INTRODUCTION got to compete with Airbus. Taking risks is



The Boeing 787 is a new aircraft built by Boeing a famous
company in America. The aircraft is built all around the world countries such
as: Italy, Korea and the UK. The plane uses composite materials which allow it
to fly further at a higher speed as well as allowing it to be more fuel
efficient. This important as now fuel prices are increasing more and more. To
allow the best sales, Boeing have had to upgrade the systems on the aircraft which
shows they are happy to change with the times to allow demand to increase as
well as profits. This is especially important due to the fact that Boeing has
got to compete with Airbus. Taking risks is what Boeing has decided to do and
what has come out is a very good aircraft that will sell very well.

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To allow the best sales for the new 787, Boeing has adopted
a marketing sales team. This team will go from country to country to go to
airshows like Farnborough. The sales team advertise the aircraft as well as
possible by showing the pros of the aircraft over rivals such as Airbus. The
787 can go on direct routes whereas the Airbus A380, which is much larger, has
got to go from hub to hub. The sales team can also state how the aircraft is
much lighter and has got two engines rather than four which means they can say
the plane has got more fuel efficient engines that is crucial for companies
such as British Airways who have got to pay for the fuel prices. The sales team
can also mention the fact that the aircraft is made out of lots of composites
which allows a higher cruising speed, more fuel efficiency and corrosion
resistant. This is important in a time like this as fuel prices sky rocket and
there is more wet weather. The sales team are crucial to give Boeing a
competitive advantage as they give the major pros over rivals and they be bias
towards their aircraft and don’t tell clients what other aircraft have that
theirs don’t.

(Fig 1 shows the fuel price increases)



The company have got a Human Resource team for the Boeing
787. They have to hire and fire people. To do this they look into each recruit
and do a test to see if the recruit is ready to work on building the
aircraft.  By the HR team doing these
tests they can see how the people do under pressure and whether or not they do
have the proper skills for the manufacturing of a product that is on a mass
production scale. The HR team may also offer a different role within the
company for that specific recruit to try and give the company as much of an
advantage as possible. The staff recruitment looks into people who want an
apprenticeship or work experience. To do this they would do an interview as
well as seeing if the person is perfect for the particular role. This team of
people is made of staff management and staff recruitment. The staff recruitment
I have already mentioned. The staff management give appraisals to each member
of staff which is used to increase the devotion to the company as well as
giving them an extra motivation to work harder to keep their job within the
manufacturing of the 787. If there is a bad appraisal then the staff management
team are able to support the particular recruit and show them where they are
going wrong and how. They can also re-train the person which allows a fresh
start for the person. The HR team provide a crucial impact to Boeing gaining a
competitive advantage due to the fact that they would look for the best people
for the company and who would make an improvement to the company such as
quicker methods of building or help increase the sales for the company. They
would give extra incentives to make sure all aircraft produced are released on
time and succeed in the flight tests.

Boeing has also got a specialised finance team. The finance
team are the people that look into each contractor who build the different
sections of the aircraft and see if they are doing a good job by looking into
whether or not each section is built to a good standard and whether or not each
piece arrives on time. The finance team have got to do this as they have got to
see whether or not each plane is having a profit and is on time. The finance
team had a pivotal role in the development of the aircraft due to the fact that
it had overrun the time scale and this meant the company were making a huge
loss. The finance team play a very important role within the company as they
are the people who need to make sure each aircraft is sent away for a profit
and that each subcontractor is on time with each piece that goes into the
massive jigsaw puzzle.

The next function is the manufacturing of products and
delivery of services. They would do all the crucial roles within the factory.
They put together the aircraft so that it can be given to the clients. There is
the forming side of the company who have to make each piece to the correct
sizes before joining them. Fabrication is the manufacturing of something. An
example of this is welding. The company need to do welding on many areas of the
aircraft so that each piece does not fall off after delivery. There is the
assembly process of the 787 which uses mass production. Each piece comes in at
certain times which allow some contractors to be later than usual. The aircraft
moves as it goes down the production line so the engineers working on the
aircraft have got to assemble each piece properly and quickly. They also do the
quality and control checks to make sure the aircraft is perfect and ready for
use by the clients. The manufacturing of products and delivery of services team
play an important role in the production of the 787 as they have got to build
the aircraft ready for the client and then check it all over so that the client
does not have to send the aircraft back. They also make an impact within other
companies as some engineers may be more experienced than other companies so
they would give Boeing a competitive role within the industry and make a higher
profit than other companies due to being early or on time.

