By August 18, 2006 8 Comments Read More →

Boeing’s Beer Game

Boeing to shut down C-17 production

Boeing is planning to shut down production of a cargo aircraft. It’s a slightly different lesson than the Ford posting, below. Here, the lead times on A&D items are so ridiculously long (34 months), that Boeing has to anticipate three years out what is needed from suppliers.

“The decision affects long lead-time items purchased from suppliers, many of which have to be ordered as long as 34 months in advance.”

So let’s say Boeing shuts off the spigot of parts from suppliers…. and then the government decides in a year that they want more planes. Where will the parts come from? If Boeing wants to be at all responsive to customer demand, they’ll have to spend a lot of money on inventory (“just in case”), a form of waste.

I hope that Boeing and other A&D OEM’s are working with suppliers to use lean to reduce lead times. The C-17 is a cargo plane, but I would supposed the same situation exists for fighter jets. How ironic that a company with products that can “turn on a dime” has a supply chain that’s as bulky and hard to turn as an aircraft carrier.

Production could be restarted if Congress approves funding, which could happen as early as next month. But restarting the supply chain would be costly and add millions of dollars to the cost of each plane — about $154 million each.

If you’re familiar with the “Beer Game” and the “Bullwhip Effect“, it seems like Boeing and its supply chain fits this dysfunctional mode. Long lead times lead to inventory and unresponsive supply chains. That’s why a core lean concept is the reduction of time — time from order to delivery, from order to cash, from supplier to factory, etc.


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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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8 Comments on "Boeing’s Beer Game"

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  1. Andy Wagner says:

    Mark,
    For better or worse I’ve heard that an expert at MIT’s Lean Aerospace Initiative has called Boeing’s C-17 production the leanest aerospace shop around. Its certainly a relative term.
    Aircraft require forgings made from high-strength, low-weight specialty metals. Its typically these areas that drive the lead-times. With commonly available alloys used in most industries, there’s a constant supply of metal that doesn’t effect lead time. Not so in aerospace.

  2. Mark Graban says:

    Well, for one, being the “leanest aerospace shop” is like being called the skinniest sumo wrestler, eh?

    I hope that “up to 34 months” means that they only have a few long lead time parts.

  3. Anonymous says:

    Unfortunately, comparing Lean measurements (i.e. max lead time) across different industries doesn’t make sense. 34 months might seem like alot, but the C-17 is one of the leanest projects in the aerospace industry. It also was the first incredibly successful example of Lean in aerospace back in the 80s. 34 months sounds about right for the longest-lead items, which there aren’t many of but still include the most critical parts (the wings, for example).

    Boeing is well-regarded as being very bold when it comes to Lean in Aerospace. I know this because I work for Boeing, although not on C-17. Unfortunately, this industry is full of cutting-edge technology as well. Usually we invent and refine the technologies that automotive draws from.

    I seriously suggest you investigate Lean in Aerospace so you sound like a more well-versed commentator. Its well-known that Boeing is one of the best companies when it comes to Lean, even if military aerospace is one of the worst industries for a system like Lean (lots of cutting edge technology vs. more conservative technologies in Lean systems). Thats one of the reasons that Boeing is now the only remaining company among these well-regarded Aerospace companies – Rockwell, McDonnell-Douglas, Hughes, and Rocketdyne (all taken over by Boeing).

  4. Mark Graban says:

    To anonymous: fair enough, I have a lot to learn. I posed the question as an outsider to the A&D industry, just asking a question that I think many others would ask: 34 months seems like a long lead time for anything and I hope they’re working to reduce lead times (I’m sure they are).

    I’m doing this blog, not because I know it all and want to tell everyone… I’ve learned more doing this blog than I would have ever expected.

    Thanks for correcting me on the perception that Boeing isn’t “lean”, at least for their industry. Sincerely, I appreciate it.

    I hope you’ll return to the blog.

  5. Mark Graban says:

    Can you explain more how “cutting edge technologies” hamper Boeing’s lean efforts? How is that incompatible with continuous improvement and the management side of lean? There are certain lean tools that might be tough to adapt, I’d assume, but you’re not Toyota.

    For example, I’m asking this out of curiosity — does a moving assembly really help with airplane manufacturing? We don’t try to put a house on a moving line to build it.

  6. joe sheehan says:

    I’m anonymous from above.

    Continuous improvement is certainly one of the ways in which Boeing, and other aerospace companies, demonstrate Lean within the company culture. My teams have been receptive to new ideas generally, and management always supports continuous improvement. Always.

    Cutting edge technologies, however, dampen our ability to use tried and true technologies, like Toyota does. Generally, the Automotive industry lags the Aerospace industry in technology. Example: Electric braking, or “brake-by-wire” has been on airplanes for many years. However, “brake-by-wire” is only now starting to make its way into the cars you and i drive. Cars still have mechanical braking linkages. Other examples include cruise control (autopilot), 4-wheel drive (came from Humvees), anti-lock brakes (or “anti-skid” in the aerospace world). The economics fit the bill as well – by having aerospace companies pioneer technologies and publish them in technical journals, automotive companies can implement them very cheaply (sometimes too cheaply) and thus cars dont get too expensive for you and I.

    The relationship is not entirely one way. Boeing has learned alot from Toyota, thats for certain. But Boeing has to stay Lean – its one of only two aerospace companies left in the world which builds wide-body commercial jets. Imagine if the automotive industry had that sort of consolidation.

    One example of long-lead is Titanium. Trying to buy titanium now takes at least 18-24 months, and I would bet that the 34 months is specially-cured Titanium for some parts of the C-17. Why Titanium? Well, steel is too heavy, iron rusts, aluminum can’t stand the physica loads… you get my point. Cars dont have many large titanium parts like airplanes do.

    Check out these links:
    http://www.boeing.com/ids/ids-back/lean-bg.html

    http://www.mrotoday.com/mro/archives/Cover%20stories/BoeingFM2002.htm

    Great blog, keep up the good work.

  7. Mark Graban says:

    Hi Joe-

    Thanks for returning and for your continued comments. What is the value added time percentage of an 18-24 month lead time Titanium part? Why can’t Boeing help their suppliers get more lean to get their cycle times down? Can you shed some light on that?

    Thanks,
    Mark

  8. Anonymous says:

    I cannot. I do know that Boeing works pretty well with its suppliers. 18-24 months was just a guess, it could be longer, primarily due to the simple supply/demand of the commodity at this point in the aerospace cycle, as well as the intense processes and rigorous testing that the material must go through before it can arrive at Boeing.. Thats another arena Automotive doesn’t tackle. Testing. Aerospace tests are orders of magnitude harder to pass than Automotive tests, primarily related to the fact that testing increases costs.

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