The Boeing 767: From Concept to Production

THE BOEING 767: FROM CONCEPT TO PRODUCTION (A)

Executive Summary

This case study deals with the dilemma faced by Dean Thornton, Vice president – General Manager of the Boeing 767 program. The company had lobbied the Federal Aviation Administration (FAA) for permission to build wide-bodied aircraft with two-person cockpits instead of a three-person cockpit. Permission was granted late and by the time thrity of those planes were already in various stages of production. Thornton knew that the planes need to be converted to models with two-person cockpits. Now, how should Thornton handle this situation? What are the options that he has? Which one would be the best method to proceed with? The decision had to be made quickly as the delivery dates were fast approaching, and these were not small changes. Commercial aircraft manufacturing posed large and costly complexities. In 1981, three companies dominated the market being able to manage this grand project cost: Boeing, McDonnell Douglas, and Airbus. Launching a new plane was a challenging task as the manufacturing required $1.5-2 billion, often placing a company's net worth on the line. But, any successful product launch was expected to lead to heavy profits within the market segment for at least 15 to 20 years. Buyers comprised mainly of the top 50 airlines, negotiated on price, after-sales parts and service, design modifications, etc. to make the task of successful design and production even tougher.  Boeing was the industry leader partnered with subcontractors on a risk-sharing basis for manufacturing parts and subassemblies, while the final assembly was done by Boeing. It later also started to offer varieties in design, drawing on the same basic structure but just some carefully selected variations. These were built on the same assembly line, resolving the complexities. With its expertise in global marketing, technological leadership, production skills and effective use of project management tools helped Boeing become the "low-cost producer" of the industry. Two solutions were available to Thornton for converting the models with two-person cockpits – In-line and Offline operations. For the in-line option, two-crew cockpits would installed in the thirty planes without removing them from the flow of production, requiring unique design solutions for each airframe and slower production learning curves. Whereas in the off-line option would complete the thirty planes as three-person cockpits maintaining the learning curve rates, then establish a large separate area to retrofit each with two-person cockpits. In our analysis, we came to the conclusion that Dean Thornton should proceed with Off-line operation, considering delivery (time) as the main constraint. Neither learning curves nor schedules would be disrupted using this approach. The airplane systems would be functionally tested during the final assembly process as originally planned. The number of labor hours required for the offline operation would be half of that required for in-line operation.  We would also recommend for the company management to increase the number of expert staff to reconfigure design and installation to overcome the scheduling delays incurred with this approach. In addition, to initiate space availability and feasibility planning to carry out the rework operations on the aircraft requiring retrofit modification.

Statement of the Problem

 During the manufacturing of Boeing 767, the cockpit design was planned for both a three-crew and yet un-approved two-crew configuration. Already into the production process, the Federal Aviation Administration made a late approval of the customer preferred two-crew option, but thirty units had already undergone various stages of construction with the three-crew design. A task force was convened to assess the feasibility of methods to complete the production and delivery of all aircraft with two-crew configuration as scheduled without delay. Dean Thornton, Boeing’s 767 program vice president-general manager, had a dilemma to choose the between the best of two options to make the changes in thirty mid-production planes. Option A: Completion of production of the 30, three-crew cockpit models as initially designed, later making necessary modification to two-crew configuration (Off-line) Option B: Modification during production so that all planes are completed as two-crew models (In-line). Background

As the sales leader in airframe industry and one of America's leading exporters, Boeing earned $5.1 billion from Commercial Airplane and $4.1 billion from other divisions-missiles, rockets, helicopters, space equipment, computers, and electronics. Boeing emerged as the industry's "lowcost producer" by employing these strategies:   Variations– Boeing manufactured various families of planes with several variations on the same airframe based concept. It required flexible designs, inherent growth potential and modifications capability, with no need for wholesale revisions  Expertise in global marketing  Manufacturing Benefits– Manufacturing a common family of planes on a common assembly line expediting the learning curve. This led to far-earlier break-even points.   Technological leadership  Facilities– Huge centralized facilities were available with sophisticated manufacturing systems and project management tools.   Customer support  Production skills The culture of Boeing had a distinct identity as characterized below: Teamwork and cooperation were valued in the organization.  Cross-functional teamwork ensured in addressing the serious concerns of new plane programs, which was a prime vehicle for management development.  Autonomy was granted to teams but disciplined decision-making and detailed planning were expected.  Regular communication was encouraged to ensure prompt adaption and agility  High priority was placed on meeting schedules. Realistic schedules were developed and monitored over time. This was done with the help of the following:

Master Phasing Plan to map out the entire development cycle for each new plane program o Parametric Estimating Techniques to estimate the costs and established relationships between critical sections of the schedule o Management Visibility System which surfaced problems before they became delays

The 767 Program initiated as The New Airplane Program (NAP), was assembled to study the issues faced with previous major efforts and avoid repetition of any problems from those predecessors, the 707, 727, 737 and 747 programs. A series of lessons learned resulted, called "Project Homework" which also included ideas for the development of the next generation plane. The first stage of the development program looked out for market opportunities, configurations, forecasting future needs of the buyers, etc. Then Audit Teams comprised of experienced managers performed constant reviews of the important elements to report consistency and compliance.