The Boeing Co. was flying high at the end of 2006 when demand for the company's 787 Dreamliner pushed its total orders past rival Airbus for the first time in six years. The aerospace giant duplicated that feat in 2007, but this time with a bittersweet twist. Supplier issues have plagued the Dreamliner program, forcing a second delivery delay in January and speculation in late March of another setback that could push the first delivery out about 18 months past the originally scheduled date.
The delays raise questions about an otherwise promising lean journey that helped reduce production time on the 737 aircraft line from 23 days to 11. It's an issue that lean manufacturing proponents have attacked over the past year, asking for instance whether Boeing's decision to source more work to offshore suppliers strayed from its continuous improvement philosophy.
"It seems like they aren't subscribing to the idea of 'going slow to go fast,'" observes Mark Graban, founder of LeanBlog. "Boeing set up this global supply chain and chose the suppliers. Now, they seem to be dumping on the suppliers, saying how they wouldn't use some of them again. There might be good reasons for that, but how many [suppliers] were set up to fail through poor selection or poor planning?"
"At least Boeing is having a little fun, and painted one of the Dreamlifters to look like a monster Oscar Meyer (sic) Weinermobile, if it is a real photo," writes Kevin Meyer in his lean blog Evolving Excellence in reference to a Boeing jet that transports supplier components. "But who cares if it's really real... just like Boeing doesn't really care about 'real lean.'"
Those are harsh words to aim at a company that prides itself on being lean, almost to the point of bragging. (Boeing highlights its lean achievements through its in-house Frontiers magazine and speaks frequently about its continuous improvement efforts at industry conferences.)
But as a $33.4 billion company, any misstep by Boeing can make it an easy target for critics. Few manufacturers, if any, can say they haven't encountered some roadblocks along their lean missions. For some companies the problem is understanding that lean isn't just something you carry out on the shop floor -- that truly lean operations extend that philosophy to the supply chain and getting suppliers onboard takes work. Others lose sight of what really drives lean -- the employees.
Learning to 'Bunt'
Gaining employee buy-in was Boeing's first major hurdle when management looked to implement lean on the 737 line in the mid-1990s. The company wanted to switch from building the 737 in stationary workstations to a continuous flow "moving line" where workers would build the plane nose to tail as it moved along the factory floor two inches per minute. Employees were worried they couldn't keep up with the faster pace, says Carolyn Corvi, vice president and general manager of Boeing Commercial Airplanes. The company brought in consultants who suggested the company start small.
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Instead of making sweeping changes, the company introduced lean to its small fabrication and subassembly areas first before realigning final assembly in 2000. In addition to reduced production time, the change cut work-in-process inventory from 30 to approximately 10 planes on the plant floor at any given time and cut customer introduction hours by 51%. The changes were so successful that in 2005 Boeing decided to incorporate similar lean concepts into its 777 line. Again, management met resistance and had to stop the process.
"We started on the 777 maybe naively thinking that the people who worked in the [737] program had seen and appreciated what happened on the 737 and understood why we were asking them to change as well," Corvi says. "It turns out they probably didn't have as much of an understanding of what we were doing and why." Management failed to educate the workforce on why the changes were necessary and engage them in the process, she recalls.
Such employee push-back often stems from fear. They worry that lean means layoffs or more work. The communication process should include the message that it's OK to fail because it's part of the learning process, lean accounting expert Orry Fiume said at the LEI Summit. Also, goals should be elastic. That means recognizing improvement even if the ultimate target isn't met, says Fiume, a retired vice president of finance and administration at The Wiremold Co.
At Ross Controls, a maker of pneumatic and hydraulic controls, the lean transformation took hold when company COO John Smith hit employees with a dose of reality. "At first, people said, 'It's kind of like you're threatening us. What you're telling us is that we either need to get better or you're going to close the place,'" Smith recalls. "The line I used quite often was that if we cannot be competitive here, we will be competitive somewhere else. This is what the customer is telling us."
Smith says initially he didn't effectively communicate the "why" part of the company's continuous improvement effort and focused too much on lean tools, such as 5s, and not enough on the procedures. So Smith spent time with union representatives and the management team to help the two groups understand each others' roles.
"So many people have what I would call a weak structure, but they expect great things from the tools and rules," he says. "If they focused more on what their structure is, I think they'd be surprised."
