FAA Review of 787 Is An Illusion

January 15, 2013

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.

Boeing_787

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

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HP Reeling from Oct12 Shareholder/Analyst Call

October 4, 2012

Wall Street and analysts are reeling from HP’s Shareholder/Analyst call yesterday. The stock hit a 9-year low yesterday. Meg Whitman and HP are signaling it’s going to be another couple of years before the company is back on track. That’s astounding.

I have to ask at what point in the last decade was HP truly “on track?” What does “on track” look like?  I don’t think HP really knows.  HP simply knows it’s off track.

One quote stood out yesterday:

 When Todd Bradley took over the Printing and Personal Systems business, he was surprised to find that we made more than 2,100 laser printers. In every business, we’re going to benefit from focusing on a smaller number of offerings that we can invest in and really make matter. By the way, we have plans to cut those laser printer SKUs by about — by nearly 50% in 2013.

Cut it in half in 2013?  I can’t imagine the lack of economies and negative supply chain implication of having 2100 laser printer SKUs. This is an incredible number.  To think that they will have to continue with that number for the better part of another year is puzzling. And, to think they hope to only cut it in half in 2013 means they’ll still have over 1,000.

How about cutting it by 75-80% from the current 2100.  How about looking at a strategy to reduce the number of SKUs by modularizing the products?  This would mitigate supply chain and channel distribution issues.

There’s more that’s troubling.

  • For one, a “year” doesn’t need to be the smallest time unit for change to occur. In many businesses, a month or a quarter is sufficient to get a lot accomplished if people are motivated. HP needs to tighten up its timelines dramatically.
  • The longer it takes to make critical changes in a business, the less likely the things essential to moving the needle on the business  will occur. Where is the sense of urgency?
  •  HP leadership doesn’t have 2-3 years to ease into the changes. Investors won’t tolerate slow, steady progress. We’ll get another regime change and be right back talking about what needs to happen.
  • There is really no proof that HP knows what the right things to do are and has a plan to execute.
  • Cutting and downsizing–while necessary–won’t improve morale or the culture at HP. What is the plan to energize the team, customer, channel partners and the marketplace?

For too long, HP has just been going through the motions. What I heard yesterday is that will continue albeit with slightly more urgency.

Something’s got to give. I don’t think HP knows what that is yet. Where will HP be in a year?  Still stuck?

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


Hope Is Not A Strategy

April 3, 2012

Too often, executives fail to take action when it is clear that action is what is needed. Hope is not a strategy!

    • If you’ve got a problem employee, you’ve got to deal with it and either get them well or get them out of your organization.
    • If you’ve invested in an IT system and you’re not getting a sufficient return on your investment, you’ve got to take action. It often isn’t the system as much as the IT system not been properly integrated with your people and your business process. The IT system isn’t the process (contrary to what the sales folks said). Microsoft Word can be used to write an effective sales letter but it isn’t the reason the letter is effective. Microsoft Word is just a tool—a minor part of the solution. The same is true for all software.
    • If you’re losing market share, you’ve got to find out why and quickly take action.
    • If you’re losing employees to your competition, you need to find out why and take action to stem the exodus.
    • If you’re company is continually late delivering customer orders or not getting orders right the first time, you’ve got to take action.
    • If you’re inventory levels are growing while sales are declining, you’ve got to take decisive action.
    • If you can’t turn around customer warranty repairs in a timely manner, you’ve got a problem that will irritate your customers— you’ve got to take action to correct the problem.
    • If your customers won’t pay within your payment terms because your products don’t work, weren’t delivered or installed properly, you’ve got a problem that is consuming cash and undermining relationships with your customers. Urgent action is needed.
    • If you’re company is more dependent on people than processes that your people follow, you’ve got a huge problem that will undermine your ability to grow and to be agile. People dependency creates a sense of entitlement. You’ve got to take action to correct this.
    • If there is an enthusiasm gap between what your customers expect from you and what they experience, you must identify the issues that contribute to the enthusiasm gap or risk opening the door to a leaner, more agile, more willing and able competitor. You must identify and run these issues to the ground.

