FAA Review of 787 Is An Illusion

Ray LaHood, the head of the U.S. Government’s Department of Transportation, declared the the Boeing 787 is safe to fly. Yet, in the same press event, LaHood announced that the Federal Aviation Administration (FAA) will conduct a complete safety review of the 787 to reassess the electrical systems and production process/quality control. This action is unprecedented.

The FAA doesn’t have the expertise to lead or devise a definitive plan to execute this effort. Given the complexity of the plane and the task, it could take several years before a FAA reassessment plan could be designed and implemented unless Boeing is really going to lead this effort. I suspect the FAA will participate in a safety review but will not lead the effort as has been advanced.

Doesn’t Boeing have the most to gain or lose from the current problems being reported? Boeing must have an extreme sense of urgency to understand and initiate corrective action for any and all of the problems that have surfaced that represent potential threats to the airworthiness of the aircraft.

One can only imagine the setback a catastrophic failure of a 787 would represent for Boeing and the airline industry which is counting on this product to increase efficiencies airlines face serving a global marketplace.

A Japan Airlines 787 had to abort a trip from Boston to Japan due to a fuel leak in a fuel nozzle.  CNN reports that the plane was later flown back to Japan for a more thorough examination. Personally, I would have flown it to Boeing in Seattle or South Carolina for that examination rather than half-way around the world. But, that’s just me.

A final thought: I’m not sure I want Ray LaHood to be a cheerleader for Boeing and the airworthiness of the Boeing 787.  The effort to certify a plane is extensive and exhaustive–I wrote about it in Fast Company. The FAA has already invested some 200,000 hours in the original certification process. But, the sample size for certification is limited.  It is certainly reasonable that supply chain complexities and design or producibility issues will surface as production is ramped up. Realistically, though, the burden is on Boeing.  The FAA can provide oversight, but, let’s not kid ourselves: the oversight is limited.

Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

U.S. Manufacturing Grows for 33 Consecutive Months

Here’s some good news on May 1, 2012:

NEW YORK (CNNMoney) — American manufacturing activity picked up in April, according to a report that showed the sector grew for the 33rd month in a row.

The Institute of Supply Management’s monthly index rose to 54.8 in April, from a 53.4 reading in March. Any reading above 50 indicates growth in the sector.

“This month’s increase is yet another sign that the U.S. manufacturing sector has been one of the most reliable sources of growth in the U.S. economy since the Great Recession ended,” said Alistair Bentley, an economist with TD Bank.

Manufacturing growth has created 120,000 jobs in the first 3 months of 2012. This is welcome news!

Dave Gardner, Gardner & Associates Consulting, http://www.gardnerandassoc.com

Viability of Offshore Manufacturing

Issue raised on LinkedIn:

I am working on my Research Project as a part of MBA Curriculum. Title of my research project is “DOES OFFSHORE MANUFACTURING STILL MAKE CENTS?” The purpose of this project is to research and document the continued viability of off-shore manufacturing to primarily Asian countries and evaluate if time has come to return back to the United States or North America. I have come up with some questions for my project. I would appreciate if anyone can comment on some of my below questions:

1. What are the real costs components of off-shore manufacturing?

Costs that are often missed are the engineering and administrative costs associated with supporting sub-contract manufacturers. Traditional cost accounting distorts cost and potential savings as significant non-manufacturing costs aren’t included in cost accounting metrics. What a company should really concern itself with is total cost associated with getting a product into and sustaining it in the marketplace. Activity-based costing is a better approach for looking at total cost and the performance of a product or product line.

2. As companies have moved their production off-shore, have they realized all the costs savings they expected? If not, why?

I submit this is a bit like the estimated mileage sticker on a new car–the savings is never quite as good as it appears to be after you’ve purchased.

3. Can United States become a manufacturing power house again?

The U.S. is a power house today in manufacturing! No need for doom and gloom. Not all manufacturing segments are moving off-shore. Those that have moved likely will not come back. There is greater growth potential for higher-end, personalized or customized products to begin to expand with the U.S.

4. How can companies keep their manufacturing operations at home and still compete with the competitors who absorb the overseas risks?

