boeing undergraduate case competition 2016

UNLOCKING THE NEXT 100 YEARS OF SUCCESS

CHRISTINA LICALEB KWOK

CASEY CONNERCHRISTIAN GIBSON

CARLEY BELSTERLING

BOEING’S 1916 – 2016 AT A GLANCE

Operate as One

Delivering customer value

Leading with innovation

Growing through productivity

Leveraging global strength

100 Years

Kaizen

J.I.T. Efficiency

5S Efficiency

Implementation

Risk Mitigation

K.E.E. Concepts

• 120 to U.S. Navy (2017 – 2021)• 180 to Germany (2017 – 2021)• Produce 5 per month at capacity

V-22 OSPREY CONTRACTS

Circling Back

Renegotiated Contract:• 120 to U.S. Navy (2017 – 2021)• 180 to Germany (2017 – 2026)• Max 90 to Germany (2017 – 2021)

How can we scale back production while maintaining profitability?

K.E.E. CONCEPTS INITIATIVE

CELEBRATING THE PAST, PREPARING FOR THE FUTUREA three-pronged strategy for success

hson

K.E.E. CONCEPTS INITIATIVE

K.E.E. Concepts Initiative

Efficiency in our supply chainE

Kaizen-centered cultureK

Efficiency in the workplaceE

100 Years

Kaizen

5S Efficiency

Implementation

Risk Mitigation

K.E.E. Concepts

Circling Back

J.I.T. Efficiency

REDEFINING CORPORATE CULTURE

Rewar

ds &

Recogn

ition

02• S.M.A.R.T. goals• Recognizing achievements• Celebrate hard work

Kaizen

Lea

dership

Training

04• Increase participation• Teach growth philosophy

• Operating as One Boeing• Inspire passion in

employees

01Corporate

Culture

Mentorship

03• Establish relationships• Improve communication

Kaizen

100 Years

Kaizen

5S Efficiency

Implementation

Risk Mitigation

K.E.E. Concepts

Circling Back

K.E.E. Concepts Initiative

J.I.T. Efficiency

57 hours

65 hours

KAIZEN’S VALUE ADD

K.E.E. Concepts Initiative

Mentorship Kaizen

Culture

Recognition

12%increase productivity

100 Years

Kaizen

5S Efficiency

Implementation

Risk Mitigation

K.E.E. Concepts

Circling Back

J.I.T. Efficiency

EFFICIENCY IN THE SUPPLY CHAIN

Just-In-TimeSourcing

K.E.E. Concepts Initiative

100% of suppliers on JIT contracts by Year 3

100% supplier quality sign off by Year 3

Kanban “Card”Pull systemMaterial replenishment

Takt Time “Rhythm”Pace of productionProduction time ÷ demand

Continuous FlowReduced work in progress

Minimal delay between steps

Standardized WorkMeasure & document best practicesMinimize opportunity for variation

100 Years

Kaizen

5S Efficiency

Implementation

Risk Mitigation

K.E.E. Concepts

Circling Back

J.I.T. Efficiency

SOURCING CHANGES

Costs Per AircraftIncumbent $30,403,440

Weighted-ValueOn-Time 40.00%Quality 30.00%Cost 20.00%Lead-Time 10.00%

K.E.E. Concepts Initiative

EngineSupplier 1 Supplier 2 Suppler 3

5 3 15 3 51 3 55 5 3

4.2 3.2 3.2

Incumbent New

AVERAGE ON-TIME PERCENTAGE

99%

95%

New suppliers $29,507,500

100 Years

Kaizen

5S Efficiency

Implementation

Risk Mitigation

K.E.E. Concepts

Circling Back

J.I.T. Efficiency

5S PROGRAM: MATURITY LEVEL FOUR

Goal

Document housekeeping functionsConsistently follow schedules

Report sources and frequency of problemsDevelop corrective action plans

Structure written housekeeping, inspections, and workplace arrangements

Minimize needed items in work areaArrange items for retrieval and use

Inspect workplace cleanliness daily Restock equipment based on visual controls

Reduce production time

Sort

Set

Shine

Standardize

Sustain

100 Years

Kaizen

5S Efficiency

Implementation

Risk Mitigation

K.E.E. Concepts

Circling Back

K.E.E. Concepts Initiative

J.I.T. Efficiency

DEMING CYCLE P.D.S.A.

