Horse Meat and See-through Yoga Pants: Supply-Chain Failures

Education Opportunities

Most students after graduating college will go to work full-time. For those students who want to continue their education either through an M.B.A or specialized Master’s Degree the options are countless. Many students may turn to an M.B.A or another common Master’s degree. However, one of the fastest growing fields in business is for individuals with degrees or experience in supply-chain management.

Supply-chain management is a broad term that incorporates numerous elements of business including leverage, communication, efficiency, innovation, risk management, and continuous improvement. These elements are used by supply-chain managers in procurement, transportation, inventory, and forecasting to name a few. Also, supply-chain hires will find themselves conducting supply-chain analysis, which can incorporate fields such as engineering, analytics, and operations.

Why Supply-chain Management?

As our economy and the economies of the world have become globally focused, supply-chain management has become a necessity. Multinational corporations and global partnerships have opened the possibilities of receiving goods from around the world at the blink of an eye. These new possibilities give businesses and consumers greater opportunities, and access to products at prices never before seen in a free-market.

However, as stories of horse meat in European stores and see-through yoga pants have become more common, managers are turning to supply-chain personnel to prevent these embarrassments from happening again. These negative story lines hurt a companies bottom line and reputation, which can have long-term consequences. By leveraging supply-chain experts a company can help their bottom line and customer service.

If interested, below is a brief overview of supply-chain management through the operations of a lemonade stand.

Supply-Chain Management Failure

One example of a supply-chain management failure, as we talked about in class, is the example of Boeing and the 787 Dreamliner. Boeing increased its outsourcing from about 35-50% on the 737 and 747 to close to 70% on the 787. The supply chain that Boeing had in mind was one that would keep cost’s low and spread the risk proportionately between themselves and their suppliers. Unfortunately for Boeing, this strategy backfired due to poor supply-chain management. Ultimately, this led Boeing to run billions of dollars over budget and caused years of delays.

If a company as large as Boeing can have supply-chain management failures, any company, large or small, can experience similar failures. By hiring individuals with a background in supply-chain management companies are hoping to counteract the potential issues related to supply-chain management.

Increasing Supply

Below are some new programs offered in supply-chain management to meet increased demand.

School Location Program Year Started
University of Houston, C.T. Bauer College of Business Houston M.B.A. certificate in supply chain management 2011
Rutgers Business School Newark and New Brunswick, N.J. Undergraduate major 2011
Bryant University, College of Business Smithfield, R.I. Undergraduate major and M.B.A. specialization in global supply chain management 2012
Governors State University, College of Business and Public Administration University Park, Ill. Online M.B.A. in supply chain management 2013
Portland State University, School of Business Administration Portland, Ore. M.S. in global supply chain management 2013
Texas Christian University, Neeley School of Business Fort Worth, Texas M.S. in supply chain management 2013
University of North Carolina, Kenan-Flagler Business School, and Tsinghua University Chapel Hill, N.C. and Beijing Global Supply Chain Leaders Program—M.B.A. from Kenan-Flagler, Master of Engineering Management from Tsinghua 2013
University of Southern California, Marshall School of Business Los Angeles Online M.S. in global supply chain management 2013
Arizona State University, W.P. Carey School of Business Tempe, Ariz. M.S. in supply chain management or M.S. in supply chain management and engineering 2014


Would an advanced degree in supply-chain management be of interest to you? Do you think supply-chain management can help companies overcome global issues?

Boeing Proves More Issues with the Dreamliner

Business Week this past week posted a story about Boeing’s 787 Dreamliner and the most recent issue that occurred. Whether it has been issues with the batteries catching fire or the most recent fire on the Ethiopian Air 787, it appears to me that poor project management is to blame. We continue to talk about risk management in our class, but if the Boeing project manager for the 787 was doing the job properly, then I would guess that the issue would have been fixed in January when the initial fire occurred. The article stated that Boeing redesigned the lithium ion battery packs, but last week’s fire on the 787 proved that their are possibly still issues with the 787 Dreamliner.

The incident last week caused Heathrow Airport to temporarily close some runways and re-route some flights. The costs for this latest incident will be large, not only due to the re-routing and delays, but to the share price in Boeing stock. It did seem like the response to the issue was very quick, so perhaps the risk management plan was ready for this type of scenario with a backup strategy in place. Officials were sent right away to check out the issue in person and tweets were sent right away to confirm that no one was hurt and calm the public.

