Tag: defects

OM in the News: An Inside Look at Boeing’s Outsourcing Mess

The site of this month’s midair door-plug blowout on this Boeing 737 is behind the wing, outlined in red

Long before the harrowing Alaska Airlines blowout this month, there were concerns within Boeing about the way it was building its planes. Like so many other manufacturers, Boeing was outsourcing more and more of the components.

Much modern manufacturing, of course, includes outsourcing, our topic in Chapter 2. From hot tubs to iPhones, machines are built in small pieces by different companies, then delivered to another factory for final assembly. The system has sliced costs from the process by letting production lines maximize output and eliminate waste. But the strategy also stretches oversight and adds risks, since the final product is only as good as the least-good supplier, writes The Wall Street Journal  (Jan. 13-14, 2024).

A Boeing engineer distributed a controversial report in 2001 warning of the risks of its subcontracting strategy, especially if Boeing didn’t provide sufficient on-site quality and technical support to its suppliers.  “The performance of the prime manufacturer can never exceed the capabilities of the least proficient of the suppliers. These costs do not vanish merely because the work itself is out-of-sight,” he wrote.

But Boeing doubled down on outsourcing in the 2000s with its 787, which was the first jet that was heavily designed by suppliers. To lower costs and risks of a new design, Boeing authorized dozens of suppliers to design and build major sections of the 787 (see text page 30), including mostly completed fuselage sections.

Now, Boeing is reckoning with the fallout from this strategy. Dozens of factories build key pieces of 737 and 787 models to be assembled by Boeing. One of the major subcontractors is Spirit Aerosystems, the sole supplier of the fuselages used in 737s and 787s. Spirit is heavily dependent on Boeing for revenue, and the two companies have often battled over costs and quality issues. The earlier 737 MAX grounding and pandemic sapped Spirit’s finances, and the company slashed thousands of jobs, leaving it short-handed and with inexperienced workers when demand recently bounced back.

Spirit employees said production problems are common and internal complaints about quality are ignored. In a given month, at a production rate of 2 fuselages a day, there are 10 million holes that need to be filled with some combination of bolts, fasteners and rivets. The result: a factory under pressure where workers rush to meet unrealistic quotas and where pointing out problems is discouraged if not punished. Increasingly, Spirit workers say, planes have been leaving the factory with “undetected defects.”

Classroom discussion questions:

  1. What are the advantages and disadvantages of outsourcing?
  2. What are Boeing’s options vis a vis Spirit?

OM in the News: At Ford, Quality Is Now Problem 1

In May, Ford recalled some Ford Expeditions and Lincoln Navigators after reports of fires while vehicles were parked. In June, it recalled 49,000 Mustang electric SUVs over concerns that the battery contactors could overheat. In the first 7 months of the year, Ford had 46 separate safety recalls on 6.8 million vehicles, more than any other U.S. auto maker.

Once touted for its quality record—“Quality is Job 1” was its slogan for much of the 1980s and 1990s—last year Ford set aside more than $4 billion for warranty costs, up 76% from 5 years earlier. Those billions that Ford spends yearly on warranty repairs and recalls could instead have gone towards spending for new EV models, and battery and manufacturing plants, writes The Wall Street Journal (Aug. 6-7, 2022).

Ford recalled Mustang Mach-E electric SUVs.

In 2021, Ford allocated $1,041 per vehicle for covering warranty claims compared with $713 per vehicle for rival GM. This year, in addition to the recalls, auto-safety regulators also opened a defect investigation into 2021 Ford Broncos after receiving reports of “catastrophic engine failures” at highway speeds.

One of the challenges at Ford was that it tried to make too many last-minute design and engineering changes ahead of a new-vehicle launch, increasing the risk of problems down the line. Workers rallied to fix problems when they blew up, but weren’t empowered to flag them early in the process when there was still time to head them off. Consumer Reports says Ford has too many new-model launches bunched together and often makes more substantive changes in its redesigns, while other car companies use more carry-over parts.

Ford recently installed video cameras to monitor the early build of vehicles—before production—to target any steps they can eliminate or simplify. Higher tech cameras are now used to inspect the vehicles for quality, too, allowing workers to scour for an incorrectly placed hose or a paint blemish. “We are placing more time and emphasis on ensuring everything is done right upfront to prevent quality issues from manifesting later in the development process,” says Ford’s new quality czar.

How Ford compares itself to rivals in quality has changed, too. It now sets its quality targets against the benchmarks of its competitors. One example is the quality of Ford’s Bronco SUV as compared with the Jeep Wrangler.

Classroom discussion questions:

  1. Select one of the 7 tools of TQM found in your Heizer/Render/Munson text in Figure 6.5 and describe how Ford might use it.
  2. When and where should Ford inspect according to Chapter 6?