Boeing: New Jet, New Way of Doing Business

By Edward Cone  |  Posted 03-06-2006

Boeing: New Jet, New Way of Doing Business

Almost everything about the new Boeing 787 is different—from the cutting-edge materials and electronics used to build the plane, to the technology used during the design and assembly process. It is so different, in fact, that even the Boeing Co. itself—a fixture in the global economy for nearly a century—is undergoing a radical transformation as it builds this next-generation jet.

The design and production strategy employed by the $55 billion, Chicago-based aerospace giant to get the 787 built as quickly and economically as possible involves an unprecedented degree of collaboration between Boeing and its partners around the world—partners who are participating in the actual design of the plane. All of which marks a shift in the way Boeing defines itself: The company is no longer just a manufacturer, but also a high-end systems integrator. "We are a technology company," says Scott Griffin, Boeing vice president and CIO.

The reasons Boeing is making the shift go beyond the savings it hopes to enjoy by making the planes faster and cheaper. The company is also spreading the costs of design and development throughout its partner network, and building global relationships that may, in turn, help the company sell its planes overseas.

The previous state of the art in aviation manufacturing was to have global partners work from a common blueprint to produce parts—actually, whole sections of the airplane—that were then physically shipped to a Boeing assembly plant near Seattle to see if they fit together. There, successive iterations of the planes were built and refined with onsite teams from around the world.

On the 787, that process has gone the way of the biplane. Instead, parts are designed concurrently by partners, and virtually "assembled" in a computer model maintained by Boeing outside its corporate firewall. "We have different people building different pieces by creating data that is assembled and checked in real time," says Griffin, who is responsible for the computer systems that make this process possible. Ultimately, completed sections of the plane will be picked up by three specially fitted 747s and carried to a Boeing facility in Everett, Wash. Thanks to the online modeling, Boeing can now trust its global partners with the process of creating entire sections of the plane, from concept to production.

"The design is occurring in Japan, Russia, Italy, the U.S.," Griffin says. "This is not merely a PowerPoint or SharePoint collaboration, or looking at two-dimensional drawings to see if a company can bid on a contract. This is big companies like the Japanese heavies, and our Russian design center, and Boeing in Everett working together. This is something that creates competitive advantage.

"This kind of collaboration has taken a huge amount of time out of the process," he adds. "It's where the big savings are."

The competitive advantage is critical to Boeing, which is locked in a global battle for market leadership with Airbus S.A.S., the Toulouse, France-based aerospace manufacturer that has emerged as its most potent competitor for civil aviation business in the modern era. Boeing has 291 firm orders, and 88 commitments, from 27 airlines for the new 787, nicknamed the "Dreamliner," which will seat from 250 to 330 passengers in varying configurations. List price: around $150 million per plane.

"The importance of the 787 to Boeing's success in the coming years simply cannot be overstated," says Bill Dane, senior aviation analyst at Forecast International Inc., an aerospace industry research firm in Newtown, Conn. "It is no hype to say that the 787 is the company's future." In an industry characterized by epic bets and enormous risks, says Howard Rubel, a managing director and aerospace analyst at Jefferies & Co., in New York City, "The 787 is a defining program for Boeing."

And a defining element of that program is a new level of global collaboration.

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Boeing: New Jet, New Way of Doing Business

  • From Manufacturer to Integrator
  • Building a Better Airplane, Better
  • Boeing's Global Imperative
  • Measuring Virtual Distance

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    Though Boeing still makes pieces of the planes they sell, the recent shift in their business model is undeniable. "We still do manufacturing, but we are moving up the value stream to become a large-scale systems integrator," Griffin says.

    The fabled company, founded in 1916, didn't change overnight, and not all of the changes have been visible from the outside. In 2004, for example, Boeing's IT organization was consolidated under Griffin. Last September, it was moved into the Boeing Technology Group, so that the CIO reports to Chief Technology Officer James Jamieson. "We pulled all of our systems people out of the business units, because IT is not a back-office function here," says Griffin. "It is too important to our business model."

    Previous development programs for planes such as the 757, built in the early 1980s, brought increasing levels of collaboration with global partners. "The original breakthrough came in the 1980s, when we started inviting people from around the world to Everett," Griffin says. Until recently, Boeing's worldwide partners kept teams onsite in Washington; some companies still maintain a physical presence near Seattle, but it is no longer required.