It depends on the segment as I’ve written above. Dell, for example, has moved a lot of manufacturing out of Round Rock, Texas, to other parts of the U.S. and the world. But, as I will write in a Fast Company article in a few weeks, Dell has not reduced its office footprint in Round Rock and actually continues to create more, higher-paying jobs for knowledge workers in Round Rock than it previously paid manufacturing employees. I recently interviewed the Vice President of Corporate Social Responsibility, Trisa Thompson, about this and other issues. Dell has just announced that it is expanding in Silicon Valley, again with product development and knowledge workers. [Note: I am member of Dell's Customer Advisory Panel, a position for which I receive no compensation.]

5. Do you think that government needs to provide some type of incentives to improve manufacturing competitiveness in North America and encourage companies to return manufacturing on-shore?

As we have seen with “green” industries, investors are loathe to invest in industries where the U.S. government offers incentives. The fear is that the market dries up when the incentives are pulled. So, we need to be careful about how the government participates. The U.S., state and local governments as well as foreign governments offer incentives to lure companies to create jobs in their area–this is routine and expected. This also allows companies to shelter profits outside the U.S. in many instances.

What do you think?

Dave Gardner, Gardner & Associates Consulting
http://www.gardnerandassoc.com

© 2011 Gardner & Associates Consulting  All Rights Reserved

Dave Gardner’s “Thank God It’s Monday” 08NOV10

“Thank God It’s Monday” is to help companies thrive!

This week’s focus: configurable products and services

The reason most ordering environments for configurable products and services are so challenging is that they cannot easily accommodate “exceptions.”

Non-conformity to standard, e.g., “I want it just like this but…,” requires 10 people to put their heads together to figure out how to handle an exception that never should have been an exception in the first place.

Companies that provide configurable products and service must pre-define a relevant set of options and allow people to order within the parameters provided.

The more “a la carte” product and service providers can be, the happier their customers and employees will be ensuring the company thrives.

Thought for the week:

“Don’t be pushed by your problems. Be led by your dreams.” -Unknown author

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Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

© 2010 Gardner & Associates Consulting  All Rights Reserved

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Dave Gardner’s “Thank God It’s Monday” 16AUG10

“Thank God It’s Monday” is to help companies thrive!

This week’s focus: configurable products and services

A small business owner contacted me about needing a configurator system to handle his anticipated volume of business.  He wants to spend “as little as possible” to resolve his mission-critical challenge.

His business is about configuring, pricing and quoting configurable pump systems. His prospective dealers have told him that they might fail without an effective configurator tool.

The business owner has focused on the product design and product features, not the support system required to seamlessly drive the business from quote to cash.  In this instance, the support system is as important as the product itself.

Why are companies with configurable products reticent to invest in critical infrastructure so their businesses will scale?

A go-to-market strategy and budget must address critical infrastructure as well as the product or service. Businesses that thrive anticipate and address all challenges in their go-to-market strategies pro-actively.

Thought for the week:

“I’ve never made a secret of what gets me out of bed in the morning. It’s the challenge.  It’s the brand.” - Sir Richard Branson in Business Stripped Bare

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Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

© 2010 Gardner & Associates Consulting  All Rights Reserved

Note:  To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.

Ramping Up Your Factory during Economic Recovery

The June 20, 2010, Wall Street Journal offered a terrific insight into a rather daunting challenge facing business: “Factories Grapple with How Fast to Ramp Up.”

No one wants to commit dollars to inventory for which there may be no customer yet companies don’t want to get caught flat-footed and be unable to support their customers either.  While it may be difficult to increase inventory turns, you don’t want inventory turns to spin out of control.

Here is what many manufacturing companies are facing today:

• After idling capacity, manufacturers are facing a significant challenge aligning supply with an unknown and unpredictable demand and, therefore, meeting customer commitments.

• Companies have leaned and downsized to the point where they can’t respond in a heart-beat to unexpected demand without negatively impacting other customer relationships.

• Tight supplies negatively impact end-product availability which shifts revenues to other producers or forces delay in revenue growth.

• FedEx is seeing an increase in its overseas airfreight business to try to take time out of the supply chain.

This is quite a conundrum.  In light of these factors, what should manufacturers do?

• Manufacturers need to align supply within what is considered by the marketplace to be a “competitive lead time.”  This metric is often not well-understood by the manufacturer or its customers.  The best practice is get alignment on and then do what you can to meet customer expectations.

• Communicate closely with customers to align supply with demand.  There can’t be too much communication here.

• Communicate closely with suppliers about your needs. There can’t be too much communication here.