Now instructions such as product design are documented and descriptive enough that almost anyone can understand how to assemble the component, Smith notes. When problems do occur, all groups involved in the process are brought together in a kaizen event to identify the root cause without scolding or preaching.
"What you don't do is chastise the people who may have created where that problem might be," he says. "You have to demonstrate that it's about the process and not the people. When they see it, then they believe it."
Getting Supplier Buy-in
Boeing seems to have resolved most of its in-house lean disruptions, but the 787 delays highlight the need for tighter supply chains. The company already addressed some of these challenges when it entered into a contract for the first time with a supplier that states both companies will work on lean together, which Corvi adds was not in response to any of the Dreamliner setbacks.
"The strategy is founded more on how do we move ourselves more quickly to leaner production processes that embrace and include our suppliers, and so the foundation for it is more of a lean management system -- not a reaction to changes or results of any of the issues we face with the 787," Corvi told IW.
While the new contractual agreement isn't a reactionary measure, the company may rethink future vendor responsibilities in light of its current struggles. The company used nearly the same supplier base that it has on previous flight programs but outsourced more of the major design work. "We've learned since that some of their depth of experience wasn't as great as we had assumed it had been because they've always been very reliable and good suppliers for us, but we expanded their work statement beyond the more traditional work statement that we had asked them to support," Corvi says.
Based on that experience, Boeing will evaluate some of the functions it outsources and "be very conscientious about applying lessons we've learned on the 787," says Corvi.
By transferring so much of the major component design, Boeing has become in essence a project management company rather than a lean manufacturing operation, says Meyer, co-author of the book Evolving Excellence and founder of online lean resource center Superfactory Ventures LLC. "The bottom line is managing that complex of a supply chain has led to a lot of Boeing's current problems on the 787," he contends.
In contrast, the lesson high-tech manufacturer Hewlett-Packard Co. learned through its supply chain relationships was to share risks and rewards when entering into contracts with suppliers, says Christian Verstraete, senior director of manufacturing and distribution industries solutions at HP. About seven years ago the company started a procurement risk-management program. Instead of entering into variable-quantity contracts in which the vendor assumes all the risk if product doesn't sell, HP now agrees to more fixed-quantity contracts supplemented by a variable contract if the company sells more than the set amount. In turn, the supplier can provide a better price because it has little or no risk.
"We make our partners feel like they're part of the deal," Verstraete explains, "and that has helped us save money, ensure the supply and build loyalty with suppliers because they realize that we take care of them, without on the other hand being so complacent they rip us off."
Verstraete admits that this may not be considered truly lean by purists but says many of those naysayers are "lean bigots." "To go lean, they would strip everything off, forgetting something may go wrong," he says. "So we're looking at lean and at the same time looking at risk mitigation."
Polaris Industries Inc., a maker of all-terrain vehicles and snowmobiles, realized quickly when it began implementing a Web-enabled supplier performance tracking system in 2006 that trading partners need to be involved in lean supply chain planning. The company's "plan-do-check-act" database includes more than 300 of its 450-plus suppliers. Data included in the system range from supplier instructions on how to stack packages on pallets to carton dimensions and weight.
Polaris supplier Stern Industries Inc. wasn't prepared for the additional legwork when Polaris' data-collection effort began, says Ron Kobes, logistics manager at Stern Industries. The company was required to answer as many as 25 questions on a given part number and get its 19 suppliers onboard. "We weren't given information. We were just told to do it and had to explain it to our suppliers and get buy-in from them," Kobes says.
Stern Industries requested more meetings with Polaris, which helped the company gain a better understanding of Polaris' expectations and how to proceed. "Anytime you ask anybody to do something that requires a lot of extra time and work and effort, everybody wants to know why," Kobes says.
While the program hasn't provided much if any benefit to Stern's operations, it's begun paying off for Polaris. Among its achievements is an increased supplier fill rate at its Osceola, Wis., plant from 67% to about 90%, says Molly Rossini, logistics project lead, Polaris Industries. The Web-based scorecard has helped the company identify the worst-performing suppliers and assemble teams to work with those partners to improve their fill rates.
Eventually, Polaris plans to incorporate its international suppliers into the system, but Rossini realizes that will present new hurdles because of cultural and language barriers and the visibility challenges inherent with tracking overseas logistics. The company will likely roll out a pilot program to three international suppliers and focus on gaining improved visibility into their operations. Polaris will hold off on altering route designs. "We want to make sure things happen when they're supposed to," Rossini says.