Self-examine processes and take corrective

measures

Design improvements

and define success metrics

Implement plan and

measure its performance

Evaluate effects of plan and document

monitored results

Plan

Do

Act

Study

100 Years

Kaizen

5S Efficiency

Implementation

Risk Mitigation

K.E.E. Concepts

Circling Back

K.E.E. Concepts Initiative

J.I.T. Efficiency

PRODUCTION AND FINANCIAL IMPACT

2017 2018 2019 2020 2021 2022 2023 2024 2025 20260

10

20

30

40

50

60

70

Germany

U.S. Navy

Year

Air

craf

t Pro

duct

ion

Gross Income NPV

$889 MM

K.E.E. Concepts Initiative

$1,337 MM

100 Years

Kaizen

5S Efficiency

Implementation

Risk Mitigation

K.E.E. Concepts

Circling Back

J.I.T. Efficiency

IMPLEMENTATION TIMELINE

Year 1• Implement Kaizen

cultural programs• All employees

complete Kaizen Training

Year 3• 100% suppliers

J.I.T. and quality inspection

• 5S maturity level 4

Year 5• Complete U.S.

Navy contract• Continue transfer

of employees to Chinook program

K.E.E. Concepts Initiative

100 Years

Kaizen

5S Efficiency

Implementation

Risk Mitigation

K.E.E. Concepts

Circling Back

Year 10• Complete Germany

contract• Actualize project

NPV and gross income

J.I.T. Efficiency

RISK MITIGATION

Investment in human capital and the future of Boeing

Heavy weight given to suppliers with the highest on-time delivery rates

Accelerated re-training program for V-22 work

Additional contracts

Supplier reliability

Extensive training

K.E.E. Concepts Initiative

100 Years

Kaizen

5S Efficiency

Implementation

Risk Mitigation

K.E.E. Concepts

Circling Back

J.I.T. Efficiency

hson

K.E.E. CONCEPTS INITIATIVE

K.E.E. Concepts Initiative

Efficiency in our supply chainE

Kaizen-centered cultureK

100 Years

Kaizen

5S Efficiency

Implementation

Risk Mitigation

K.E.E. Concepts

Circling Back

Efficiency in the workplaceE

J.I.T. Efficiency

K.E.E. CONCEPTS INITIATIVE

CELEBRATING THE PAST, PREPARING FOR THE FUTUREA three-pronged strategy for success

APPENDIX: SUPPLIER ANALYSIS

  Engine Aux Power Units Landing Gear Seat Cockpit Displays Radar

 Supplier

1Supplier

2Suppler

3Supplier

1Supplier

2Suppler

3Supplier

1Supplier

2Suppler

3Supplier

1Supplier

2Suppler

3Supplier

1Supplier

2Suppler

3On-Time 5 3 1 1 5 3 5 3 1 3 1 5 3 1 5Quality 5 3 5 3 5 5 3 1 5 5 3 5 1 3 5Cost 1 3 5 1 3 5 5 3 1 3 5 1 1 3 5Lead-Time 5 5 3 3 5 5 3 5 1 5 3 1 3 1 5  4.2 3.2 3.2 1.8 4.6 4.2 4.2 2.6 2.2 3.8 2.6 3.8 2 2 5        Flight Control CPU Fuel Tanks Guidance System Troop Seats Crew Seats

 Supplier

1Supplier

2Suppler

3Supplier

1Supplier

2Suppler

3Supplier

1Supplier

2Suppler

3Supplier

1Supplier

2Suppler

3Supplier

1Supplier

2Suppler

3On-Time 5 3 5 1 3 5 3 5 5 5 5 3 5 5 5Quality 5 3 1 3 5 5 3 5 5 3 5 5 5 5 5Cost 1 5 3 5 1 3 1 3 5 1 5 3 1 3 5Lead-Time 5 5 5 3 5 3 3 1 5 5 5 5 5 5 5  4.2 3.6 3.4 2.6 3.4 4.4 2.6 4.2 5 3.6 5 3.8 4.2 4.6 5        Radios Flight Controls Cabin Intercom System Interior Lighting System Flight Control Actuators

 Supplier

1Supplier

2Suppler

3Supplier

1Supplier

2Suppler

3Supplier

1Supplier

2Suppler

3Supplier

1Supplier

2Suppler

3Supplier

1Supplier

2Suppler

3On-Time 5 1 3 5 3 1 3 5 5 1 3 5 1 3 5Quality 3 5 5 3 3 3 5 5 3 3 5 5 5 3 5Cost 3 5 1 3 5 5 3 1 5 1 3 5 5 3 3Lead-Time 3 1 5 3 5 5 5 3 3 3 5 1 5 3 3  3.8 3 3.4 3.8 3.6 2.8 3.8 4 4.2 1.8 3.8 4.6 3.4 3 4.4

APPENDIX: SOURCING BREAK DOWN

Commodity Supplier On-Time Quality Cost Lead-TimeEngines Supplier 1 99.50% 100.00% $6,500,000.00 13 Mos

Aux. Power Units Supplier 2 95.00% 98.00% $525,000.00 11 MosLanding Gear Set Supplier 1 98.00% 99.50% $850,000.00 12 Mos