• Explore new sources of supply to back up your current suppliers.  Spread the wealth and spread your risk.

• Look at the macroeconomics and consider if the actions you are taking or planning are prudent in light of other economic factors you are seeing.

• Look for ways to change fixed cost into variable costs: outsource non-core functions.

Good luck!

Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

© 2010 Dave Gardner

Toyota-Tesla joint venture announced

About 3:30 pm PDT today, I heard the fantastic news that:

• Toyota and Tesla Motors have formed a joint venture to produce electric vehicles
• The production will take place in Fremont, California
• It will utilize the production facility that closed on April 1, 2010, known as the NUMMI plant, a joint venture between GM and Toyota

This is very exciting.  When the NUMMI plant closed, it displaced 4,500 workers and had a negative impact on nearly 25,000 jobs through the supply chain, shipping, logistics, etc.

The NUMMI folks fought long and hard to save their jobs and did not prevail resulting in the closure of the last automotive manufacturing facility in California.

Well, no more.  Here is an article summarizing this news story.

The news could not be more welcome here in the San Francisco Bay Area.

Thank you Toyota and Tesla Motors for reaching an agreement that will stand to benefit thousands and thousands of people right here in my back yard.

Wahoo!

Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

Best practices for selling and producing customized, configurable products

The best practices for selling and producing customized, configurable products are:

• producing a customized product on demand,
• for a specific, named customer,
• based on the order attributes specified by the customer (or their representative) within an online tool offered for that express purpose,
• after receipt of an actual order, and,
• a customized product is produced with the same efficiency as one would expect from a non-customized (or mass-produced) product.

Most manufacturers of customized products produce them under sub-optimal business processes. We often find that the sales, dealer and customer side of the business are not well aligned with the back office creating tremendous inefficiencies, errors, rework and order delays. We work with clients on the front end of the process and, when indicated, on the back office processes as well.

The inefficiencies come with a considerable cost.  Industry experts estimate a customizer’s inefficiencies nominally cost 1.5-3.5% of gross revenues year after year and sometimes much more.

Many customizers experience low single-digit profits that they are constantly challenged to attain or even maintain as the cost of variety increases which further erodes profits.  There is nothing worse than working your tail off to make almost no profit quarter after quarter, year after year.

To realize enterprise-wide efficiencies, I have long advocated that manufacturers offering configurable products look at this business challenge holistically. I apply a holistic approach with my clients.

If you are a customizer, isn’t it time you implemented a solution that improves efficiency and profits and delights your customers as well?

Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

© 2010 Gardner & Associates Consulting

Highest manufacturing growth since 2004

Great news this morning from the Associated Press:

The U.S. manufacturing sector expanded in March at its strongest pace in 5 1/2 years, a private trade group said Thursday, as industrial companies continue to lead the recovery from the recession.

The Institute for Supply Management, a trade group of purchasing executives, said its gauge of industrial companies rose to 59.6 in March from 56.5 in February. It is the eighth straight month of expansion and the fastest growth since July 2004, when the index was 59.9.

Economists polled by Thomson Reuters had expected the measure to read 57.

Very encouraging!

Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

Boeing and Airbus in 2009

I’m certain the Boeing and Airbus sales departments are thrilled that 2009 finally ended.

The Associated Press reports on 07JAN10 that Boeing’s new 2009 aircraft orders were 142 (about 1/10th the number of orders back in 2007) while Airbus received about 194 new orders.

Boeing delivered 481 commercial aircraft during 2009 and Airbus is expected to announce that it shipped 437 new aircraft.

Boeing’s total backlog is about 3,375 aircraft.  I don’t have the figures for Airbus at this point.

Healthy backlogs will help these companies weather these challenging, global economic times.  I expect many additional orders will be pushed out as the airline industry struggles with weak demand, lower profits and the effect of the recent terror attempt on Northwest Flight 253 over the Christmas holidays.

Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

Manufacturing grows at fastest pace in 3 years

The Associated Press reports today:

The Institute for Supply Management, a trade group of purchasing executives, said its manufacturing index read 55.9 in December after 53.9 in November. A reading above 50 indicates growth.

That is the fifth straight month of expansion and the highest reading for the index since April 2006.

The ISM report said new orders, a future of future production, jumped last month to 65.5 from 60.3 in November.  Indexes measuring production and employment also rose.

