boeing undergraduate case competition 2016
TRANSCRIPT
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