On a side note, it was interesting to learn that the Boeing 787 Dreamliner was not built in the traditional manner, but instead completed subassemblies from suppliers were delivered to Boeing. The use of pre-installed systems shaved off time for the final assembly of the airplanes. In an industry where delivery time is huge, this can account for a large cost savings in the final project, especially since this could limit the amount of extra labor needed to complete a project on time. It doesn’t appear that this was a cause of the issues that the Dreamliner has seen, but it can be difficult to manage quality when you are sourcing from an outside company. As a manager you to decide between shorter time period of final project to market versus the extra costs incurred, but you also need to look at the extra risks that can occur as a result of outsourcing or shortening the time of individual activities in the production process.

I wonder what the Boeing risk management process was and if it was amended after the last fire that occurred as a result of the ion batteries used in the plane. Do you think that Boeing could have eliminated the risk of the most recent fire? Do you think that the Boeing project managers have worked through these technical issues with the 787 Dreamliner or do you expect that this will happen again?

Flying High with Project Management

As my closest friends know, I am a huge airplane buff. I love aviation and really love to follow the large aircraft  manufactures as they develop the next generation of planes to transport millions of people a day. Recently on the Financial Times of London, there was a great article talking about the ongoing war between Boeing and Airbus to gain control of the wide body aircraft market. For those of you that do not know, a wide body aircraft is for the most part one that has more than one aisle running the length of the aircraft. Currently, examples of this type of plane would be the 787, 777, 747, A380, etc. They are needless to say very large aircraft and occupy large air routes.

Long-haul contender: the twin-engine Airbus A350 is rolled out of the factory in Toulouse. The manufacturer is hoping to stage a fly-past at the Paris air show

Many individuals that pay attention to the news will hear stories about endless delays for these manufactures in their development of new aircraft due to any number of reasons. Something that occurred to me is that while many of these delays can take headlines, they are really a larger product of poor project management practice. It is absolutely true that aircraft have a very very long lifespan within the marketplace and traditionally, a new product is on the market for 20 or 30 years at a time. This timeframe supports the extensive time and costs that are required to bring a new product to market that truly revolutionizes the marketplace and well as providing a product that provides business justification to airlines to purchase these new fleets. While these timeframes are very long, the recent trend has been to experience extreme delays in these developments and more importantly, in customer delivery. I have started to ask myself if these firms are starting to reach an unrealistic view of the requirements in the developments of these next gen products.

787 wide body interior
787 wide body interior

Bringing two perfect examples into context, both Boeing’s 787 Dreamliner and the Airbus A350 are two of the most recent entrants into the marketplace and both are constructed of something called carbon fiber. This technique allows for extreme strength of the airframe while significantly dropping the weight on the aircraft. Additionally, both of these aircraft are being constructed using a significantly diverse supply chain as opposed to more traditionally held models supported by the manufactures themselves. The project timeframes were simply unrealistically constructed and did not take into account the possibility of things going wrong all over the place. This delayed both aircraft by literally years as problems had to be worked out in both design and the supply chain. This is becoming a chronic trend for these firms and quite frankly in my opinion, these issues are ripping down their reputations.

The question to all of us project manager students is simple. When we are working on our own development schedules, how do we intend to build in time for the foreseen and unforeseen issues that can occur and what do we do when we are faced with such troubles both from a management and reputation standpoint?


Big guns blaze in wide-body war

Flying Through Quality

Boeing 787 (Google Images)

Quality is an important factor when producing goods and services. Each organization sets its own quality standards based on customers’ demands and needs. If we look at quality from the customers’ perspective we will want to have products that we can rely on when using them, otherwise if the product is defective we might want to stop using it. On the manufacturers’ perspective if the customers are unsure of quality on their products, it is their job to make the necessary adjustments to make the product attractive to the customer again.  When the situation is created by defect on fabrication it can mean big amount of money losses for the manufacturer, therefore it should work on fixing the defects as soon as these are detected in order to avoid bigger losses and not get their reputation hurt.