A very positive trend indeed for the start of the new year.

Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

What is undermining job creation in the USA?

I recently attended a Silicon Valley executive networking meeting. Here’s what the participants concluded:

• People can’t wait for 2009 to end; 2009 just can’t end soon enough.
• Many want to close additional business before the end of 2009 to have strong momentum going into 2010.

The US needs job growth. Many economists are predicting a “jobless economic recovery” meaning there won’t be much hiring going on for some time to come. When people leave their positions either due to normal attrition or layoff, there is often no intention to replace them. This isn’t what the US needs.

Unemployment in California just hit 12.5%. The effective rate of unemployment may be understated by as much as 5% due to furlough days, temporary shut-downs, people who have given up looking for work, etc.

I see many factors undermining job growth; 2 of the most critical structural impediments are:

• Out of control health insurance premium increases
• Access to capital

Out of control health insurance premium increases

Health insurance costs have been spiraling out of control for at least the last 5 years and, realistically, much longer. The insurance companies are passing along double-digit premium increases year after year. Mine went up 16% this year, I’ve heard of many others in the same situation, one business owner in Massachusetts saw a 30% increase with no discernible rationale or explanation.

A woman in the insurance business tried to say, “Well, Dave…you don’t understand…” Frankly, I don’t want an explanation—I want a solution. What came next was some diatribe about how the insurance companies are just passing on costs, how we need to get people to eat differently and exercise so the system can right itself in 30 or 40 years, etc. Yada, yada, yada.

When did it become acceptable to pass on double-digit premium increases year after year? When did it become acceptable to have premium increases that are 5 times or more the rate of inflation? I get incensed just writing about this. And, of course (as we have been warned), it will only get worse if and when the insurance companies have to cover people with “pre-existing conditions” who are denied coverage today.

Business leaders need to be “mad as hell and not take this any more!” America seems to be the only country in the world that looks at this issue with such complacency. America is also one of the few countries in the world that allows people to be driven into bankruptcy due to lack of insurance coverage.

We’ve got Congress fiddle-farting around trying to balance the needs of their constituents with the needs of the special interests that fund their getting into office. This is the height of absurdity. I’ve heard that if you ever saw sausage being made, you would never eat it. I’m beginning to feel that the health care reform legislation is similar—it’s not going to be palatable.

Ever-increasing health care costs are a deterrent to hiring people at a time when job growth is badly needed. So, what were ideas the group had to overcome this problem?

• I suggested we start with the assumption that American does not have the best health care system in the world (contrary to some talking points). We don’t have the best system by a wide margin—we are actually ranked 19^th in the world. I suggested everyone read T. R. Reid’s book “The Healing of America.” We should look for best practices from all around the world and incorporate changes here in the USA as quickly as possible.
• One person offered we should stop hiring people and put everyone on a 1099 so there will be no obligation to offer health insurance. Wow—great idea! Is the IRS going to change the rules to treat “real employees” as temps? Or, do we just allow people to work a few months; take a few months off, rinse and repeat?
• Outsource the jobs internationally to avoid the negative deterrents to hiring domestically. That’s going to really help with USA job creation.
• Suck it up—just recognize that increasing health care costs are our future and there’s nothing that can be done about it.

Sorry, but, I’m a change agent—change agents do not embrace the status quo when the status quo is so obviously unacceptable. The insurance industry must be far more than a pass-through point—they need to drive their own structural changes that decrease costs and undermine fraud. Right now, they are not incented to do that. They just pass it on.

Access to capital

I “romanced the past” by reminding people of what Silicon Valley was like back in the 70’s, 80’s and 90’s:

• Entrepreneurs came up with seemingly viable business ideas
• Venture capitalists funded the ideas with equity financing realizing that there wouldn’t be an instantaneous return on their investment
• Employees worked their butts off trying to deliver top value to the marketplace driving company growth, revenue and market valuations
• IPO’s were a frequent occurrence and were a reason for people to work so hard looking for a “big payday”
• Go find the next great business adventure and create excitement

Did the formula always work? No. But it was the driver of what made Silicon Valley Silicon Valley. I can tell you—people were excited about going to work everyday. Can we say that today? No. Why isn’t that happening today?

