Boeing's Supply Chain Issues

I presented at a Knowledge and Innovation Network conference in the UK in March where one of my co-presenters was Jenny Ambrozek. We didn't physically meet as I was presenting virtually from Australia. However Jenny did ask me to comment on an article she and a colleague, Victoria Axelrod were writing with the assistance of her blog. I picked up on a particular story about Boeing's supply chain issues with its new 787 plane which is running very late. One of the causes was put down to the innovative distributed supply chain they had adopted. They had essentially gone to 'electronic auction' and ended up with many more suppliers from which they had difficulty in managing to time, cost and quality.

My contention was that Boeing had probably discovered that its supplier governance processes just didn't scale. Managing a few suppliers closely doesn't scale when you up that number substantially without adding more staff, which they clearly didn't want to do as this would have defeated the purpose for expanding the supply chain/network. See my comments here:

http://c21org.typepad.com/21st_century_organization/2008/04/thinking-about.html#comments

Now I have heard David Snowden describe plane assembly as an example of the "complicated" regime in his Cynefin framework. That is, with enough analytical input, the problem can be resolved. I don't disagree with that but I would suspect that in Boeing distributing its bill of materials for the 787 more broadly, its ability to make explicit the tacit understanding encompassed in a specification for a new component, such that it could be sent electronically to potential suppliers, who may have had no prior relationship with Boeing or its people, is asking too much. In other words the process becomes uneconomic. The big question is should Boeing now be looking to understand how it can "socialise" its potential supplier base, rather than treat them as "arms length" providers? Can this process of socialisation generate of new form of governance that could be effective in large, distributed supply networks.

P.S. A little six degree story: Jenny Ambrozek is an Aussie (1st connection I didn't know of) who prior to the KIN meeting had met with some Italians at a web 2.0 conference in Germany who I happen to be helping out with an SNA/ONA project (2nd connection). I met these Italians through an Italian friend who used to be married to my cousin. Who said the world wasn't small!