Creating stability can be difficult — but worthwhile

The Twin Towers attack of 9/11 led to a downturn in demand that led to a consolidation in the manufacturers of the nuts bolts rivets and washers used to hold aeroplanes together. The uncertainty in demand then led to shortages, which became a serious problem for Boeing as it attempted to develop the Dreamliner 787.

Boeing decided to implement a new centralised purchasing system in which the company and its partners would daily update their inventory levels, which suppliers would then be required to maintain between max and min levels.

Problems arose when the company realised it had forgotten to include distributors in the system, and when suppliers and distributors resisted sharing commercial data. There was also resistance from inside Boeing.

Key lessons are:

  • The lack of even a minor component (rivet) can bring a massive project (aeroplane) to a standstill
  • The parties involved, and their personal agendas, are likely be more complex than any one person will be aware of
  • Once a solution is properly in place, the stability that it brings equates to competitive advantage for all those involved

http://www.ft.com/cms/s/0/a7d38332-ef70-11e0-941e-00144feab49a.html

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