Cockpit Displays Supplier 3 99.50% 100.00% $606,000.00 12 MosRadar Supplier 3 100.00% 100.00% $1,150,000.00 12 MosRadios Supplier 1 100.00% 95.00% $300,000.00 9 Mos

Flight Controls Supplier 1 100.00% 100.00% $350,000.00 11 MosCabin Intercom System Supplier 3 98.00% 99.00% $151,000.00 10 Mos

Flight Control Computers Supplier 1 98.00% 100.00% $700,000.00 12 MosFuel Tanks Supplier 3 100.00% 100.00% $456,000.00 10 Mos

Guidance System Supplier 3 100.00% 100.00% $1,015,000.00 12 MosTroop Seats Supplier 2 100.00% 100.00% $1,045,000.00 14 MosCrew Seats Supplier 3 100.00% 100.00% $940.00 7 Mos

Interior Lighting System Supplier 3 100.00% 100.00% $123,000.00 12 MosFlight Control Actuators Supplier 3 100.00% 100.00% $770,000.00 12 Mos

APPENDIX: V-22 OSPREY TAKT TIME

Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

# aircrafts 50 60 40 30 30 30 20 20 10 10

Daily TT 0.136986 0.164384 0.109589 0.082192 0.082192 0.082192 0.054795 0.054795 0.027397 0.027397

Average Daily TT 0.082192

Original Daily TT: 0.164384

APPENDIX: 2017 – 2026 INCOME STATEMENT

US Navy Aircraft $4,800,000,000.00Germany Aircraft $11,700,000,000.00Total Revenue $16,500,000,000.00Depreciation -$1,666,666,666.67Production Worker Pay -$550,680,000.00Production Fringe -$192,738,000.00Support Worker Pay -$392,560,000.00Support Fringe -$137,396,000.00Management Pay -$70,400,000.00Management Fringe -$24,640,000.00Supplier Parts -$8,852,250,000.00In House Parts -$2,213,062,500.00Overhead -$1,062,000,000.00Total Costs -$15,162,393,166.67Gross Income $1,337,606,833.33

APPENDIX: DISCOUNTED GROSS INCOME FLOW

2017 2018 2019 2020 2021Net Income Flow $30,177,583.33 $275,333,833.33 $143,318,333.33 -$50,177,916.67 -$50,177,916.67Discounted Value $30,177,583.33 $250,303,484.85 $118,444,903.58 -$37,699,411.47 -$34,272,192.25

2022 2023 2024 20225 2026Net Income Flow $440,822,083.33 $238,325,833.33 $238,325,833.33 $35,829,583.33 $35,829,583.33Discounted Value $273,715,831.22 $134,528,719.78 $122,298,836.16 $16,714,765.05 $15,195,240.96Total Gross Income$1,337,606,833.33

NPV$889,407,761.21

APPENDIX: EMPLOYMENT TIMELINE

Year 2017 2018 2019 2020 2021Production 1500 1800 1100 825 825

Support 834 1000 612 459 459Management 109 130 80 60 60

Total 2443 2930 1792 1344 1344

Year 2022 2023 2024 2025 2026Production 825 550 550 275 275

Support 459 306 306 153 153Management 60 40 40 20 20

Total 1344 896 896 448 448

APPENDIX: 2017 INCOME STATEMENT

US Navy Aircraft $1,200,000,000.00Germany Aircraft $1,300,000,000.00Total Revenue $2,500,000,000.00Depreciation -$166,666,666.67Production Worker Pay -$112,320,000.00Production Fringe -$39,312,000.00Support Worker Pay -$80,000,000.00Support Fringe -$28,000,000.00Management Pay -$14,300,000.00Management Fringe -$5,005,000.00Supplier Parts -$1,475,375,000.00In House Parts -$368,843,750.00Overhead -$180,000,000.00Total Costs -$2,469,822,416.67Gross Income $30,177,583.33

APPENDIX: 2018 INCOME STATEMENT

US Navy Aircraft $1,200,000,000.00Germany Aircraft $1,950,000,000.00Total Revenue $3,150,000,000.00Depreciation -$166,666,666.67Production Worker Pay -$112,320,000.00Production Fringe -$39,312,000.00Support Worker Pay -$80,000,000.00Support Fringe -$28,000,000.00Management Pay -$14,300,000.00Management Fringe -$5,005,000.00Supplier Parts -$1,770,450,000.00In House Parts -$442,612,500.00Overhead -$216,000,000.00Total Costs -$2,874,666,166.67Gross Income $275,333,833.33

