Boeing Doesn’t Know That "Profit = Price – Cost" ?
For the thousandth time, the Toyota principle is that prices are set by the market, therefore Profit = Price – Cost. The old industrial mindset was a “cost plus” approach where Price = Cost + Profit. This quote below makes it sound like Boeing, for all their lean work, is still thinking the old way.
“Boeing spokesman Todd Blecher said cost savings from a renewed focus on lean manufacturing has given the company some pricing flexibility. ‘We will not, however, do any deal that we consider irresponsible or a bad business deal simply to grab market share,' he said.”
I would say the cost reductions have given them “profit flexibility”, mainly in the upward direction. The price is set by the market (as a factor of demand for planes, fuel costs, and competition from Airbus, right?) Or do I not understand this, that aerospace is different?
What do you think? Scroll down to comment or share your thoughts and the post on social media. Don't want to miss a post or podcast? Subscribe to get notified about posts via email daily or weekly.
- Jody Crane, MD: Lean in Emergency Medicine and Hospitals; 3 Big Issues Causing Tough Times in Healthcare - February 1, 2023
- Alternative History: GM Uses Lean to Remain #1 in the Auto Industry - January 31, 2023
- Fall in Love with the Problem, not the Solution: In Entrepreneurship and Continuous Improvement - January 29, 2023