Digital transformation critical to Boeing

Who’s Benefit?

BCA would have to justify a push to integrate suppliers into SAP based on efficiency gains. But how would the gains be divided? Boeing executives have made it clear that they want to cut into Tier 1 suppliers’ fatter profit margins.

So, Boeing likely would want a greater share of any efficiency gains to accrue to its bottom line. Of course, that will be fine for some suppliers and not okay for others. It should be noted, for decades Boeing has worked with suppliers to make their operations more efficient, with both sharing the cost reductions.

No suppliers expressed serious reservations about divvying up savings from greater integration with Boeing supply chain management.

Supplier Autonomy was the biggest concern.

Suppliers expressed concern about losing autonomy inasmuch as it would ultimately affect their bottom lines.

“It’s our (supplier) rating” at risk, a manager at a smaller Tier 1 supplier said. “If Boeing comes in and screws up our algorithms and screws up our production, our supplier rating goes down.”

And that potentially means losing future work.

What’s the business model?

One of the biggest barriers to more integrated digital manufacturing, said an executive at a multinational Tier 1 supplier, is coming up with a framework that suppliers and OEMs can trust.

“The question is, ‘What’s the business model?’,” he asked, rhetorically.

Turning over terabytes or petabytes of data to an OEM has to produce a clear benefit to justify the immediate and potential costs, he said.

One reason suppliers may be willing to hand over data to Boeing is if they can influence the product and production flows in a way that benefits the supplier, as well as the OEM, he said.

Another concern suppliers expressed to LNA is increasing the risk of security breaches. No doubt, Boeing has the same concern. The more data is transmitted, the bigger a network system, the more vulnerabilities exist.

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