The coordination riskEven with prov

The coordination risk

Even with proven technology, there are major risks in outsourcing that components won’t fit together when the plane is being assembled. “In order to minimize these potential problems,” wrote Dr. L. J. Hart-Smith, a Boeing aerospace engineer, in a brilliant paper presented at a 2001 conference, “it is necessary for the prime contractor to provide on-site quality, supplier-management, and sometimes technical support. If this is not done, the performance of the prime manufacturer can never exceed the capabilities of the least proficient of the suppliers. These costs do not vanish merely because the work itself is out-of-sight.”

Boeing did not plan to provide for such on-site support for its suppliers. In fact, it explicitly delegated this responsibility to sub-contractors. When the subcontractors didn’t perform the necessary coordination, Boeing had to provide the support anyway. “Boeing sent hundreds of its engineers to the sites of various Tier-1, Tier-2, or Tier-3 suppliers worldwide to solve various technical problems that appeared to be the root cause of the delay in the 787′s development. Ultimately, Boeing had to redesign the entire aircraft sub-assembly process.” The result? Huge additional expense, that should have been planned for and included in the project’s costs from the outset.