APPENDIX: 2019 INCOME STATEMENT

US Navy Aircraft $800,000,000.00Germany Aircraft $1,300,000,000.00Total Revenue $2,100,000,000.00Depreciation -$166,666,666.67Production Worker Pay -$68,640,000.00Production Fringe -$24,024,000.00Support Worker Pay -$48,960,000.00Support Fringe -$17,136,000.00Management Pay -$8,800,000.00Management Fringe -$3,080,000.00Supplier Parts -$1,180,300,000.00In House Parts -$295,075,000.00Overhead -$144,000,000.00Total Costs $1,956,681,666.67Gross Income $143,318,333.33

APPENDIX: 2020 INCOME STATEMENT

US Navy Aircraft $800,000,000.00Germany Aircraft $650,000,000.00Total Revenue $1,450,000,000.00Depreciation -$166,666,666.67Production Worker Pay -$51,480,000.00Production Fringe -$18,018,000.00Support Worker Pay -$36,720,000.00Support Fringe -$12,852,000.00Management Pay -$6,600,000.00Management Fringe -$2,310,000.00Supplier Parts -$885,225,000.00In House Parts -$221,306,250.00Overhead -$99,000,000.00Total Costs -$1,500,177,916.67Gross Income -$50,177,916.67

APPENDIX: 2021 INCOME STATEMENT

US Navy Aircraft $800,000,000.00Germany Aircraft $650,000,000.00Total Revenue $1,450,000,000.00Depreciation -$166,666,666.67Production Worker Pay -$51,480,000.00Production Fringe -$18,018,000.00Support Worker Pay -$36,720,000.00Support Fringe -$12,852,000.00Management Pay -$6,600,000.00Management Fringe -$2,310,000.00Supplier Parts -$885,225,000.00In House Parts -$221,306,250.00Overhead -$99,000,000.00Total Costs -$1,500,177,916.67Gross Income -$50,177,916.67

APPENDIX: 2022 INCOME STATEMENT

US Navy Aircraft $0.00Germany Aircraft $1,950,000,000.00Total Revenue $1,950,000,000.00Depreciation -$166,666,666.67Production Worker Pay -$51,480,000.00Production Fringe -$18,018,000.00Support Worker Pay -$36,720,000.00Support Fringe -$12,852,000.00Management Pay -$6,600,000.00Management Fringe -$2,310,000.00Supplier Parts -$885,225,000.00In House Parts -$221,306,250.00Overhead -$108,000,000.00Total Costs $1,509,177,916.67Gross Income $440,822,083.33

APPENDIX: 2023 INCOME STATEMENT

US Navy Aircraft $0.00Germany Aircraft $1,300,000,000.00Total Revenue $1,300,000,000.00Depreciation -$166,666,666.67Production Worker Pay -$34,320,000.00Production Fringe -$12,012,000.00Support Worker Pay -$24,480,000.00Support Fringe -$8,568,000.00Management Pay -$4,400,000.00Management Fringe -$1,540,000.00Supplier Parts -$590,150,000.00In House Parts -$147,537,500.00Overhead -$72,000,000.00Total Costs -$1,061,674,166.67Gross Income $238,325,833.33

APPENDIX: 2024 INCOME STATEMENT

US Navy Aircraft $0.00Germany Aircraft $1,300,000,000.00Total Revenue $1,300,000,000.00Depreciation -$166,666,666.67Production Worker Pay -$34,320,000.00Production Fringe -$12,012,000.00Support Worker Pay -$24,480,000.00Support Fringe -$8,568,000.00Management Pay -$4,400,000.00Management Fringe -$1,540,000.00Supplier Parts -$590,150,000.00In House Parts -$147,537,500.00Overhead -$72,000,000.00Total Costs -$1,061,674,166.67Gross Income $238,325,833.33

APPENDIX: 2025 INCOME STATEMENT

US Navy Aircraft $0.00Germany Aircraft $650,000,000.00Total Revenue $650,000,000.00Depreciation -$166,666,666.67Production Worker Pay -$17,160,000.00Production Fringe -$6,006,000.00Support Worker Pay -$12,240,000.00Support Fringe -$4,284,000.00Management Pay -$2,200,000.00Management Fringe -$770,000.00Supplier Parts -$295,075,000.00In House Parts -$73,768,750.00Overhead -$36,000,000.00Total Costs -$614,170,416.67Gross Income $35,829,583.33

APPENDIX: 2026 INCOME STATEMENT

US Navy Aircraft $0.00Germany Aircraft $650,000,000.00Total Revenue $650,000,000.00Depreciation -$166,666,666.67Production Worker Pay -$17,160,000.00Production Fringe -$6,006,000.00Support Worker Pay -$12,240,000.00Support Fringe -$4,284,000.00Management Pay -$2,200,000.00Management Fringe -$770,000.00Supplier Parts -$295,075,000.00In House Parts -$73,768,750.00Overhead -$36,000,000.00Total Costs -$614,170,416.67Gross Income $35,829,583.33