    One longtime Boeing partner is Vought Aircraft Industries Inc., of Dallas, which is building two sections of the 787 fuselage and is partnering with an Italian firm, Alenia Aeronautica S.p.A., to integrate pieces of the fuselage being built in South Carolina and Italy. "We've never done a project before where the roles and responsibilities are as clear and consistent as they are on this one," says Vern Broomall, vice president for quality, engineering and technology at Vought.

    "There is a real difference in the business approach, with Boeing taking the role of integrator and the interface to the airlines, and the partners taking responsibility for the major pieces, including their design," Broomall says. "We work directly with the Japanese and the Italians, and have an excellent working relationship with them, while Boeing facilitates the work for all of us." As mandated by Boeing, all the partners use the same design and collaboration software from French vendor Dassault Systemes S.A.

    Griffin identifies three kinds of collaboration between teams and companies, although he stresses that the levels shade into each other. Basic collaboration, he says, involves useful information-flow tools such as Microsoft Office and SharePoint. "Everyone calls in, makes their changes in blue, and the team works together," he says. The next level involves suppliers working with their supply chains, and Boeing working closely with its suppliers. This is an effort that encompasses much of the aerospace industry, including Boeing's rivals and multiple tiers of suppliers.

    Boeing and other aerospace companies use a product suite from Exostar LLC to share two-dimensional drawings, do forward and reverse auctions, and respond to RFPs. "We use the term 'global enterprise,' to describe it," he says. "It goes beyond talking to strategic suppliers, to having it look like the enterprise. This is a set of tools that allows you to do more than communicate."

    Story Guide:
    Boeing: New Jet, New Way of Doing Business

  • From Manufacturer to Integrator
  • Building a Better Airplane, Better
  • Boeing's Global Imperative
  • Measuring Virtual Distance

    Next page: Building a Better Airplane, Better

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    But it is the high-level, real-time collaboration with its design partners that is "the differentiator," says Griffin. It's key to how the trailing edge of the wings, and the place where the wings attach to the body, can be built halfway around the world from each other and still be parts of a safe and stable aircraft. Technology is the enabler of this kind of collaboration, which involves a significant amount of product lifecycle management across multiple countries. Boeing requires all its partners on the 787 to use an application called Catia, made by Dassault, and the plane is designed at a special online site, maintained by Boeing, called the Global Collaboration Environment.

    Customers, including pilots and flight attendants, were asked to provide input before the design was handed off to design partners. The new midsize passenger jet, scheduled to begin production later this year, will have an outer shell made of carbon-fiber-reinforced plastic, known as composite, rather than the familiar aluminum skin used on previous generations of airliners. About half the plane's parts by weight will also be made of this advanced material, which will make it lighter and give the jet better fuel economy than its forebears. Passengers will notice a difference, too, because the super-strong composite exterior will allow the cabin to be pressurized at much lower altitudes than is possible with metal-skinned planes, resulting in a more comfortable ride. And key internal systems will depend on electronics, instead of on the hydraulic controls that have been used for decades.

    The firm's partners got a master design that showed the general contours of the plane—they knew, for example, where the landing gear would attach, and how much space would be available for it when it folds up into the belly of the aircraft.

    But Boeing didn't just turn its partners loose. "An airplane is a system of systems, with components that include thousands of parts," Griffin says. "You need tools that let you see the parts fit together. The data has to be created in the same format. You can't just tell someone to design parts and send them to us, and we'll put them together."

    Actually, that's pretty much how collaboration used to be done. Prior to the 787, wood mock-ups of planes would be constructed to see if parts built by partners around the world would really fit together. Now, "clashes" between parts and whole sections show up easily on a computer screen before the part is even manufactured. "Quality is up, because the computer finds the mistakes," says Vought Aircraft's Broomall. "If there are two parts in the same space, or they don't fit together well, a big red blotch shows up on the screen. You don't have to put it together and say, 'Rats, that didn't work.' "

    Finished designs are stored in another Dassault product, Enovia, which is also maintained by Boeing. "We are creating an enormous amount of digits in the descriptions of parts and engineering," Broomall says. "This is an enormous data-management task."

    There have been other difficulties as well. "One of the technical challenges for collaboration has been to provide airtight information security," says Griffin. "In the aerospace industry we team with a company on one project and compete with them on another. But over the last few years, security technology has matured to the point where we can be assured of keeping information secure."