An example of a company restoring confidence in its product is Boeing and the battery problems that its passenger jet 787s has been facing since January and that it cost them to stop flying them. According to an article in the New York Times by Christopher Drew and Jad Mouawad, the Federal Aviation Administration approved in April the company’s plan to fix the batteries of 50 jets that where delivered at that time. The authors explain that the lithium-ion batteries problems were detected when two of them had overheated in two different jets. As soon as the problem was detected its engineers worked on finding the causes of the defective batteries and the best approach to fix it. Collection of data was necessary to support the changes and come up with a plan.  Luckily, the 800 orders that were already planned for the plane were not affected, the authors explain, since it promised a 20 percent fuel savings. After collecting data and analyzing it, the company decided to send several technicians around the world to fix the batteries and install the new system which includes better insulation and other features to prevent batteries incidents (Drew and Mouawad). The article goes on by explaining that even after this efforts by the company to fix the problem, Japanese airlines have asked for more assurance that the incidents will not be likely to happen again or at least detected by introducing monitoring systems for the batteries that would send information about the batteries conditions and replacement of them every certain time period. All this efforts are done in order to recover the customer’s confidence.

We can see in this example how a defect might represents serious consequences in the company’s reputation and generate monetary losses. This illustrates the importance of having systems that monitor the quality and processes on production and if problems are presented look for the causes and fix them as soon as possible.

Do you think Boeing’s approach to solve the problem was appropriate? Should the company provide monitoring systems that Japanese airlines demand or do you think is enough just by replacing the batteries and the insulation system implemented?



Boeing, flying high once again?

After 15 months and millions of dollars spent, the Boeing 787 Dreamliner has resumed commercial flights. The groundbreaking jet, introduced in July 2003 was dubbed as the next generation airplane that would revolutionize the way air travel operated. Soon after preliminary flights, major aircraft corporations began to notice technical and mechanical issues that affected the reliability of the jet. These problems resulted in flights being delayed and cancelled. In January, two 787s owned by Japanese airlines experienced burning batteries that would later ground all 787s.

Prior to the grounding, delivered 787s logged a reliability rating of 97.7% (23 delays/cancellations out of 1000 flights). This result was comparable to the long tested and proven 777 that that 787 aims to replace. As technology expands, systems become more intricate and coincide with higher rates of failure. The 787 is an example of new age lithium-ion batteries, electrical systems, and computer systems that alter service requirements. This plane alone requires 10 times more power during startup than traditional Boeing planes, computer and electrical systems to be turned on three hours before each flight, and scheduled maintenance in between each flight.

During this downtime Boeing continuously has been mass producing these airplanes to fill the 800+ orders that have been filed from 50+ customers. By April 2013, 50 planes have been built and delivered to their respective companies. However, this plane does retain more positives than negatives, thus accounting for the 800+ orders. With this new technology, the planes will be able to be serviced in as little as 45 minutes. This will allow for companies to keep their planes in the air instead of on the ground. In addition, new light weight materials have been used and new fuel efficient engines fitted on the wings that allow for longer distance flights without using more fuel.

Aboard the new computer system, Boeing has also included a transmitter that will upload the airplane’s data to a world-wide network managed by Boeing’s facilities near Seattle. This system will track each jet’s information, making it easier for mechanics to fix any issues that may have occurred during a flight. This system will also allow for Boeing to monitor necessary maintenance updates as well as be able to ground any planes that it deems unsafe to fly.

Years behind schedule and plagued with problems, the Boeing 787 did not have a successful start. Boeing executives believe that in the future years to come, this plane will be more reliable than the 777 and project a reliability rating of 99+%. The 787 is a key example of problems during the operations strategy of a company and their ability to overcome difficult situations that result in millions of dollars of losses. At this point the 787 is operational, but if similar problems occur in the future, Boeing may lose potential orders.

With so many problems occurring with the 787, do you believe that its main competitor (Airbus) may be regarded as a safer investment?

What do you believe lies in the future for the 787? Will it continue to experience more problems or will it beat the projected 99+% reliability?

Works Cited
Ostrower, Jon, and Andy Pasztor. “Dreamliner’s Other Issues Draw Attention; Boeing and Airlines Try to Improve More Systems After Fixing Battery Flaws.” Wall Street Journal (Online): n/a. May 20 2013. ProQuest. Web. 22 May 2013.

Is The “Dreamliner” Still a Dream?

Finally, “after months of headaches brought on by its 787 Dreamliner jet, Boeing Company is now back on track and even speeding up the production rate of the new airliner.”

This is fantastic news for the Dreamliner program being that starting from January 16th until late April of this year, all of the Boeing 787s had been grounded due to some safety concerns with the plane’s lithium-ion battery system. The influential aerospace company has stated that they have since increased the jet production rate to seven airplanes per month at one of its factories in Everett, Washington, and claims that the Dreamliner program is set to reach a further increase to ten per month by the end of the year.

