Lean Manufacturing at Boeing and Airbus

1. Lean Manufacturing at Boeing and Airbus Chris Hall and Josh McArthur

2. Boeing was founded on July 15, 1916 by William E. Boeing as Pacific Aero Products • Became Boeing Airplane Company in 1917 • First “modern” plane, the 247 built in 1933 • Government regulations force a split into Boeing Airplane Co. and United Airlines in 1934 • Built B-17 bombers in WW2, peak production was 350 planes a month • First commercial jet, the 707, introduced in 1958 • 1967 the 737 is introduced, the top selling plane of all time. It is still being manufactured with modern updates • Top contractor for the International Space Station • Lost its market leadership position to Airbus in 2003

4. Company Background • Airbus was formally established in December 1970 in France. • Company was founded by grouping of leading German aircraft manufacturing firms. • Together the companies had decided to build the A300, the first twin-engine wide body airliner, to fill a gap in the market and to challenge American supremacy in the aviation industry. • In 1972 the Airbus A300 made its maiden flight. • By 1979 their were only 81 A300’s in service. • The launch of the Airbus A320 in 1981 established Airbus as a major player in the aircraft market. • The A320 was move advanced, fuel efficient, and smaller.

5. Company Background • Through out the 1980’s and up until today Airbus has continued to grow their company through both civilian and military contracts. • Airbus is a EADS company (European Aeronautic Defense and Space) • Currently employee over 57,000 people • President and CEO is Thomas Enders

8. Competition • Airbus and Boeing are in direct competition with each other year after year. • There are around 5000 airbus aircrafts in service. • There are alone over 5000 Boeing 737’s in service. ORDERS

9. What is Lean and Why Should You Care? • A set of tools to reduce waste and create process flow • Developed by Toyota • Includes value stream mapping, 5S, kanban, and error-proofing ( poka-yoke ), and production leveling • Reduction of 3 types of waste: • Non-value-added work ( muda ) • Overburdened systems ( muri ) • Unevenness ( mura ) • Incorporates JIT and “smart automation” • Inventory turns are a common lean measure

10. Boeing Goes Lean • In the early 90’s Boeing realized it needed to improve its process flow • Executives were sent to Japan to study JIT, error free production, and process flow • Consultants were hired from Shingijutsu Co., a group of former Toyota executives • “To make planes is to make and develop people” – Chihiro Nakao it’s all about training

11. The Apache is a Bit Chubby • Boeing took over manufacture of the Apache in 1997 • Cycle time was increasing and quality slipping • 22 aircraft in inventory for a 2 per month delivery • Huge inventory costs

12. The Apache Slims Down • Manpower reduced and more direct work on the helicopters was achieved • Factory floor redesigned by building wood and styrofoam models • Tools and parts arranged for minimal movement • Support cells moved alongside the aircraft • Process targeted for 75% reduction, 72% was achieved in the first year • Takt time is 2.75 days, calculated from customer demand, creating a “pulse line”

13. The Results • 85% reduction in hours to assemble an Apache, 54% in total build time • 218% increase in build rate • 87 inspectors now working as mechanics, now only 16 auditors remain • Overtime costs reduced from 20% to 3-5% • $8 million per month saved in inventory costs

14. Lean Training for the Commercial Division • 1500 executives trained in Japan over a 3 year period • 50 master six-sigma black belts, over 100 green belts • 3-400 trained in kaizen • Toyota consultants hired for 350 billed weeks/year, now down to about 100/year

15. The 737 Line • Boeing worked backward from the plant exit to reorient the line, from a 2 line slant build to a single nose to tail • This change helped implement a moving line system • 60% of the time was spent away from the plane, so point of use kitting was incorporated

16. Improving 737 Production • Boeing is working with suppliers to use a JIT system on the 737 line • The goal is first contact by a Boeing employee is attaching the part to the aircraft • Flow time reduced from 28 days to 22, 15, and now 11 days

17. 737 Continued • Moving line is set at 2 inches per minute, calibrated to team task times with point of use kits • Crane moves reduced by 39% • Flow times improved by 30% • Inventory levels dropped by 42% • Floor space reduced by 216,000 square feet

18. Supplier Improvements • Woven Electronics improved inventory turns from 7 in 2000 to 26 in 2006, and will soon achieve one-piece flow • Interior manufacturers reduced flow time for overhead storage bays from 140 days to 4 • Wing production facilities have created a savings of $58,000 per set of wings, and have a goal of $100,000

19. Non-Manufacturing Gains • Non value added steps being removed allowed a rework of the variable labor scheduling, resulting in a new computerized scheduling optimizer. The Result, $200,000 in initial savings and $40,000/yr in reduced time and paperwork costs • Improved requisition process allows early negotiation with suppliers and customers • New office supplies procurement system tracks thousands of commonly used items at various facilities

20. Non-Manufacturing Gains • Renton lake facility reorganized after a 2001 earthquake destroyed • Consolidation reduced square footage by 40%, forcing more efficient organization. • Managers and engineers offices overlook the factory floor, with glass and plastic barriers to allow them observation points. Factory sounds filter into the office environment • This setup keeps everyone focused on the final result, a better, more efficient plane

22. LEAN AIRBUS • The concept that turned Toyota into a powerhouse is now transforming aerospace companies. • Lean cut assembly time for the Boeing 737 by more than half, transformed an Airbus factory, and probably saved Pratt & Whitney from going belly-up. • At its most basic, lean means eliminating waste, defined as anything that uses resources without creating value for the customer. • In four years, the Airbus factory in North Wales, which produces wings for all the company’s airliners, has reduced quality defects by 62%

23. LEAN AIRBUS • In the 1990’s delivery of its wings to Airbus’s final assembly plant in France, took place on schedule only 18% of the time. • They began leading a formal implementation of lean initiatives that by 2001 had boosted on-time delivery to 100%, where it has stayed ever since. • To achieve these results Airbus appointed Unipart Logistics as a supply chain partner and Lean Logistics Service Partner for the Broughton operation.

24. LEAN AIRBUS • Unipart had been able to demonstrate a rich heritage in lean operations and a track record of developing and implementing lean logistics solutions for clients in a diverse range of industries. • Working as an integrated part of the Airbus organization, Unipart assumed overall responsibility for a wide range of supply chain operations

25. LEAN AIRBUS Productivity improved through: • Implementation of Lean Principles and developing Unipart’s culture of continuous improvement • Progressive synchronization of extended supply chain activities. • Supplier capability assessments and improvement programmers. • Airbus manufacturing project planning and support • Improving operational control through introduction of standard operating procedures.

26. LEAN AIRBUS BENEFITS • Reduction in operational headcount activity allowing for reallocation of staff • Inbound processing time reduced by 70% • 80% reduction in lead time and kitting inventory for A320 Family production • 16,000 man hour savings identified throughout the internal Supply Chain and Manufacturing areas • 30% recorded improvement in stock integrity levels • 51% improvement in internal customer satisfaction score • Consolidation of kitting operations allowing for integration of processes creating cost and space reductions • Improved layout and material flow releasing required floor space