Boeing’s Great Supply Chain Mismanagement

Boeing gets grip on 787 supply chain with upsized jumbos

Read more:

According to Boeing officials and reports, they have begun to take back into organization their supply chain management. Their new hook on their global supply chain will increase production of their new, “Dreamliner” jets. On there other hand, there are many people who believe that this increase in production from new supply chain management will, “expose new supply bottlenecks” (Kelly, 1). Boeing has had past trouble with their deadlines on production. They have numerously delayed their scheduling because of management issues. Boeing has had, “difficulties managing 325 suppliers building parts for the 787 at 5000 factories worldwide” (Kelly, 3). Boeing plans to raise their carbon-composite jets per month by one and a half. This target increase in production is expected to be very difficult to achieve, but they believe it is possible. Jeffery Luckey, a supply chain management executive at Boeing, said, “We are currently on a path to achieve ten [per] month” (Kelly, 7). This jet’s production is the most outsourced in Boeing history. One company outside the US working on the jet is the Fuji Heavy Plant in Nagoyia. This plant is the sole supplier of a one-of-a-kind fuselage needed for the Boeing jet. Boeing’s planned production increases will increase strains on suppliers such as these creating new bottlenecks in the supply chain (Kelly, 8-9).

As we have learned from chapter 11, bottlenecks can be created when there is one process in the production that is essential to the product and can take a long period of time. Boeing is seeing new bottlenecks appear because of their increases in production scheduling. It is interesting to see how new supply chain management problems occur and what implications they can have on outsourcing and global supply. Boeing, if their production process is going to fit their production schedule, needs to manage the new bottlenecks that are going to occur because of their increased demand. They will have to take into account the abilities and capacities of their suppliers when making there forecasts, and release work orders at the adjusted rate from the bottleneck. One idea Boeing could look into would possibly be searching for methods to increase the capacity of their bottlenecks so that overall system capacity can increase. Moreover, changing production forecasts and changing supply chain management strategies will always require adaptations to resulting problems such as new bottlenecks, starving, or blockings.

Boeing has been increasing their production schedules because of increased demand for their 787 Dreamliner Jets. They are forecasting higher production rates despite possible bottleneck problems and other supply chain management issues. Do you believe that Boeing should take outsourcing needed for these increases in production into account? When using supply chain management to maximize shareholder value, should the ethics of outsourcing always been taken into account by managers? Do you believe Boeing will be able to effectively manage their vast supply chain in filling the 824 orders for Dreamliners and Dreamlifters?

Boeing Dreamliner Jet

A weak link in the chain

Companies all of the world have created enormous supply chains to meet the ever increasing demand of the public. These supply chains are global and consist of manufacturers from many parts of the world. As we have learned in Chapter 2, Globalization is a big part of the operations strategy for many companies as it is a great way to increase profits and grow your whole company. Improving a supply chain is usually done by locating facilities closer to unique resources which in turn lowers the costs of production and allows for more profits. Steve Culp, the author of the article “Supply Chain Risk a Hidden Liability for Many Companies”, explains that  global supply chains have a risk factor involved that companies should pay attention to. This risk factor is what creates the weak link in the chain.

The risk factor is created by the possibility of disastrous events. Whether it be an earthquake, a flood, or a tsunami, the results are devastating. As an example, the article states that the flooding in Thai created shortages in hard drives that lead to millions of dollars worth of losses for electronics manufacturers. Surely this can null any previous savings that are established by outsourcing part of the production process, but at the same time this risk needs to be looked at face value. Companies need to balance the efficiency and low cost that they desire with the risk that they are willing to take. The article gives a couple of suggestions on how to assess this supply chain risk. Out of all of the points, one stands out the most. Companies should integrate risk management into operations planning and management. This would allow risk to flow into key supply chain decisions. If supply chain risk is accounted for, companies could even set some of their profit aside as a way of dealing with the potential loss in the future.