I am now going to mention the next business function is
supply chain management. They have to outsource decisions and give supplier
appraisals. The have got to give suppliers appraisals as it would give them
ideas on how to improve. For example, Rolls Royce who supplies the engines.
Boeing may want more fuel efficient engines. If Rolls Royce are unable to
deliver this then Boeing would do an appraisal and they would mention this. The
supplier appraisals tell the company where they are going wrong and if they
carry on doing a bad job then the supply chain management can tell the company
that they have a limited time and then they would be removed. The supply chain
management also outsource decision. By outsourcing decisions the company are
able to find other companies to do components of which cannot be built within
the main company location as Boeing may not know what type of component is
needed and how to design it. A good example is the fixable and leading edges
which are produced by Spirit.  By Boeing
using other companies they can also keep costs to a minimum as they would not
need to spend more money on components they are not able to design and produce.
Boeing also adopted a brand new way of producing the aircraft. The reason the
supply chain decided to change the way the 787 would be assembled is to make
the production quicker and when a sub-contractor is late, the company can carry
on building the aircraft until the very final assembly.  Boeing did play a very risky strategy which
is never a good idea due to the fact that they could gain major losses as a
result. The team have got to play a brilliant role within the company as they
would look for many other companies to do jobs that Boeing are unable to do.
With the case of the 787 the supply chain management have had to look into many
companies other than themselves to produce the components as there would be too
much for them to do.

By doing appraisals as well the contractors would massively
improve as this is due to the magnificent role played by the team. They also
changed the way the aircraft is built so that there are no delays and the
aircraft comes out quicker.

(Fig 2 as seen below shows the new strategy)

(Fig 3 shows what Boeing used for the 737)


(Fig 4 as seen below shows the different places of which
sections come from)

The next business function is the Research and Development
team. R and D teams are found in every engineering company including Boeing. The
R and D team require market research. The market research found can be applied
to the R and D team who can then look at the aircraft and see how it can be
developed to make it better for the clients as well as passengers. The R and D
team will use the market research to find out the customers satisfaction. If
there is a specific area of which many companies have found the same issues the
Research and Development team can look into specific components and materials
and this would allow the company to get better. Then they would develop this
and see whether or not it fits in with the original aircraft. They are unable
to change too much as this would cause problems with production and as a result
Boeing will have a newly names aircraft rather than a 787. The R and D team
have got an important role when it comes to developing upgrades for the old
aircraft as well as helping with new aircraft. By Boeing having a full R and D
team employed the company are able to make clients happy and make more sales as
a result. With the R and D team not making too many changes the plane will
still be called a 787 but will have a different number at the end. This means
the companies will still be buying 787’s and there will be no losses.

The seventh operation is the purchasing team. This team of
people are employed as they will be the ones that are tasked with sourcing and
buying the raw materials for the production of the aircraft. The purchasing
team go to areas such as oil sellers and fabricators. The team would then see
if the items that are produced are to a good quality and then the purchasing
team would use them as a contractor. This is an easy way for Boeing to produce
the aircraft quicker as there are more materials now that the company can use
to build the final product. The purchasing team would go to different companies
and see who will do the best deal for the specific components. As a result that
company will be chosen. They would look into possible samples of the
subcontractors work and compare it to other samples. This could be the
difference to getting the contract or not getting the contract.




Most of the 787 is produced of composites such as carbon
fibre. The reason why Boeing did this was to increase the speed of which the
aircraft can travel at and also be more lightweight as a result. This also
allows the aircraft to be more fuel efficient and less likely to become corrosive
resistant. This would help improve the sales to aircraft companies. Also, the
weather is becoming more and more wet and it is only understandable as to why
Boeing would use materials to prevent the plane becoming wet and making
aircraft satisfaction be lowered. The purchasing team play a very important
role within the main production of the 787 as they are the ones who have got to
choose the contractors who will do a good job for a low price. By the
purchasing team looking into each sample sent by contractors and has got to
ensure the best but cheapest contractor for the job. The 787’s manufacture may
be in the balance due to the fact that the contractors work may be bad and that
is why a purchasing team is needed.

