Boeing: The Fight for Fasteners

by: Ravi Anupindi

Publication Date: November 17, 2009
Length: 26 pages
Product ID#: 1-428-787

Core Disciplines: International Business, Operations Management/Supply Chain

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Teaching Note

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Boeing originally was scheduled to deliver the Dreamliner to airline customers in mid-2008. However, after five announced delays over two years, the company was forced to postpone the first test flight. One driver for the delay was an industry-wide shortage of aerospace fasteners, the hardware that held the aircraft together. Engineers at Boeing never could have imagined that fasteners, which comprise approximately 3% of the total cost of an aircraft, would become such an issue. To address the fastener issue, Boeing’s management knew that it could not just use a band-aid solution; rather, it had to drive sweeping changes to the way the industry and supply chain functioned. Boeing’s solution: the fastener procurement model (FPM).

Teaching Objectives

After reading and discussing the material, students should:

  • Identify how industry dynamics and lack of vigilance even on low-spend items, like fasteners, can place a company at considerable risk
  • Understand and critique the design and implementation of Boeing's new procurement model
  • Articulate different ways an OEM and its partners can source components, including when and how an OEM should reach further back in its supply chain