It is all seemingly  based on luck. Take two hypothetical companies, Company A and Company B. Company A only focuses on low cost and chooses suppliers based on that factor while Company B chooses suppliers based on cost and risk. If no tragic events happen, Company A will be in the better position in the marketplace and make more profit. However if tragic event halt the production of Company A’s suppliers, Company A could possibly lose millions of dollars which could result in a net loss during the current period. Because of the random factor of these events, I think that many companies will opt to just ignore the risk involved and focus on making as much profit as they can. In my opinion, ignoring this risk would be a big mistake.

What do you think, should companies incorporate supply chain risk into their key decisions on which suppliers to use?


IPhone 5 Apple Maps VS. Google Maps

In 2007 Apple introduced something called an IPhone which changed the world forever. Each year since 2007 Apple has been releasing new models of the IPhone. This year there newest addition was the IPhone 5. The IPhone 5 is the fastest and thinnest smart phone in the world.  Apple sold over five million units within the first couple weeks.  This is more than the amount of IPhone 4S that were sold in the opening weeks.

The new IOS6 firmware that was introduced with the IPhone 5 came with a few changes. A lot of people weren’t happy with some of these changes. One of the biggest shockers for users was that the maps application was changed. The previous five IPhones used Google Maps. Google Maps has been the leading maps application for smart phones for a while now, ever since they passed Yahoo and MapQuest.

Apple introduced its own Apple Maps application with the release of IOS6. There have been many complains about this new maps application. People have been complaining that:

  • The application has fewer details
  • There is no longer an option to select public transportation
  • There are misplaced landmarks

These issues aren’t really that big of a deal. Apple was looking at the overall picture when they decided to make the switch from Google Maps to their own. It took Google years to make it to the top of the market with their maps application. People shouldn’t be surprised that apples maps application is not as good as Google’s. The reason is because Apples application is still new. I’m sure that if consumers give Apple some time they won’t be disappointed. For years now Apple has been coming out with mind blowing innovations and I feel that there maps application isn’t any different.

People have been too busy complaining about the small issues that they don’t even realize that apple added the one thing that most users were asking for, turn- by- turn navigation.  Apple couldn’t keep Google Maps because Google only allowed turn- by- turn navigation on android devices.

I feel that Apples quality and effort can’t be beat.  They have been making top quality products for years and I feel that this is never going to change.–finance.html


McDonalds Supply Chain

Over the summer, I had a chance to interview with McDonald’s supply chain department for an internship. In this interview, I gained a vast amount of information about McDonald’s supply chain. McDonald’s focuses on three main concepts in maintaining the supply chain that helps 14,000 restaurants in the United States run smoothly: ethics, environment and economies. This goes hand-in-hand with another philosophy McDonald’s has, called the three-legged stool method. This method is unique to McDonald’s business, incorporating achievement, trust and “personal”.


When it comes to McDonald’s supply chain, the main focus is bringing food from cow to plate. This is a short way of saying that the company wants to know every detail about how their ingredients are brought into the restaurants. McDonald’s has such a great relationship with their suppliers that they trust them enough to have no written contracts with them. Of the 14,000 United States restaurants there are, no contracts have been written up to ensure that every restaurant has beef, for example, each day. This is pretty impressive. McDonald’s also tries not to completely knock out a supplier’s entire crop and make it so they cannot work with them again. The company always tries to gain a lasting relationship with all of their suppliers; this is a great thing for the farmers and is also a positive for farmers to keep these long lasting relationships. The relationships between McDonald’s and their suppliers are the center to the three-legged stool method.


Another interesting aspect of McDonald’s supply chain is how they decided what menu items are available. For example, over the summer, McDonald’s offered Blueberry Banana Nut Oatmeal as a breakfast choice; however, the oatmeal has been in the works for a long time. Before it could hit the nationwide menu, though, McDonald’s needed to find enough suppliers to grow the blueberries that they would use in restaurants. Since McDonald’s is such a large market, finding some of the fresh ingredients can become a problem. For example, if McDonald’s wanted to create a Pineapple Salad, they would not be able to because the pineapple supply in the world is not large enough to supply all of McDonald’s restaurants.





Amazon and what an amazing Inventory tactic. VIDEO clip attached.

Amazon and what it is one of the most innovative inventory techniques.


Amazon is such a huge global online store. It started as a bookstore, yet today you practically can buy anything. One of the main reasons why Amazon has become so successful is because of their inventory tactics and fast delivery. They have partnered up with UPS which brings out a great example of a business to business model.