The operation that I am going to involve in this literature
review is the customer relations team. These people have the task to go out and
meet the expectations that the buyers are after. Boeing’s team of customer
relations are very good with the client’s expectations as they have got many orders
and delivered many aircraft. By meeting this expectation, the company can gain
more money from sales and sell multiple aircraft to the same buyer. This is
perfect for the Boeing considering the competition that the 787 has got. The
customer relations team may go to the client and see if the client is happy
with the aircraft and if not then they can go back and improve it. The customer
relations team also have to be proactive. As I said earlier on in this
paragraph I stated how the business function would ask the customer if they
were happy. The company have got to be proactive by asking customers for the
required feedback and in some cases they would have to anticipate common
customer concerns. The 787 team may ask the company what they have found and
this could be linked to many other companies. If there is a common issue then
Boeing could improve the 787 to make it perfect for the customers. The customer
relations team play a pivotal role to Boeing as they are tasked with staying
with clients to find out what they are after in the aircraft and if there is
anything wrong with the aircraft, what should Boeing do to improve the aircraft
for future sales. With a relations team, they could persuade the company away
and meet the expectations better than others.

The last operation I will be mentioning is the Resource
Management function. They are tasked with the sourcing for the funding for all
of the funding of the contractors as they would be the ones who will be
sourcing each and every component. They would have to identify the perfect ways
to fund from budgets. This is important in the case of the 787 as it is
produced out of many different components each different to some extent. One
piece may be more expensive than something else and this means the company may
struggle to fund it. As a result, the resource management team would look into
how much money the company spends and see if there is a cheaper way of doing
so. They also look into the resource allocation. This means they have to in
effect allocate each component that has been produced to a different project.
Due to how big a company Boeing is, they have got to have each component go to
the correct aircraft.  If there is an
engine for a 747 then they would not allocate it to a 787. If a component is
allocated to the wrong aircraft then both planes productions will have to stop.
The last factor that the Resource Management team have got to look for is the
stock that is available in the workshop ready for the production. They would
look into the stock and if there isn’t enough then it is down to this team to
buy more.

The Resource Management team have to play a pivotal role
within the company otherwise Boeing would not be able to build more aircraft
without the components. If there was no Resource Management team then Boeing
may make a huge loss on each of the aircraft built.

In the 787’s case, Boeing used design triggers to produce
the aircraft. Boeing used market pull and technology push for the new and
improved aircraft. Market pull is when a company produces a product in response
to the market. This caused by the demand for new and sometimes improved
products. With aircraft, airliners are after more fuel efficient planes and
that is why Boeing decided to use composites. The market pull may have been caused
by Airbus and Bombardier. Boeing would need to be launched to compete.
Technology push is a product that has been re-designed because of changes in
materials or new manufacturing methods have been found and the last option
would be new materials had been discovered. In the 787 case, Boeing had used
composites and that means Boeing used technology push as well to get the new
product out as quickly as possible to compete against rivals and give them a
bigger share in the market. This links in with every operation I have
mentioned. The reason I have stated this is because the 787 is a product that
is coming out of Boeing and the company needs to have every operation in order
to build a new product that will be sold. The purchasing team purchased the
materials. The market research team had to look into companies and ask them to
review and complete questionnaires on the new product etc. This is the same
with all the operations. This is a good reason on why Boeing need all of these
business functions within them. If Boeing had no business functions then the
787 may not have been as good a seller as it actually is right now. Without
business functions, Boeing would lose millions on just one aircraft and it
means they would give up and not sell the plane at all.


The next section of this assignment is based on the trade
considerations that influence Boeing. The trade considerations are based upon
the company using contractors. With Boeing, the trade considerations are very
important as it would take too long if every single piece was built by Boeing

The first trade consideration I will be mentioning is
tendering and contracting. Boeing decided to contract out which means they have
decided to use external suppliers to carry out many different activities such
as building the engines or the fixed trailing edge. Due to Boeing having these
contractors they have to say that they are out to tender. Companies such as
Boeing compete against each other to find the perfect contractor for the job.
In order to get the perfect contractor, the companies put in bids on how much
they would be willing to amount owing to. This is for operations such as
producing components. Some contractors can be different. They may provide
different specifications and this may allow for the contractor to make an
easier decision as this would mean the company, who are Boeing, can make an
easier choice as the contractor may provide the price and quality of components
being built. A low, high quality component is better than one that is low
quality but at a high price. With the contract, Boeing will have to make a
specification sheet and say what the contracted company have to do with clauses
and then an agreement can be made and as a result, Boeing would have a contractor
signed up.


