By now, Boeing's supply chain woes are well-trod ground.
Despite continually missed delivery dates, the pace of orders is not slowing for the aerospace company. United Airlines on Tuesday ordered another nine 787 Dreamliners, worth $2.93 billion, and last week the Air Force announced Boeing had won a $2.4 billion contract to build training aircraft.
Still, as NPR reported in September, the number of unfinished 737s outside a Boeing facility near Seattle is growing. To address this, the company is rehiring retired workers to help finish the work.
There have been "a significant amount of disruptions in our productions systems" said Roxanne Shinn, supply chain senior director leading inventory management and ordering for Boeing, at the APICS 2018 conference in Chicago. There, she outlined the company's response to shortages and delays: A multistep process of digitizing the supply chain, which led to changes so dramatic, some employees didn't make it through.
Digitization is no easy task for a company with operations in 50 states and 140 countries. The company spends $43 billion buying more than 1 billion parts per year. Three million parts arrive at Boeing facilities every day from 5,400 suppliers.
Shinn, along with the PwC consultants who helped with the process, described the digitization as a way to find the "connection points" between each part's original manufacturer and the mechanic who needs it at the end of the chain, in the hopes of developing a supply chain management system that is proactive and not reactive.
"We were doing a lot more fire-fighting than proactive planning," Shinn told the crowd.
First steps: See, analyze and integrate
The basic steps in the roughly six-month process as outlined by Shinn (though it had fits and starts):
- See everything: Organize and unify all of the "unstandardized data" from processes, suppliers, orders and parts into a relatively cohesive data set. The buzzwords here are "end-to-end visibility."
- Analytics: Determine which analytics would help with decision-making, linking seemingly disparate parts of the supply chain and foreseeing problems before they happen.
- Integrate: Getting the company to use this system, stringing the links in Boeing's value chain together, and what PwC's Mark Hermans called "making it real."
A crucial element at each step here was getting buy-in from inside the company — an important element in any major supply chain change echoed over and over at APICS presentations and panels.
In order to add context to those shortages, departments had to learn to see the whole board and understand how their decisions rippled throughout the company. For example, through this process, Shin discovered that some shortages were driven by an engineering change. It didn't occur to the engineers that the change would matter, so it was never communicated down the supply chain.
"We were doing a lot more fire-fighting than proactive planning."
Roxanne Shinn
Executive in Strategy and Business Operations, The Boeing Company
Another challenge was distinguishing the signal from the noise, as the amount of available data grew.
Hermans said that his clients have to make sure they're not creating a "nervous system" through the digitization process. "It can become a very jittery system that can overreact," said Hermans, a managing director of digital operations consulting at PricewaterhouseCoopers (PwC). At the end of the day, the tools need to be actionable and not create more noise in the system.
Not only did getting employees from all corners of the supply chain on-board facilitate the collaboration needed for Shinn and her team to visualize the whole process, but it helped to temper some of the sentiments lingering from the days of part shortages and manufacturing delays.
"When you're in a fast-paced production environment there's a lot of emotion that comes with getting off schedule," explained Shinn.
To improve, it may take some unlearning
Boeing had the benefit of not seeking immediate cost savings from digitizing its supply chain, as many companies do. But even armed with more data, the necessary actions to keep production flowing were not always easy to see or agree on.
"I worked in areas where there was a perception that every time we had a production rate increase, we were going to have a corresponding shortage increase. So [we had to break] those paradigms, proving that you can actually have fewer shortages with [lower] inventory levels," Shinn said.
In a crunch, she explained, working capital, freed up by keeping inventory lean, can be more valuable than stock — especially if inventory and orders are not aligned.
Shinn added her teams also needed to disabuse themselves of old, engrained habits and notions. KPIs were ditched, roles changed and, yes, some people did not make it through the transition.
Hermans said they leaned on the team members that were more amenable to change, often the younger team members, while looking to hire expertise from outside of the supply chain field. "That was a way that we tried to break through the traditional thinking," he said.
"When you're in a fast-paced production environment there's a lot of emotion that comes with getting off schedule."
Roxanne Shinn
Executive in Strategy and Business Operations, The Boeing Company
Boeing is likely not going to be free from production disruption forever. In fact, one of the most important tasks for Shinn and her team was finding a way to make the benefit of this work easy to see and feel internally.
"Making improvements within the supply chain takes a long time to see the result. How can you make it visible?" Shinn asked of an audience of supply chain managers.
It may take longer for Boeing's digital supply chain transformation to become visible from the outside of the company, but if Boeing meets its goal, of delivering 800 planes this year, Shinn and her team will know why.
