Arab Academy for Science, Technology & Maritime Transport

operation Management

Group: 2HH – Wednesday

Operation management
Midterm Case study
Boeing 787 Dreamliner

Presented by: Group (A)

1- Aala Gamal Hassan
2- Hassan Abdelbaset Hassan
3- Mohammed Mahmoud Elsaied
4- Nahla Ahmed Mamdouh
5- Noha sherif Samaha
6-Salma Ragab Mohamed

Prof. Dr. Wessam Elmaghraby

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 Arab Academy for Science, Technology & Maritime Transport
operation Management

1) Considering your studies for the different sources of “Idea

Generation”; explain how the idea of the new product (The
Boeing 787) has been developed?

Ideas for new or redesigned products or services can come from a variety of sources, in our case
study Boeing 787 concept is growing due to numerous factors as following:

1- Competition

The reason for the severe rivalry in the aviation market was as follows:
 The switching of the B 767s began in the late 1990s when sales declined owing to
competition from the Airbus 200-330
 the decline in sales of the 747-400 jumbo jets planes.
 Boeing declared on December 16, 2003 that the assembly of their 787s will be in Everett,
Washington State, as the reason for the strong competition. Instead of constructing the
full plane, between 800 and 1,200 people will finalize the connections.
While developing the Dreamliner, Boeing researched Airbus plans and attempted to create
several differences, such as:
 working on decreasing the full
 providing 57% more cargo room than plans in the same category
 comfortability
 Reaching previously unreachable regions.

2- Supply chain
(Customers, suppliers, distributers, employees or maintenance and repair personal).
a- Customers:
 Boeing's traditional airline customers remained financially stressed as a result of high
fuel and labor expenses, union unrest, the increasingly high fixed costs of airplanes, and
the industry's harsh price competitiveness.
 Customers prefer point-to-point transportation over intermediate transportation.
 Clients prefer medium-sized jets to huge planes, prompting Boeing to consider this and
exploit it as a competitive advantage in luring clients away from Airbus, which has the
benefit of large planes. According to studies, promoting tickets in medium planes is
easier than in huge planes.

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 Arab Academy for Science, Technology & Maritime Transport
operation Management

b- Suppliers:
 With the B 737 program, the business had already pursued this technology
and combined the systems. Boeing has identified its global subcontractors to
be more numerous and to hand over more work.
 Boeing will receive smaller parts to complete final assembly. This strategy
was designed to produce a smaller, simpler, and less stocked production line
 Using this method saves time because the smaller sections of the main
aircraft parts are pre-installed before being delivered to Everett, reducing the
time required to complete the assembly process.

c- Employees:
 The development of low-cost airlines posed a challenge to traditional players
such as United Airlines, Delta, Northwest, and American Airlines' business
models. Faced with these business dynamics and Airbus's impending launch
of the superb-jumbo A380, Boeing was looking for methods to recover the
industry leadership status by introducing the 787 airliner.

d- Maintenance & Repair Personal:

Boeing confirmed to all airline operators that sensors will be integrated into the
primary structure to monitor and obtain real-time maintenance data, resulting in cost
savings for the airlines.

3- Research and development (R&D):

As previously stated, there are many areas related to the developments in the Dreamliner,
such as working on decreasing fuel 20% compared to others, cargo space 57% compared
to other plans in the same segment, providing passengers comfort by developing wider
and larger seats, aisles, toilets and luggage bins, even for the windows, and finally
working on increasing the humidity inside the aeroplane to avoid moisture.
.

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 Arab Academy for Science, Technology & Maritime Transport
operation Management

2) By recognizing the change in the air transport market demand

mentioned in the case (from “Hub & Spoke” to “City Pairs”), and
using the included product map for the commercial airplanes
(Figure A), explain how the “Boeing 787” was supposed to close a
gap in the market?

“Figure A” shows that Boeing had three models with 200-300 seat range, which in the case of the
7E7-9 and 7E7-8 had more flying range than every airliner on the market save the 777-200LR with
less fuel usage.
The 787 would be the first aircraft of its kind provide nonstop service on routes that required long
range but did not justify larger airplanes. The 787 was designed as a family of airplanes in the 200-
to 300-seat class. The base airplane (787-8) and its stretch version (787-9) would carry 200–250
passengers in tri class configurations on routes between 8,300 and 8,500 nautical miles (14,500 to
15,400 kilometers), respectively.
A third, shorter-range version (787-3) would carry nearly 300 passengers in a two-class
configuration and be optimized for routes of 3,500 nautical miles (6,500 km). These configuration
choices would also enable some customers to use denser seating (up to 400 passengers) for shorter-
range missions.
This was designed to persuade airlines to abandon the late 767 line, as well as the Airbus A300s
and A310s, and to favor it over the new Airbus A330.
As people want to travel direct to their long-haul destinations, not squeeze into huge planes before
changing later to smaller ones at crowded hub airports in order to reach their final destination.
“Boeing 787” was supposed to close a huge gap in the market.