Before the grounding, Boeing had delivered fifty of the Dreamliner planes to eight different airlines worldwide, including United Airlines, which is the only U.S. carrier that operates 787s currently. Today the Dreamliner program has more than 800 unfulfilled orders to 58 customers worldwide. Hence, the immediate need for Boeing to fix the jet’s design flaws and production challenges they were facing. The Federal Aviation Administration grounded Boeing’s newest and most technologically advanced jetliner until the risk of battery fires was resolved. During the time of the grounding order, Boeing had not been allowed to deliver any new 787 Dreamliner’s but continued building them. The company had to seriously look at the jet program’s operations and reevaluate some of their critical decisions.

The final assembly of the Dreamliner’s takes place at the Everett facility, but the bulk of the jet’s large components come from numerous suppliers around the world so the time putting these planes together is influenced heavily on the getting the parts in quickly. “There are about 50 suppliers in California alone.” But the major production slowdown was due to Boeing having to redesign the 787’s battery system due to some overheating incidents that had occurred. One incident even resulted in a fire.

Although “Boeing will not say how much redesigning, testing, and retrofitting the battery system has cost the company,” officials have stated that the cost was absorbed into spending $705 million in research and development during Boeing’s first quarter. The three-month grounding period of the Dreamliner created a 2.5% downturn in revenue for the company, which came out to be around $18.9 billion. Despite all the production troubles Boeing has encountered recently, the company now firmly states it is back on track to deliver more than 60 of the planes during this year as originally planned. But the question is whether the Dreamliner will now stick in the pubic’s mind as a troubled aircraft?

In addition to the increased production of the Dreamliner jet, Boeing has also increased production of its 737 and 777 jets and is forecasting to deliver as many as 645 planes this year, making this a record for the company.

Which types of critical decisions did Boeing have to reevaluate? Do you think that the grounding of the Dreamliner will or has had any effect on the company or the plane’s reputation? Which types of forecasting methods do you think Boeing is using in regards to their production ability and what other factors does Boeing need to consider?

Article Reference:,0,6024577.story


Boeing Dreams On

Boeing’s 787 Dreamliner, which is supposed to be the most fuel efficient Airlines, hasn’t stayed in the skies for long due to its lithium-ion battery issues. Recently, the 787 Dreamliners have had overheating battery problems in January due to which they had to halt services. Two of the aircrafts from Japan, one All Nippon Airlines and the other being Japanese Airlines, had to be grounded due to electrical fire in the batteries. Later, the entire 787 Dreamliner fleet was grounded totaling 50 planes, which has cost Boeing about $600 million.

Leading engineers and battery experts made alterations to the electrical systems. Boeing stated they put ten teams of about 30 engineers worldwide to fix the problem. The engineers covered the batteries in a stainless steel box. They redesigned the batteries to reduce the chances of short circuit. They installed new and higher quality batteries, battery chargers, and exhaust systems in order to help in the occurrence of overheating.

Boeing expressed that they went in great depths to discover the reason behind the problem; however, the quality control and maintenance sectors failed to detect the potential cause of the electrical fire. Furthermore, Boeing chairman and chief executive also stated that the repairs of these 50 planes will be finished by the end of April, and they will start deliveries of 787 in next month, May. He further asserted, “Our first priority in the days ahead is to fully restore our customers’ 787 fleets to service and resume production deliveries.” The plane will then be safe to fly, authorities have stated. But the question of the cause still remains a problem.

The Dreamliner has done good business, especially in Asia and the Middle East as they depend on long-range flights more and since the airline is made up of lighter weight composite materials and provides great fuel economy. But since experts could not untangle the enigma behind the fires, people may still be skeptic about trusting the safety of the planes. This could even result in people switching to planes with conventional technology rather than the innovative, yet malfunctioning 787s, which can highly damage Dreamliner’s predicted sales.

Moreover, Larry Loftis vice president and general manager of the 787 program mentioned that there is a possibility that they may never be able to find the real cause. Nonetheless, he declared that this calamity will not impact the expansion of other jets and “would not derail Boeing’s plans to double 787 production to 10 a month by the end of the year.” He even announced that this will also not postpone the upcoming edition of the 787, known as 787-9.

With that said, how would this affect the time ahead for 787? How would this tarnish its image and hurt future sales?  Should they alter their forecasted sales due to this incident?