Boeing tackles supply chain problems to ramp up production

Boeing is increasing its production of 737s from 52 to 57 aircraft per month in…...

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Boeing is increasing its production of 737s from 52 to 57 aircraft per month in 2019 despite being beset by significant supply relationship management problems last year, which threatened its production targets. Executives say they are now on course to deliver between 895 and 905 of the aircraft in 2019, the company’s target for the year.

Supplier shortages and other supply chain problems in 2018 forced a fundamental rethink in the company’s supply relationship management processes, which executives said earlier this month resulted in record-breaking production. It delivered 806 of the targeted 810-815 aircraft last year – short of the goal, but still a record-breaking result.

The work to recover from an unsteady supply chain continues, with Boeing personnel being deployed to supplier factories in efforts to improve understanding of the workflow and ensure prompt deliveries.

Boeing concluded the final quarter of 2018 with strong year-on-year revenue growth of 14%. But CEO, Dennis Muilenburg, was candid in his assessment when asked if the firm’s supply chain was out of the woods, commenting: “You’re never completely out of the woods.” Muilenburg confirmed that, despite delivering a record of 69 737s in December, the company’s supply chain still isn’t running at 100%. However, it is receiving relentless, disciplined focus from the firm to iron out the difficulties.

A continuing difficulty rests with engine builds, Muilenburg confirmed, which is why Boeing staff are being deployed to supplier factories. He said: “This is about production system ramp-up and synchronization. And by us getting deeper into the factories, it’s going to give us better insight on long lead items.”

Strategic sourcing, category management, and other core procurement functions will continue, but the company is confident that it will deliver on its ramped-up production goal of approximately 900 aircraft this year. A welcome development, as Boeing is also working through a 5,900 aircraft backlog worth $412 billion, which Muilenburg calculates will be cleared in seven years at current production rates.

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