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 Arab Academy for Science, Technology & Maritime Transport
operation Management

So Based on market requirements, Boeing designed the Dreamliner to meet market needs by
delivering super-efficient plans that can fly as fast as today's fastest plans, changing the minds of
aero plane operators to replace the old models of their plans with the new 787, but this
competition was very tough and challenging because they were competing with the market
leader because Airbus produced 5 plans compared to only 1 from Boeing over the last ten years.
The Dreamliner was designed in three versions (787-8 Family - 787-9 Stretch version & 787-3)
to meet the needs of all customers.
Boeing concentrated on what the world requires now, as well as what its customers require. They
need smaller plans to get from point A to point B without taking significant transit times, and
they expect to have more than 400 city pairs shortly, which will be the key difference between
them and the Airbus plans: small but long-range non-stop flights.

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 Arab Academy for Science, Technology & Maritime Transport
operation Management

3) Considering your study for “product design considerations”;

mention the different aspects of the new 787 flight design, and
explain how it is fitting with the different considerations
(sustainability, reduction of cost, newness, ..)?

For the sustainability Aspect: -

 In the context of a changing climate, consuming less fuel can help to minimize
one of the Sustainable Development Goals.
 The 787's environmental performance is a bonus, with the quietest takeoffs and
landings and the smallest sound in its class.
 It may aid in better sleep on long journeys Boeing was considering increasing
cabin humidity.

For the reduction of Cost Aspect: -

 Boeing informed all airline operators that sensors will be installed in the main
structure to monitor and receive real-time information for maintenance time,
reducing costs and supporting airlines.
 A 20% reduction in gasoline consumption will save operational costs.
 57% more cargo space compared to competing designs in the same segment means
more profit
 Boeing relied on their design by assembly method, which ensured quality,
dependability, and cost savings.

For the newness Aspect: -

 The dual-engine design ideology has been improved (reusing parts from returned
items).
 Enable massive collaboration through integrated assemblies from global partners
(cost and material savings).
 Saving time during assembly by implementing a planned strategy to finish the final
assembly in three days (speeding up the production process and increasing
newness). Although this strategy will not be carried out, all of these components
were put in place to combat market rivalry and develop strong distribution channels
for its global partners.

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 Arab Academy for Science, Technology & Maritime Transport
operation Management

4) What is the new manufacturing strategy adopted by Boeing?

What is the associated risk?

Boeing altered their production strategy for the compared to prior planes.787, resulting in a DFA
(Design for Assembly) as opposed to a DFM (Design for Manufacturing).
Boeing used a previous design that was intended for production before these 787 items, but it
developed a new concept for this product in order to stay up with market competition as quickly
as possible.
Boeing had placed a bet on creating a new aeroplane, which has been likened to high-stakes
gambling. Airbus had followed suit.
Japan and China joined the table of talented poker players. The newcomers approached the
situation differently from the incumbents. The incumbents were unsure whether they actually
understood the plans, skills, and motivations of the new actors.
It was a high-stakes game in which the winner may walk away with everything. One thing was
certain: in order to succeed, Boeing's top management and the 787 project teams would have
their work cut out for them as they assessed their next moves in the face of several uncertainties.
The "build vs. buy" ratio was usually 30% for components built and 70% for goods purchased.
Boeing has a long and famous history as a result. It has been informed that each plane it
constructs is made up of thousands of parts manufactured by domestic and international vendors.
Despite the significant risk, Boeing must use this strategy to maintain its dominant position.
Airbus commands a substantial market share. However, there is a lot of misinformation
surrounding a vital strategic issue. Partners today may become competitors tomorrow, or "The
Risk Sharing Partnership," to put it another way.
They may one day use their expertise against the competition or become competitors themselves
because they will know every aspect about the plane.
Boeing devised a brilliant answer to this problem: a risk-sharing agreement that transforms
suppliers into 787 programmers. Boeing insisted that the risk-sharing partners absorb the first
non-recurring R&D investment and not be reimbursed until the jet was certified and delivered.
As a result, delays in programming are the responsibility of both vendors and programmers.
Because the payment is based on a per-unit price, the more planes Boeing sells, the more money
each supplier makes. In exchange for accepting the risk, Boeing granted the suppliers' work
intellectual property rights, and the suppliers have Boeing's pledge that they would not be
replaced in the future.

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