Boeing's Strategic Initiative: Raw Material Supply Chain Risk Mitigation

by: Prakash Sathe

Publication Date: April 5, 2019
Length: 30 pages
Product ID#: 1-035-801

Core Disciplines: Operations Management/Supply Chain

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Teaching Note

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This case details The Boeing Company’s raw material supply chain risks and explores appropriate strategies to mitigate them. Aluminum and titanium accounted for about 75% of the weight of a typical large commercial aircraft, so Boeing and its suppliers bought hundreds of millions of pounds of these metals every year in order to manufacture structural parts. But Boeing’s forecasting methodologies for aluminum and titanium consistently underestimated true demand, which cost the company significant time and money.

The case describes an ineffective scrap recovery process which failed to recover millions of dollars of precious scrap material, as well as a disproportionately low allocation of risk mitigation resources to raw material mills. Students will analyze purchasing policies pertaining to supplier evaluation and develop new strategies to minimize raw material costs.

Teaching Objectives

After reading and discussing the material, students should:

  • Understand the risks of raw material flow interruptions in the supply chain.
  • Examine external versus internal causes of suboptimal supply chain performance.
  • Identify internal processes in need of improvement to ensure efficient supply chain functionality.
  • Analyze purchasing policies pertaining to supplier evaluation and develop new strategies to minimize raw material costs.