    And so far, Boeing has not been able to standardize its collaboration techniques across its sprawling operations. "Today, the process is different for each program," says Griffin. "As we move the company to common processes and systems we are trying to reuse as much knowledge as possible across Boeing, but the partners are different each time and therefore the issues are different as well."

    Boeing maintains ten multimedia rooms at the Everett complex for the use of collaboration teams, says John La Porta, a Boeing team leader. "They are open 365 days a year, 24 hours a day," he says. "It's always daytime somewhere." On a recent afternoon, meetings were underway between one group of engineers at Boeing and their peers at Mitsubishi Heavy Industries Ltd., in Japan, while another group worked with teams at Japan's Kawasaki Heavy Industries Ltd. and Australia's Hawker de Havilland, a Boeing subsidiary. A visualization application developed by Boeing allows the teams to do real-time design reviews of complex geometry without any lag time as the models load. "The tone is cordial, it's engineers talking to engineers," says La Porta. Meetings are conducted in English, with sidebar conversations as needed in native languages around the world.

    Story Guide:
    Boeing: New Jet, New Way of Doing Business

  • From Manufacturer to Integrator
  • Building a Better Airplane, Better
  • Boeing's Global Imperative
  • Measuring Virtual Distance

    Next page: Boeing's Global Imperative

    Boeing

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    Collaboration is a necessity for Boeing for several reasons. One is scale: Airplanes are enormous, and enormously complex. "There is not a building big enough to house a project like this," Griffin says. "You cannot do four million parts in the same location." Another reason is political. "We are a global company, and we sell our products globally," he adds. "One thing that helps you sell is that people in other countries are building parts of the airplane. It's not just a product built in Everett, Wash., but a global product." (Airbus, originally a multinational consortium, will soon be building some of its planes in China.)

    Boeing also needs to spread the financial risk of the 787 project, says Richard Aboulafia, vice president for analysis at Teal Group Corp., an aerospace and defense research company in Fairfax, Va. "The 787 is hugely promising, and hugely risky, so they have to maximize their use of risk-sharing partners. This plane takes advantage of truly cutting-edge technologies, and there are aircraft in the past that have stumbled on that, like with the Lockheed L1011 that almost destroyed that company." Boeing still takes the hit if the planes fail, but the actual cost of development and manufacturing is spread across its network of collaborators.

    Collaborative design that speeds the process also helps Boeing avoid expensive penalties from its customers if the plane is not delivered on time, Aboulafia says, and it gives the company more flexibility in designing the multiple versions of the 787 that are part of its wide-ranging appeal in the marketplace.

    Says aerospace analyst Rubel, "On-time delivery is important to hold the customer's trust, to reinforce Boeing's leadership position, and to allow the company to make money. The customer goes through an elaborate process to have its systems and routes and markets ready for the plane and it needs an on-time arrival."

    Vought's Broomall says the 787 process is delivering on those needs. "We have probably taken more than one-third to one-half of the time out, and perhaps 50 percent out of development cost versus historical methods," he says.

    Meanwhile, Boeing is chasing talent and looking for cost-savings around the world. In addition to its global business partners, Boeing maintains technical research centers in Madrid and Moscow. "We want to use the best and brightest anywhere in the world, and part of our role at Boeing Technology is finding them," Griffin says. "We're seeking Indian ingenuity, or Japanese or British or Italian ingenuity. The mathematicians in Russia are fascinating to talk to, they're trained differently, they think about models and use wind tunnels differently." Different regions do some things better than others, Griffin adds. "A big problem, where there is not a lot of structure, we tend to give to the Russians," he says. "A big problem with lots of structure, and a chance for continuous improvement, we tend to give to India."

    Not every job at Boeing can be done by non-U.S. nationals. Defense-related projects, which make up more than one-third of the company's current order backlog, are off-limits to workers without U.S. citizenship or work papers. But wherever possible, Boeing is bringing global talent to bear on its design and manufacturing projects.

    Of course, no amount of technology can fully replace the need for face-to-face interaction, Broomall says. "When we do the next project—we are committed to doing derivative versions of this plane—there will be less human contact and more collaboration via IT," he says. "But you still have to have meetings, and maintain relationships, so that you are comfortable that you know the person behind the computer. You can build a new plane from scratch on the computer, but you have to have confidence in the people."

    Story Guide:
    Boeing: New Jet, New Way of Doing Business

  • From Manufacturer to Integrator
  • Building a Better Airplane, Better
  • Boeing's Global Imperative
  • Measuring Virtual Distance