Featured case: Boeing’s Strategic Initiative:
Raw Material Supply Chain Risk Mitigation

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The case

AndrewBurgessWho – the protagonist

Andrew Burgess, Senior Manager of supplier performance for aircraft materials and structures at The Boeing Company.

What?

Boeing is a global leader in the design, manufacture and sale of commercial and military aerospace equipment.

Why?

Boeing BuildingAluminium and titanium are key to Boeing’s raw material production, so if they couldn’t obtain the material they needed to produce parts, airplanes couldn’t be built.

The risks urgently needed to be mitigated as Boeing were at risk of losing supply from one of its largest titanium mills in Russia, with the US Government looking to ramp up trade sanctions on the country.

When?

In 2014 and 2015 Boeing paid over $2.6 million in penalty charges for failing to meet minimum mill scrap recycling requirements.

By 2017, Boeing was collecting almost all of its recoverable titanium scrap, but around 60% of the scrap was classified as non-recoverable.

Where?

Boeing is the top US manufacturer exporter, supporting airlines and government customers in 150 countries.

Key quote

“Boeing relied on suppliers to deliver millions of parts on time and at an acceptable quality standard to assemble airplanes for timely delivery. If even one part was missing, planes could not be delivered, making supply chain risk assessment a critical part of Boeing’s strategy.” – excerpt from the case.

What next?

Andrew faced a number of questions. How could the company better forecast its raw material needs? How could it rework its PRA process to better suit raw material mills? Could it better limit errors in the ordering, processing and shipment steps of the supply chain?

The author

Prakash Sathe

Prakash Sathe

Prakash talks about Boeing being the perfect case company.

Placing things into context

Prakash said: “Students really enjoy the realistic context of the case study. This case provides adequate facts and data, so that students can quickly grasp the serious threat to Boeing of raw material supply disruption from aluminium and titanium mills. They appreciate how a large, global, high technology company like Boeing can be quite vulnerable to basic metal supply and demand. Also, the name “Boeing” itself adds to the cache of the case.”

Perfect case

Norwegian Airline Boeing planePrakash continued: “The case was written and published prior to the public disclosure of the full extent of the 737 Max problems. In retrospect, I think it is a perfect case to analyse.

“The analysis reveals that Boeing is an extremely well-run company and has good management systems in place to run their business, albeit these management processes can always be improved. The case provides students opportunities to identify these improvements.”

Data rich

He concluded: “I think cases in the Production and Operations Management field have certain vigour and vitality. They are data rich and usually describe real life situations that students can relate to.

“Personally, I am biased towards Production and Operations management issues because this is where “all the action is.” This is where companies produce products, provide services and contribute to the well-being of society.” 

About the author

Prakash Sathe is a Lecturer of Industrial and Operations Engineering at the University of Michigan.
 
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