In class, we focused on two questions that ties down to inventory:

1. How much to order?
2. When to order?

In addition, we discussed 4 types of inventory:

1.Raw Materials
4.Finished goods

Amazon strictly deals with finished goods. What makes them so successful is the way the business operates. Many people would not think of amazon as an assembly line, in fact, it sort of it. The way it works is that an order is being placed. One person would tag the box with the order, the second would go around the warehouse and packaged the order goods, 3rd would label the box and drop it off at the shipping station.

In addition, many of amazon products are at your home. Customers have the option of selling their books and more through amazon. This way, amazon acts as the middle man. You are solely responsible for shipping your good. Amazon will charge you a small fee for using them as the selling vendor.  Because of the way Amazon does business, they are extremely efficient when it comes to inventory related costs. Correct me if I am wrong, but one of the only costs that Amazon may be concerned about for some items are Holding or Carrying costs. Some of the products will never sell. Will Amazon just drop the price of the product or completely destroy it because the carrying costs exceed the projected revenue?

Many of you may not know, however, Amazon was the inventor of the “Shopping Cart.” What a great invention that almost every online vendor took advantage of.

Lastly, I believe that Amazon sparked the popularity of online shopping. Because of the world wide shipping, convince and such a wide variety of product and low prices, there is no reason for you to leave your house to order your favorite book or DVD. Amazon actually, is one of Wal-Mart’s main competitors. I think that one day, the popularity of online shopping will exceed the need for BestBuy and Wal-Mart. It’s only the matter of time.

Wal-Mart and the Successful Supply Chain Management

We all know that Wal-Mart is one the most sucessful companies out there with one of the best supply chain’s ever created. The University of San Francisco wrote up an article on the techniques that Wal-Mart uses to become sucessful and they are exactly the same techniques that we learned in class.

Wal-Marts cost saving methods are always passed down to the customer as the costs associated with their supply chain is minimized.

Their success comes from:

  • Cross Docking
  • Demand Planning
  • Forecasting
  • Inventory Management
  • Strategic Sourcing
  • Distribution Management
I looked up cross docking to get a better understanding of what it is and how Wal-Mart uses it and it is a technique that replenishes inventory. Cross-docking is when inventory comes from the supplier directly to the retailers warehouse and then turned around and shipped out on trucks to the retailers store. This minimizes shelf time and inventory costs that Wal-Mart would of had to pay.
In addition, supply chain managers at Wal-Mart focus heavily on demand planning and forecasting like we did in class in order to acheive “lean inventory”. They focus on historical data, upcoming sales, and trends in the indsustry to predict the inventory levels they need.  They then forecast out their predicitons to make sure distributors have just the right amount of inventory on hand to reduce inventory costs.
One of the best ways Wal-Mart gets the lowest prices though is it vendor partners and the long-term contracts established with them. Since Wal-Mart is a market leader in retail sales, vendors are forced to agree to low margin, high volume sales to Wal-Mart if they want to stay on the retailers shelves.
One of my first accounting jobs was working at a online computers parts retailer/wholesaler. We had a few warehouses connected to an office and this gave me my first insight into supply chain and inventory management as I was involved in purchasing as well. Initially, our inventory system was out of date as we used a periodic system that was time-consuming and expensive. Our inventory mangement became more efficient when we ordered a SKU system to keep a perpetual count of what we had. Our hot-selling or our “A” list items were constantly being re-ordered and our inventory became much more lean to the point where we were restocking huge shelves every week. We used histroical data such as Black Friday sales and upcoming promotions to know how much to stock and also became a volume buyer to achieve the lowest prices.
Have you had experience being in a purchasing department and measure the inventory volume that needs to be purchased?


