Reference no: EM1353407

Discussion & background

Boeing main product and services are aircrafts to the commercial sector, such as the 747, 787 Dreamliner and etc. Boeing had to establish a firm supply network in order to achieve the usual delivery lead time of 12 to 18 months depending on the order of product. The organization achieved this by strategic partnerships with Rolls-Royce, General Electric and Pratt & Whitney to outsource the creation of engines and engine parts for it's the new aircraft (Cizmeci, D. 2005). The aerostructures are mainly outsourced to American firms such as Aerostructures Corp and Goodrich Corporations. In addition to outsourcing the maintenance and engineering services to third party Maintenance and Reserve Organization. Note that a new product such as the 787 may take longer to deliver due to the capacity of the total supply chain has to be adapted for the new aircraft. For example, the 787 was allowed to be ordered in December 2003 and Nippon Airways was the first to order 50 787 in April 2004; however Boeing will deliver the 787 in 2008 (Tang, & Zimmerman, 2009). This is due to the capacity of the supply chain and the current work in progress within the system.

In regards to location capacity, the framework and design is built around a lean mindset. The issues that influence such a design are cost of labor, political environment and logistics. Therefore, Boeing's suppliers, mainly its 2nd and 3rd tier, Boeing has encouraged them to relocate its services closer to Boeing's assembly facilities, in Washington and California (Boeing, 2014). However, for the majority of its 1st tier suppliers, these facilities are more diverse around the globe, such as the engine being produced in the UK by Rolls Royce. Nevertheless, Boeings design for location capacity was to develop 3 main assembly facilities for different aircraft programs. California assembles the 717 aircraft and Washington assembles the 777, 747 (Cizmeci, D. 2005). Therefore, allowing Boeing to be able to focus its supply network to these locations, this in turn helps the company's capacity (Tang, & Zimmerman, 2009).

Question
The strategic partnerships with Rolls-Royce, General Electric and Pratt & Whitney and that aerostructures are mainly outsourced to American firms such as Aerostructures Corp and Goodrich Corporations. Also outsourcing of maintenance and engineering services to third party Maintenance and Reserve Organization.

Explain the factors that have affected the organisation's decision to outsource certain parts or retain ownership and describe how the organisation has decided where to locate its capacity and manage long-term capacity?

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