Wednesday, September 14, 2016

The 787 Has Reached Lean Production Numbers

An obscure topic in the corporate manufacturing is Lean production. It indicates efficiency, inventory management, and optimal investment within its Works-In-Progress Inventory. It also has far reaching implication for Boeing's over-all strategy of reducing backlog and upping cash flow, which in turn gives Boeing a far reaching strategy of giving customers a higher degree of product immediacy within that company’s own planning. The below Chart is a quick and dirty illustration of the Boeing production efficiency is reaching a climax for optimal outcome touching many aspects of Boeing's over-all game planning.

Fig.1: 37 units Works-in-progress (WIP) 8-2016 Data

Fig.2 The 11-30-2015 WIP Report is 45, 787’s

The above two charts show a reduction of Works-in-process 787's by about 21%. The number came down from 45 Dreamliners found in the November 2015 report of only having the current 37 Dreamliners in the same status. Several assumptions can be made from this decrease with production floor units.

1. Factoring the WIP reduction production floor churning, indicates more a efficient production line where Boeing does not need additional space caused by slow production. As the production rate per month increases the WIP numbers decrease.

2. It also indicates rising cash position as it delivers more 787 each month.

3. Additionally, an intrinsic value comes from customer satisfaction while opening Boeing up for more sales.

4. Finally, there is a reduction of production cost for materials, space and labor expended, which meets the optimal Just-In Time model for efficiency.

A final optimal number is derived by Boeing as it reaches 14 units per month with its work force, plant, and inventory. Boeing's always improving theme will squeeze the WIP number below thirty-five a month giving it optimal flexibility and response to the market growth. It is a distinct advantage over Airbus' production start-up for its own A-350's. They are still working the kinks out as Boeing grabs more sales in the upcoming months when its backlog dips below 700, 787 this month.