Whole Foods Taking Over

Whole foods is probably the most well known company for selling organic products.  The companies strategy of selling natural foods has paid off and they have grown into an impressive organization.  The company is growing so large that it has been looking for smaller organic only companies to acquire.  Whole Foods recently had a merger with Wild Oates, a competing organic only store.  Although this may be a good thing for whole foods and advocates of all natural diets, it may hurt the farmers that have been supplying the smaller stores.  Because of Whole Food’s rapid growth they plan to consolidate their suppliers so that their supply chain will be more efficient.  This will mean that some of the farmers providing organic products will be dropped and they will not have another market to supply.  This would be very costly to these farmers because they most likely have dedicated much of their lives to their farm and a career change may not be an option.  Many people support organic products not only for the health benefits, but also for the benefit that it provides to small farms.  It makes them feel good to know exactly where their food came from and grew it.  They also feel good that they are contributing to the farmers livelihood.  Organizations like the Organic Monitor are worried that the lack of competition that whole foods faces will mean that many farmers may be out of work.

Instead of maintaining the many relationships that they now have with suppliers, whole foods wants to stream line and go with a few long term suppliers.  The fewer competitors that Whole Foods has the more power they have to choose who they buy from.  If they think a farmers prices are too high then they can just move on to the next farmer.  That farmer will have no one to sell to and other farmers will be competing for whole foods business.  Advocates of organic food are concerned that Whole Foods is monopolizing the natural foods market.  They are worried about the effect on the suppliers and also about smaller organic food stores. Whole Foods’ strategy may ultimately lower the price of organic foods and make it more widely available.  The could mean that it may be beneficial as a whole for our country, but it may hurt some smaller communities.  Would it be worth sacrificing some farms to make organic food more affordable and accessible? How could Whole Foods make their supply chains more efficient while still maintaining all of it current suppliers?  Would the opening of more organic food stores solve this problem by increasing competition for suppliers? Could the consolidation of suppliers compromise the quality of organic products or would it make them more reliable?

A poka – yoke yogurt



In our last class our professor discusses the concept of quality and attractive   packaging and how attractive packaging will distinguish a product from another product, which will lead to customer satisfaction. she show us how Heinz Ketchup design their small sample, which is really an attractive packaging and it was the first time to me to see that sample , these concept encourage met o see some of the leading product in Saudi Arabia marker and see dose the quality and  packaging really matter and Is it a part of operation manger work? I’m going to talk about al Marai Company; almarai is one of the biggest food exports in the Middle East, with consumers who see its product as a synonym for freshness and quality.

  Today, almarai is capable of serving top notch products to more than 43,500 outlets within the GCC on a daily basis.  , it is really a big operation to process it in one day, important to note that demand for food in Muslim countries increase during the holy month of RAMADAN. Demand for juice in KSA, for example rise by 20%. In addition, demand for food in KSA increasing during the Hajj season, which occurs 2 months after the end of Ramadan.

  One of the important reason for almarai to have these big operation is the high quality standard to produce their product  one of the method the company is implementing is a poka yoke technique which is to correct possible defect plus source inspection to prevent defects equal zero quality control, poka yoke help the operation manger and worker to process work right at the first time. These techniques can drive defects out of products and processes and substantially improve quality and reliability. It can be thought of as an extension of FMAE. It can also be use to fine tune improvements and process design form six- sigma. The use of simple poka-yoke ideas and method in product and process design can eliminate both human and mechanical errors.

 Almarai chooses combifit for its juices and yogurt, which was a turning point for the success of the company and it was an innovative packaging, the company decided to package its entire range of 1 liter long life juices in combifit premium cartons with combiTwist screw cap. This attention grabbing packaging offer Almarai the opportunity to position its products on retail shelves in a very eye catching way, really sitting it apart from the completion, which is perfectly packaged for customer tastes. ALMARAI has always been synonymous with freshness, quality and service. As an international organization, Almarai has also contributed significantly toward shaping the FMCG( fast moving consumer-good ) industry within the middle East. The company processing and distribution activities within the Middle East are unparalleled.

 The commitment to quality has not wavered since the company’s inception. The company has continued to invest in technology advanced production facilities and recruit right caliber people to better serve their coustomer.  

 Finally, Almarai is the first dairy farm in the world to have been accredited with ISO9002; Almarai also received the ISO9000award, across all its operating division including processing, technical research and development. Destruction and supply chain.

So do you think that packing is an important method to attract the customer? And what is more important the packaging of the product or the quality of the product it self?



 almarai qualty

 almarai watch watch