When the fish in the refrigerator doesn’t smell so good, you don’t put it back in the refrigerator and check it in a few days to see if it has gotten better. It hasn’t. Hope is not a strategy! Be proactive about addressing the known issues in your business.

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

© 2012 Dave Gardner All Rights Reserved

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Boeing 787 Certified by FAA-Lessons Learned

September 7, 2011

The Boeing 787 was certified for commercial use by the U.S. Federal Aviation Administration (FAA) on Friday, August 26th. That means the design has been put through the paces. Over 4000 exacting, discrete tests were required to be successfully passed for the FAA to certify the aircraft design.

The 787 is the first commercial aircraft with the body and wings made largely of lightweight, carbon-composite materials instead of aluminum. The expectation is that this lighter plane will consume 20% less fuel than a comparable aircraft design.

The program hasn’t been without its problems: The certification is about 3 years behind the original schedule, and cost overruns are estimated to be in the billions of dollars.

Boeing executives refused to discuss when the 787 program will be profitable. Right now, there are orders for roughly 850 planes.

Boeing decided to take a different path to bringing this aircraft to the marketplace, employing global design and supply chain resources. For one, there would be no prototype mockup built–this aircraft would be designed completely by computer. Engineering design would be distributed globally, increasing the risk that it would be difficult to collaborate and coordinate all the design elements. And finally, there would be a global supply chain that needed to be developed–787 final assembly and testing would occur in the U.S.

Most of the 787 program delay is attributed to a decentralized, global engineering strategy and a complex supply chain involving some 50 partners. These partners have had to make substantial investments in tooling and inventory under the provision that they would receive no compensation for their efforts until each aircraft is sold. The delays have to have been excruciatingly painful for Boeing’s partners.

Boeing’s CEO Jim McNerney said in a speech back on November 11, 2010:

“In retrospect, our 787 game plan may have been overly ambitious, incorporating too many firsts at once–in the application of new technologies, in revolutionary design-and-build processes, and in increasing global sourcing of engineering and manufacturing content.”

Boeing’s ultimate success in employing this global design and supply chain strategy will likely impact future aircraft design as Boeing and Airbus seek to push the risk and cost to global partners.

Let’s not forget a key aspect of this whole process. While we can applaud Boeing for getting this aircraft certified, the delays have had a significant impact on airlines determining when they can incorporate these new aircraft into their fleets.

Current estimates are that Boeing has the capacity to begin delivering ten 787 aircraft per month in 2013. Will the order backlog hold up? At present rates, it would take about 7 to 8 years to build out the current order backlog of 850 aircraft. With the projected savings available from the 787, the order backlog should increase as airlines see the opportunity to increase their fuel efficiency and modernize their fleets.

Boeing has a significant challenge ahead. We celebrate the milestone! Now, Boeing–get to work!

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

© 2011 Dave Gardner

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Dave Gardner’s “Thank God It’s Monday” 23AUG10

August 23, 2010

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

This week’s focus: business execution

From the terrific book How to Castrate A Bull—Unexpected Lessons on Risk, Growth, and Success in Business by Dave Hitz, Founder and Executive Vice President of NetApp, comes this gem about winning in business against a larger competitor:

“[The competitor’s] key selling point was that their systems were faster, so that was where Brian attacked. He fixed every problem he could find. To motivate others to help, he awarded a bottle of wine to anyone who improved performance 1 percent. With each bottle, a little piece of [the competitor] died.  One percent sounds small, but big improvements come in small increments, and Brian gave away many cases of wine.”

The competitor Brian targeted is no longer in business. His relentless focus on improving performance 1 percent at a time positioned his company to thrive.

What improvements are you working on to make your company, department or team thrive?

Thought for the week:

“I consider my ability to arouse enthusiasm among men the greatest asset I possess. The way to develop the best that is in a man is by appreciation and encouragement.”Charles Schwab
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Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

© 2010 Gardner & Associates Consulting  All Rights Reserved

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Ramping Up Your Factory during Economic Recovery

June 27, 2010

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