• Insufficient capital undermines the formation of new companies and the expansion of existing companies both of which negatively impact job creation. What incentives can be offered to get investors out of the bleachers and back on the field of play?
• People lending money are offering terms that one could only imagine as having originated from loan sharks. It is harder and harder to get equity investment; money lent in today’s world is debt with high interest rates and short timeframes for repayment.
• The dot com bust in 2001, Enron and then ensuing Sarbanes-Oxley audit requirements have dramatically altered the availability of capital and desirability of taking companies public. Is the US and investors getting any return or benefit for the cost of SOX? Is the value commensurate with the cost?  I think not.  There will always be white collar crooks—we see evidence of that everyday in the news.
• IPO’s are a rarity today; getting acquired seems to be the stronger exit strategy and apparently is not as attractive an exit strategy as IPO’s used to represent.

One gentleman in our meeting suggested an approach the San Jose Mercury News has just today (22NOV09) referred to as “extreme bootstrapping”—finding unemployed people, letting them work for free with the hope that there might be a job in it for them someday or some royalty payment, etc. Call me crazy, but, that’s not what we need either. Hope is not a strategy.

Summary

There is no question that access to capital and health care insurance costs are undermining job creation. Removing structural impediments to job creation isn’t just desirable—it’s key to turning this economy around. Job growth will come from small, entrepreneurial ventures. More attention must be paid to small companies, getting them financed and giving them incentives to create real jobs.

What do you think?

Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

Why Does Everything Have to Be So Complicated?

I’m a straight-shooting, pragmatic person who thrives on making the complex simple. The systems and processes I assist people with are not for my use; they are for the stakeholders daily use.

This month, I’m taking a look at business simplicity.  It’s easy to take the simple and make it complex, but, far more difficult to take the complex and make it simple.  That’s my passion.

Many companies (and, sadly, many consultants) seem to go out of their way to make things complicated.  Sometimes, I listen to people and say to myself, “What the heck does that mean?”  If you need a decoder ring, something is just not right.

The following graphic is profound in its simplicity. Take a moment and ponder it.

I wish I had created the preceding graphic, but, I did not. This visual was created by Jessica Hagy under a blog post titled “Needles and Haystacks and Such” for a blog located at http://thisisindexed.com.

Confusion is a function of how much information is available: too little information promotes confusion just as too much information promotes confusion.

I was recently involved with a Fortune 500 company and noticed that the marketing people across the enterprise were just pounding the sales people with new product and service information, new promotions, etc.  I wondered how a sales person could do their job with this constant bombardment of information. After a while, it has to feel like spam, turning people off rather than turning them on.

If I had been in sales, I’m sure I would have ignored it–it was just too much information for a person to absorb while still being able to execute their jobs. I’m certain they respond to the priorities set by their management–that would be the safer course of action.

One marketing person I knew had some 40 projects on her “to-do” list all destined to go to the same group.  I asked her if she ever sought feedback about how well the information she created was being received or assisted sales to be more successful.  She looked at me like I was nuts.  Okay, call me crazy! If you don’t seek feedback, how will you ever know?

The optimal point in this process visual diagram is where the curve is at it’s lowest point.  After that, the economic “law of diminishing returns” sets in. Incremental information promotes more confusion and overload as it is added to the mix. The challenge is finding out where the point of optimization is for the people who are expected to execute.  The best way to find that point is to simply ask the recipients for feedback.

Americans are terrible dealing with people in foreign countries who don’t speak English.  We say things louder and in a more animated voice thinking that this is the royal road to communication success.  It’s not.  The same is true with confusion and information.  Just as increasing the volume is ineffective with someone who does not speak English, more information is not more, but, actually less.

Improve business execution through simplification.  If processes or systems are not being followed or no longer serve the essential needs of the business, change and simplify them.  And, if your role is providing information, validate that the information you are publishing is serving the strategy, not confounding or adding to confusion or overwhelm.

People who are confused or overwhelmed with information are not going to be efficient or effective.

What is the best practice?  Find the balance between information and confusion.  The people using the systems and processes to do their jobs are the best judge of how well the balance has been achieved.  Consider what you can do to create simple, effective solutions.

And, certainly, don’t be shy about reaching out for help from a dispassionate third-party like me.

Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

Manufacturing Sector Growth After 19 Months

The U.S. manufacturing sector grew in August for the first time in 19 months as new orders from customers jumped to the highest level since late 2004.

