Analysis of customer-driven and systemic variation in the airplane assembly process

Abstract

The Boeing Company has long been troubled by the unpredictable nature of the costs of the manufacturing and assembly of an airplane. Due to the complexity of the product it has been exceedingly difficult to determine whether the process is inherently unstable or if there are unique characteristics of individual planes that drive the differences in cost. This paper investigates the drivers of the variation of cost in the airplane assembly process. Using the 777 as a case study, we evaluated over two hundred consecutively built aircraft to gain an understanding of those factors that contribute to the overall cost of assembly of each plane. Our conclusion was that there is, in fact, considerable stability to the airplane manufacturing process. While Boeing must continue to deal with the inevitability of unforeseen events, there is considerable evidence to support a high predictability of the costs of each airplane based on factors that are known at the time the order for the plane is placed and long before the plane is manufactured.