Complex global supply chains often
create major communication and
coordination problems. For example,
Boeing outsourced the design and development
of many critical sections of
its 787 aircraft to tier-1 suppliers. However,
these tier-1 suppliers subcontract
various modules to tier-2 suppliers, who
in turn outsource certain components
to tier-3 suppliers. With a multi-tier supply
chain that has at least 500 suppliers
located in over 10 countries, the communication
and coordination between
Boeing and those nondirect suppliers regarding various product development
activities were essentially nonexistent.
This is one of the reasons why Boeing’s
787 was launched 3.5 years late and the
development cost was $6 billion over
budget.5 Further, the lack of communication
and coordination is thought to
have caused the battery problems that
grounded the fleet for a period of time.