Boeing 767: Case Study

The aerospace industry differs from almost all other industry in the huge costs incurred at the product development level as well as the product manufacturing level. A single airplane will have a few million parts that are expected to run better than an ordinary computer that might have a few hundred parts at most. Furthermore safety regulations allow little flexibility and the harsh procedures add to the costs of development and testing.

The production and assembly costs are also considerably huge, usually there are more than a few manufacturers and hence transportation and assembly of the final parts are increased in addition to the added problems or organizing the transportation operations, in the case of the 767 parts were transported from as far away as Japan to Seattle.

To offset these costs airplane manufacturers usually rely on developing a platform every decade or more and producing as many derivatives from that platform as possible. In designing the platform special care is always taken in making sure the desired derivatives are easily produced, hence a general idea of the derivatives’ concept is already in place. This of course adds to the effort and cost of developing platforms.

In designing a platform, the technologies needed to produce it “material technology as well as process technology” are usually designed hand in hand with the platform itself. Moreover the cost of development is added to the cost of manufacturing over a long period of time and the total averaged over the expected sales volume to derive the units cost, in this way the actual cost of the first few airplanes is usually higher than the sales price, since it would have been too expensive to try to breakeven on the first few units sold. At Boeing the cost of production is expected to decrease over time since it is assumed and proven that production costs decline over time through the learning curve.

Product development at Boeing is a very detailed process and is quite lengthy. The development of the product concept of the 767 alone started at 1973 and took 4 years to accomplish, it was run simultaneously with the process modifications required to manufacture and assemble the plane, and even then the company hasn’t yet approved the project. The project was not approved for production until the concept definition was finished and preliminary performance specifications set and airlines actually committed for the new plane.

The selection of partners started well before the design was complete, and transport operations design started right after the partners were selected. Mock up parts were actually transported to verify the operations suitability, and immediately when the structural design was 25% complete teams were sent to co-operate with the selected partners and actual fabrications started.

The design did not stop at any phase, even while the plane was in production; in fact 12000 modifications were done on the first production airplane. And a plan for implementing engineering changes was set up and incorporated in the actual fabrication process.

As technology developed, it became possible to switch three-person cockpits to two-person cockpits. After several year efforts, permission from FAA finally had been granted late in July 1981. Unfortunately, the Boeing’s new airplane, 767 had originally been designed with a three-person cockpit, and 30 of those planes were already in various stages of production. Now, there were two solutions Boeing could use. First one is Completion of production and subsequent modification. Second is modification during production. Both solutions have their advantages and disadvantages.

In the following pages we will discuss the product development process and then talk about the two available options and our preferred choice.

Boeing Product Development Process

Several parts of the Boeing airplanes are built outside except the nose section

Strategy

A new generation of aircraft has the same base airframe concept and a family of derivative targeted to specific customer needs.

In 1987 the Boeing 747 had and eleven varieties

Platform: Boeing 747

Derivatives:

– Boeing 747-100B (standard)

– Boeing 747-200B (long range)

– Boeing 747F (freighter)

– Boeing 747C (Convertible)

Major Design considerations

Inherent growth potential necessitated flexible designs; Capacity influences size of fuselage. Platform product design accommodates variations in fuselage size by stretching without wholesale revisions in design or the need to start up entirely new development programs.

Major manufacturing features

The family of planes go through a common assemble line. This gives the advantage of accumulated experience; Each new plane absorbs every knowledge gained from earlier models. This is enhanced by shared design.

Marketing: Global marketing with emphasis on customer support and technology leadership is Boeing’s marketing strategy.

A new plane program at Boeing is usually the prime vehicle for management development. This explains their extensive use of project management.

Project management at Boeing

At Boeing the Team is built on competence and cooperation. The philosophy: “…best People … best Team…”.

The team when selected, is however, given considerable autonomy but not total autonomy.

Schedules

This is developed and monitored over time by the time using unique Boeing Tools.

– Master Phasing Plan: Maps out entire development cycle and critical

Milestones.

– Parametric Estimating Techniques: Bottom up estimation of costs an relationship between critical sections of the schedule.

– Inputs from Historical data from earlier plane programs.

– Management Visibility System: Signal problems before they become serious enough to cause delay.

Communication is greatly advantageous for good and bad news. Hence, problem exposure is highly encouraged.

Boeing 7X7 Program

In 1969, Boeing assembled a New Airplane Program (NAP) study group to review the company’s past experiences with each of its major programs–the 707, 727, 737 and 747–so that problems, such as those incurred by the 737 and 747 programs would not be repeated. This process is called Project Homework and took three years to produce a long list of “lessons learned”, as well as a reasonable idea of the costs of developing the next generation airplane.

Pressures from customers and within Boeing lead to the initiation of a new plane study the 7X7 (X stood for development model).

This is a heavyweight project, greatly supported by T. A. (“T”) Wilson, Boeing’s Chairman.

The objective of this program is to define, if approved, develop Boeing’s next generation airplane.

