The Boeing 787 was certified for commercial use by the U.S. Federal Aviation Administration (FAA) on Friday, August 26th. That means the design has been put through the paces. Over 4000 exacting, discrete tests were required to be successfully passed for the FAA to certify the aircraft design.
The 787 is the first commercial aircraft with the body and wings made largely of lightweight, carbon-composite materials instead of aluminum. The expectation is that this lighter plane will consume 20% less fuel than a comparable aircraft design.
The program hasn’t been without its problems: The certification is about 3 years behind the original schedule, and cost overruns are estimated to be in the billions of dollars.
Boeing executives refused to discuss when the 787 program will be profitable. Right now, there are orders for roughly 850 planes.
Boeing decided to take a different path to bringing this aircraft to the marketplace, employing global design and supply chain resources. For one, there would be no prototype mockup built—this aircraft would be designed completely by computer. Engineering design would be distributed globally, increasing the risk that it would be difficult to collaborate and coordinate all the design elements. And finally, there would be a global supply chain that needed to be developed—787 final assembly and testing would occur in the U.S.
Most of the 787 program delay is attributed to a decentralized, global engineering strategy and a complex supply chain involving some 50 partners. These partners have had to make substantial investments in tooling and inventory under the provision that they would receive no compensation for their efforts until each aircraft is sold. The delays have to have been excruciatingly painful for Boeing’s partners.
Boeing’s CEO Jim McNerney said in a speech back on November 11, 2010:
"In retrospect, our 787 game plan may have been overly ambitious, incorporating too many firsts at once—in the application of new technologies, in revolutionary design-and-build processes, and in increasing global sourcing of engineering and manufacturing content."
Boeing’s ultimate success in employing this global design and supply chain strategy will likely impact future aircraft design as Boeing and Airbus seek to push the risk and cost to global partners.
Let’s not forget a key aspect of this whole process. While we can applaud Boeing for getting this aircraft certified, the delays have had a significant impact on airlines determining when they can incorporate these new aircraft into their fleets.
Current estimates are that Boeing has the capacity to begin delivering ten 787 aircraft per month in 2013. Will the order backlog hold up? At present rates, it would take about 7 to 8 years to build out the current order backlog of 850 aircraft. With the projected savings available from the 787, the order backlog should increase as airlines see the opportunity to increase their fuel efficiency and modernize their fleets.
Boeing has a significant challenge ahead. We celebrate the milestone! Now, Boeing—get to work!
Dave Gardner is a management consultant, speaker and blogger who resides in Silicon Valley. His firm helps clients eliminate business execution issues that threaten profitable and sustainable growth. He can be reached through his website at www.gardnerandassoc.com or via Twitter @Gardner_Dave
[Image: Flickr user guerric]