

In order to maintain schedule, Boeing employed a management visibility system. Schedules wereprominently posted, and marathon status meetings, which were attended by representatives of all

affected departments, were held weekly to review slippages and highlight potential problems

3.2.Learning curves Boeing had made learning curves for every major work center To begin with, an optimum crew size was defined for the operation, based on available work space

and tooling to be employed

For e.g., optimal size for forward body section assembly = 8 people,

No. of days to complete the very first assembly = 6000 hours/(128 hours- 8 people working 8

hours per shift, 2 shifts per day) = 47 days

The next assembly would be scheduled not for 47 days, but for a lesser number, which wouldreflect the rate of learning on that operation

3.3.3-Crew to 2-Crew Conversion 30- First 767 were still far enough from completion, and subsequent planes, could be built with 2-

person cockpits without modification. But, since all the 30 planes were being built according to

the planes original, 3-cockpit design, all would require some modification

In August 1981, a special task force narrowed down the choice to two alternatives:(1). Building the 30 airplanes as they had originally been designed, with 3-person cockpits, and

then converting them to 2-person cockpits after they had left the production floor

(2). Modifying the production plans for the 30 airplanes, so that conversion would take place

during production and no parts would be installed only to be removed later


6/9


6

4.Boeing 767 Process Network Diagram

-

Programme Definition Phase

(May 1973 December 1977)

Duration - 4 ears

Preparation

For initial

airlines

contacts

Approved market

analysis

1 2 3 4

8 5

Authorize programme

definition

Market requirements

review

Programme

review

7 6

Configuratio

n selectionAuthorize cost

definition phase

Secure

commitmen

t functional,

engine,

suppliers

Approve

price/market/co

st relationship

Sales reviewEngineering

design go-

Authorizatio

n to offer

1 2 3 4

6

5

109 8

7

Cost Definition Phase

(January 1978 September 1978)

Duration - 9 Months

Select & approve

configurationFinal preliminary

design review

Programme plan review,

tech, cost, schedule

Preliminary

design review


7/9


7

5.Production Phase

6.Problem StatementWhen the manufacturing of Boeing 767 was started, they inserted three-crew cockpit for as many as 30

planes. Then a new technology emerged and the advanced technology team suggested inserting two-

crew cockpits instead of three crew cockpits. The airline pilot association argued about the dip in safety

standards if such a design was introduced. Hence, a taskforce was convened and based on theirresearches it was concluded that 2-crew cockpits were a better option. Based on the findings the

company decided to change all the 30 three crew cockpits to two crew cockpits.

Dean Thorton, the programs vice president general manager got into a dilemma amongst the two

options available for implementation of two crew cockpits.

Completion of production and subsequent modification


8/9


8

Modification during production.

COMPARISON BETWEEN THE ALTERNATIVE PLANS

COMPLETION OF PRODUCTION AND SUBSEQUENT

MODIFICATION MODIFICATION DURING PRODUCTION

Production would continue as planned without

delay and modification would be taken

separately.

Modification would be done in-line with the

production.

One million additional labour hours were

required for the modification plan.

Two million additional labour hours were

required for the modification plan.

ADVANTAGES

Learning curve and schedule would not be

disrupted.

Production would continue on the other sections

of the plane.

Modification programme was separate and

would not intervene with the normal flow of

production.

Once plan and part were available for two crew

cockpits they would be incorporated within the

flow of production.

The functional testing process would not be

affected due to the planned modifications.All parts were installed only once.

Problems could be identified and corrected on

spot.

The configuration would be more secure

because of one time configuration.

DISADVANTAGES

Loss of Configuration- The integrity of the overall

design would be compromised.

Installation of instruments associated with three

crew cockpits would be halted.

If the modification was not executed properly,

the planes operating system might be disrupted.The original production plan would be disrupted.

Space constraint for the process of modification. Learning curves would be disrupted.

The planes would have to be parked very close

to each other which would violate their fire

regulations.

Functional testing would have to be done after

the two crew cockpit was fully installed, hence,

problems could have gone undetected.


9/9


9

7.SuggestionsAfter case study and analysis, the observation is that the manufacturing process and the subsequent

modification should be carried out separately.

Below are the reasons for considering the option:

There are only 30 planes for which the modification to 2-crew cockpit is required. It would notbe meaningful to disrupt the entire production line for the purpose.

The labour hours involved in separate modification line is half of the labour hours required inthe in-line modification. Since Boeing has to stick to the deadlines, they need to choose the best

option.

One of the airlines company still needs a 3 crew cockpit. Hence, it would be easier to build the 3-crew planes and then supply the company and modify the leftover planes rather than

modification during production.

Functional testing would be a major problem if the modification during production, as theremay be chances of issues going undetected.

The learning chart and the schedule would remain unchanged reducing the re-planning costs.

boeing 767 group2 secb

Documents