Project Phases

This was divided into three major phases

– Program Definition Phase

– Authorize Program Definition

+ market requirement review

+ program review

+ preparation for initial airline contracts

+ approve market analysis

+ configuration(s) selection

+ authorize cost definition phase

Cost Definition Phase

Preliminary design review

program plan review tech, cost, schedule

final preliminary design review

select & approve configuration

secure commitment function, engine, suppliers

approve price/market/cost relationship

authorize to offer

sales review

engineering design go-ahead

Production Phase

Production Go-ahead

Program definition

This stage was largely concerned with the determination of the market, technology and costs. A projection of future airline needs to seek out unmet needs; determination of alternative airplane configurations; and investigation of new technologies to know what might be available in the next few years and likely development and production costs were the main deliverables at this phase.

The market assessment involved direct interaction with the airlines to understand estimates of future needs. Econometric models generated three forecasts (optimistic, conservative and expected) for every market segment.

Market segmentation: This is based on range of travel

– Short: less than 1,500 nautical miles

– Medium: 1,500- 3,00 nautical miles

– Long: more than 3,000 nautical miles

Forecast of industry sales: $100billion.

Marketing strategy: The 727 will take care of the replacement needs in the medium range (domestic) market with a market potential of $19billion. The 7X7 will target the market growth (longer range flights)

The configuration

The design considerationswere:

Number of engines

– 2-engine:- lighter, better fuel efficiency

– 3-engine:- greater range

– Fuel efficiency had heavier weighting and 2-engine version selected.

Wings and tails

The flexibility in the design was the major consideration here. So, a 3,000 square feet wing that was highly adaptable for longer range versions was adopted .

The Boeing 767 Development funnel

Technology

Technology development areas at Boeing are:

– Structures

– Flight Systems

– Aircraft Systems (hydraulics and electrical)

– Aerodynamics

Chief engineers lead research, development and application of the technology in these areas.

Major decisions in technology projects at Boeing are:

a. Ultimate value to customer

b. Acceptable risk

c. Schedule and cost

Audit team

This is an in-house team acting as “devil’s Advocates” assigned to review every significant element of 7X7 program and reports directly to the Chairman.

Cost Definition

The Parametric estimating technique uses a bottom up approach to estimate the project cost.

Production Management

Process layout was adopted in the final stages of the assembly–a line flow process with seven major work stations. Every 4 days, partially completed planes were moved, using large overhead cranes, from one work station to the next. At each work station, teams of skilled employees positioned a single plane in massive tools and fixtures, and then riveted, wired and connected parts and pieces.

Scheduling and Change Control

The sources of change in the project are internal (engineers): parts or wiring changes and external (customer-airline): carpeting or seating arrangement.

Approach to Change management

– incorporating changes into the normal flow of production;

– installing old parts as originally planned and retrofitting new parts off line, outside the normal flow of production;

– expediting changes by assigning additional workers (“blue streak”).

Management Visibility system used to manage schedule.

– Weekly marathon (stand-up) status meetings held by representatives of affected departments to review slippages and highlight potential problems.

Testing

– During development new technologies were given real life tests by fitting them on commercial aircrafts and observing their performances under normal usage

– Test flights: Pilot has final say in setting priorities and selecting the tasks to be completed.

THE BOEING 767 COCKPIT CREW CONFIGURATION OPTIONS:-

Option 1.

Completion of production and subsequent modification

Production continued as plan and the modification program would be conducted as a separated activity later.

Advantages:

– Production would not be delay. Because modification was separated from normal flow of production, all other production would be continued as planned as well as learning curves.

– Functional tests could be done as originally planned. Because the tests were done during the final assembly process, problems would be identified and corrected on the spot.

– Problems could be concentrated. Because every step was as normal procedure except installation of the two-person cockpit, we could isolate problems to the cockpit area.

– Cheaper Approximately one million additional labor hours were required.

Disadvantages:

– Parts needed to be removed after firmly install. Because modification would be done after completion of production, parts for three-person cockpit would be installed firmly in places as the procedure, but during the modification, some of them must be removed and replaced.

– Operation systems might be disrupted. If the modification was not done carefully, the operation systems might be disrupted.

– Space problem. Not enough room within the factory to modify all thirty planes. Special parking plan, special fire control plans and waivers would be developed.

Option 2

Modification during production

All modification would be done during production rather than after the fact.

Advantages:

– All parts were installed only once. Because there would be no installation and subsequent removal, all parts could be installed firmly and only once.

– All activities would be controlled by normal procedures. because Modification would occur during production.

Disadvantages:

– Original plan would be disrupted

– Learning curves would be disrupted.

– Expensive. Approximately two million additional labor hours

– Problems might not be detected and corrected immediately because functional testing would have to be done after the two- person cockpit was fully installed.

Conclusion:

Safety should be the most important fact we consider. Since the second approach might not detect and correct problems immediately, we feel that the first option is preferable to second one. Furthermore, the first one is relative cheaper, only one million additional labor hours required.