Boeing introduced a new risk scheme to help out with the
contracting. If one company is late because they are unable to do something
then Boeing would delay the development schedule by pushing the whole
production back. This was a terrible decision as it meant Boeing lost millions
of dollars in the form of penalties of which was paid towards the companies
such as Air France who purchased the product.

The last point for the trade considerations is the
intellectual property rights. This is very important to a company as it is the
rights that Boeing uses to make sure their ideas and designs are not stolen
from different companies such as Airbus. This is in effect patents and
trademarks. By putting this on the ideas as well as the company name, Boeing
can sue any other company and use the patent to their advantage and win the
case as a result. With the 787, Boeing can apply a registered trademark to the
outer design of the aircraft which means the design is specialised and the only
one of its kind in the world unless used within the same company.


The last section of this literature review is to consider
how two these two previous tasks can provide a benefit to the company.

In order to gain the benefits, Boeing has adopted three
things. Innovating their ideas that need to be made better, new technology
which means they are adding different machines and managing the costs on
materials and everything else.

I am going to start by mentioning innovating. Boeing
develops everything on their aircraft to make it better and perform better than
other products from other companies. They also bring in new ideas which have
got to be more electrifying than the previous model which means companies would
want the product to replace older aircraft. By also adding more to their
aircraft, Boeing are more able to compete against Airbus and Bombardier. For
example, Boeing may introduce a new auto pilot idea which would be better than
the one on an Airbus. This new system will be better than the previous model
and this would allow more sales within the company as they would sell this
brand new feature to make more sales. Also, Boeing introduced a brand new HUD
system for the pilots of the 787. This brand new feature allowed pilots to see
through areas that people cannot see through normally such as clouds. This
gives the pilots of the aircraft an advantage over Airbus as the pilots would report
back on how well the system performs and how more should be ordered as a

Boeing also had to improve the technology. In most cases
this was new. Boeing would introduce the new robots to the production line as
they would be more efficient than workers and older generations. The robots can
be programmed to make sure each weld or strip of glue (to make sure no water
gets in) would be in exactly the same place which prevents human mistakes.
Boeing may also use new electronic systems within the aircraft itself. This can
give it a competitive advantage. This would help with Boeing as once again the
pilots would be impressed and tell their parent company that the 787 would be
the best aircraft that is suitable.  With
this increase in sales, Boeing will gain more profit.



With the 787, Boeing has got to protect their intellectual
properties. So they followed what many other companies have done such as the
747 with its distinctive hump. The way a company can protect itself against
patents is to use patents. A good example of this is the copyright logo. If a
company were to use a design that looked exactly the same then Boeing can take
them to court. Then Boeing can use their patents to their advantage and get the
other company to pay compensation for copying the design. The copied design
would also have to be scrapped as a result. Trademarks can also be used. Boeing
can protect themselves against their biggest rivals Airbus if a design was
copied such as a new electronic system or design. This would help them give
Airbus a bad name within the industry and would lose out on sales as a result.

With a plane company managing costs is a massive competitive
advantage. If you can manage costs well then you can spend more on the
development on the aircraft and the factory of which it is built in. With
Boeing, they did not spend any money on building new factories for different
aircraft. Instead, they use the same factory and this allows them to keep costs
at a low. Although, people say Boeing may get confused by which production line
is which. Boeing has stopped this happening by using different sections as a
result. This allows production to be cheaper and so the new aircraft can be
sold for lower prices than other companies. Even though the price may change
for different variants, Boeing can still sell the products less than rivals.
With this, Boeing is able to provide a high quality and at the exact same time
have it at a low cost. A good advantage of this is major companies would buy
the cheaper 787 as it would do the same job as other aircraft but be cheap.
This is especially important in the present day as fuel prices sky rocket.



In conclusion Boeing has used their business ideas to their
advantage to prevent Airbus doing better than them. I have used my extensive
knowledge on how businesses work to type up this assignment and I have used
examples of Boeing in as many paragraphs possible to make sure I keep on track
with what I am talking about on this piece of work. Boeing are a major company
and it there is no reason why Boeing would try a risky strategy to make more
companies produce components and also sell the aircraft on a risky strategy. As
a result Boeing would make a major loss but know due to their extensive
research on businesses they have been able to gain competitive advantages to
provide a profit.



Managing New Product Development and Supply Chain Risks: The Boeing 787

Pearson BTECH Engineering book