Management
The 787 project of Boeing lost several billions of dollars due to wrong management decisions. Aside from the delay in the delivery schedule of the planes that took more than three years, the management decision has taken a toll on the accomplishment of the planes on time. There were about 848 planes that were already purchased but only 6 percent of such number had been delivered (Denning, 2009).
After Boeing lost its market share to Airbus during the 1990s, the best decision could have been to work on minimizing the costs and the prices of their aircrafts. However, the decision of the management was to improve the travel experience of the passengers by using lightweight materials in their aircrafts. Aside from this, it invested on lithium-ion batteries in its electrical systems with the intention to reduce the consumption of fuel to 20 percent (Denning, 2009). However, this was met with problems when the lithium-ion batteries overheated. Aside from the poor decision-making of management, there are wider-macro level factors such as outsourcing of critical components of the aircrafts.
One of the causes for the occurrence of these problems was a result of global outsourcing. It seemed so cost-effective on the part of Boeing to authorize a team of parts supplier from all over the globe to design and build the major sections of their aircraft (Hartley, 2011, p.172). The company decided to bring all together the disparate sections to its Seattle plant for assembly. The significant use of outsourcing represents a manufacturing innovation at the onset. However, despite the carefully selected suppliers of Boeing had farmed out the work to smaller companies instead of using their experienced engineers to design the work. As a result, most of the components had failed to meet the standards of expert engineers. The continued efforts to correct such situation were prolonged by the distance of the suppliers in different parts of the world and the language barrier (Hartley, 2011m p. 172). The delivery date of the sold aircrafts to the buyers was too ambitious that it caused even more delay due to wrong management decisions. Due to the setback in the delivery of its aircrafts and problems with the flexibility of wings causing the fifth delay caused the shares of Boeing to sink. Some of their customers complained while there are a few of them who made cancellations, which meant losses for the company.
As part of the recommendations, the suitable course of action of the company is to improve the decision-making of the management in the outsourcing, manufacturing and engineering. The company should take full responsibility of engineering to make the design of the planes consistent and to avoid problems caused in manufacturing the aircraft (Denning, 2013). It is vital for Boeing to do some of the manufacturing work on their own than to do global outsourcing in order to avoid delays caused by third parties. It is also recommended to change the culture of the company by removing the three-Cs mindset: complacency, conservatism and conceit. Boeing was complacent when it was self-satisfied and no longer eager for innovative growth on its own. In addition, conservatism means keeping in tradition the ways things are done. Finally, believing that it was the best company to produce aircraft which resulted its loss to its competitors such as the Airbus (Hartley, 2008, p. 174).
References
Denning, S., 2013. What Went Wrong at Boeing. Forbes.com. [online] Available at:
< http://www.forbes.com/sites/stevedenning/2013/01/21/what-went-wrong-at-boeing/.>
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Denning, S., 2013. B. The Boeing Debacle:Seven Lessons Every CEO Must Learn. Forbes.com.
[online] Available at:<http://www.forbes.com/sites/stevedenning/2013/01/17/the-boeing-debacle-seven-lessons-every-ceo-must-learn/.> [Accessed 26 November 2013].
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