The better-than-expected reading Tuesday by the Institute for Supply Management showed the highest number for its manufacturing index since June 2007.

What is your company doing to prepare for the coming turn-around?

Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

Matrix management and business execution

One of my colleagues, Dr. Guido Quelle of Mandat GmbH, was invited to weigh in on the con’s associated with matrix management by Business Week.   Guido’s and his counterpart offer compelling thoughts.  I also commented in the blog post-available  here.

Please add your commentary here or at the site of the Business Week discussion.

Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

Business Execution Lessons learned from Boeing 787 delays

The new Boeing 787 is the first commercial aircraft planned to be designed completely by computer (no prototype), the first aircraft that relies on composite (non-metal) materials for all the flight surfaces,  and that relies on a broad strategy of outsourcing the manufacturing of key components with Boeing only doing final assembly and test.   The program is some 2 years behind schedule with schedule slippages continuing.  Some much for sound business execution.

The plane currently has structural issues related to securing the wings of the plane to the fuselage.  Additional mounting points are needed to provide sufficient structural integrity. There is no revised program schedule available at present.

While Boeing claims that it may have been possible to commence test flights prior to remediating the structural issues, the company is taking the right approach in delaying the first test flight until Engineers are confident.

Imagine the impact of having one or more wings fall off during a test flight!  Is there anyone who thinks that Boeing’s customers and future passengers would be willing to say, “Oh, it’s okay–they’ve implemented a design change now to correct that defect–the wings should be okay.”

Today, the Wall Street Journal reports in an article called “Boeing Is in Talks to Buy Operations of a Major Supplier,” discusses how Boeing is in negotiations to purchase a critical part of their supply chain to improve business execution.  Is this something Boeing should have outsourced?  Or, is this a competency that needed to be developed and refined before it could be outsourced?

It’s impossible to outsource a design of this complexity that’s never been successfully built even once.  The design engineers and the production engineers need to work side-by-side to understand how the design elements come together as a “system.”

While the schedule didn’t call for building a prototype, the first unit is a prototype regardless of whether it is identified as such in the schedule or not.  It is the first time all the design elements come together as a aircraft expected to take flight.

Many years ago, I had a client who was creating a precision, high-end electro-mechanical hardware product employing state of the art technology.  I recall the purchasing agent calling the engineers to inform them that their prototype parts had arrived as each part individually came in.

To my amazement, each engineer said “thanks” and never went back to the receiving area to marvel at actually seeing their design manifest before their eyes.  Why?  They had “seen it” in the computer-aided engineering system–they just “knew” it would be okay.   Did the 787 engineers feel the same way?  Did they just “know” it would be okay?

This same client liked designing innovative systems but really didn’t want to ramp up a manufacturing organization.  So, the design was transitioned to an outsource manufacturer before a prototype system had ever been built until it became very clear that the “system” couldn’t come together as a system–there were too many issues in every area of the design for the product to work as a system.  The system was brought back in-house to complete the design and system integration work which took many months. Many months and a boat load of cash were consumed before revenues could be realized for this challenging design.

What are a few key lessons from the 787 program?

• While it would be wonderful if you could design a plane from the comfort of your office,  it’s ludicrous to plan for this.  Seeing is believing.
• If you can’t build one complete system (in this case, a 787) and make it work as designed, what would make you think your outsource suppliers can do it?
• A computer system will never be able to reveal everything that an actual prototype build will show.  It is silly to schedule a program with no allowance for a prototype system.
• The first “system” you build is a prototype, whether you call it that or not.  It is normal and reasonable to expect significant design tweaks will be needed to finalize the design.   Boeing and its 787 customers are learning this costly lesson.
• Boeing may have outsourced what was really a core competency key to the 787 success–fuselage manufacturing.

Boeing’s only competitor, Airbus, is certainly in the news in recent weeks, and, it’s not the kind of press a company wants.  There are questions about the total design strategy that, frankly, makes me reluctant to fly on an Airbus anywhere.  Fortunately, American Airlines and Alaska Airlines don’t rely on Airbus and I hope it stays that way!

Boeing must get this 787 design right.  I applaud them for doing the right thing and delaying the program to get this design right!  But, I’m concerned that Boeing’s business execution has been pretty poor for issues that should have been anticipated by the program team.

What do you think?

Dave Gardner Gardner & Associates Consulting

http://www.gardnerandassoc.com