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Boeing's offshoring woes: seven lessons every CEO must learn

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Author: Denning, Stephen

Source: Strategy and Leadership, Volume 41, Number 3, 2013, pp. 29-35(7)

Publisher: Emerald Group Publishing Limited

DOI: https://doi.org/10.1108/10878571311323190

Purpose ‐ The author's research using published internal reports and news reports suggests that some of Boeing problems with its innovative 787 Dreamliner aircraft are symptoms of a deeper calamity that has been causing US industry to waste away for decades: flawed offshoring decisions by the C-suite. This paper aims to address this issue. Design/methodology/approach ‐ The paper defines seven lessons about the risks of outsourcing that executives need to learn from observing the problems Boeing is having with the 787 plane. Findings ‐ The paper finds that in analyzing offshoring, firms must get beyond rudimentary cost calculations focused on short-term profit and consider the total cost and risk of extended international supply chains. Practical implications ‐ In contrast to Boeing's practices, what Apple has done has worked amazingly well, because they have the capability to do the perfect prototype in the USA, before it gets offshored to Foxconn. Originality/value ‐ In addition to highlighting the risk of attempting to offshore technological innovation, the paper offers a vision for the future. Success in this new world of manufacturing will require a radically different kind of management. It will require a different goal (adding value for customers), a different role for managers (enabling self-organizing teams), a different way of coordinating work (dynamic linking), different values (continuous improvement and radical transparency) and different communications (horizontal conversations).

Keywords: Aeroplanes; Mismanagement of offshoring; Offshoring; Outsourcing; Process-engineering capabilities; Reshoring; Supply chain management; Supply chain risk

Document Type: Research Article

Publication date: 26 April 2013

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