Question 1: What are the benefits to Boeing of outsourcing so much work on the 787 to foreign

suppliers?
Answer: Outsourcing is an allocation of specific business processes to a specialist external
service provider. Most of the times an organization cannot handle all aspects of a business
process internally so they outsource their resources.
Boeing which is an American multinational corporation that designs, manufactures, and sells
airplanes, rotorcraft, rockets and satellites. It also provides leasing and product support services.
The benefits Boeing will get from outsourcing from foreign suppliers are listed below.
In return for a share of the work the partners would contribute towards the estimated $8
billion in development costs.
Boeing will be able to reduce the employee cost.
Boeing will be in contact with some of the best foreign producers and suppliers, which
will help Boeing in long run.
Outsourcing some work to foreign countries will help to acquire sales in some of those
countries.
Outsourcing the design of so many components could cut down time to develop aircraft
to four years from six years.
Question 2: What are the potential risks? Do the benefits outweigh the risk?
Answer: The Risk associated with Boeing and their ideas of outsourcing are described below:
Delivery Issues: It is possible that most foreign producers will be not being able to meet
Boeing delivery schedules. As it happened in the Planes fuselage the part that had been
handled by Alenia Aeronautical, a company from Italy.
Possibility of paying millions in penalty because for late delivery of Boeing 787.
Non-standard Product: Parts not assembled as per Boeings requirement or
Other
company might find it hard to meet Boeing quality standards
The instructions on the panel or assembly charts can be printed in any foreign language
as per standard rule of any foreign country.
Partners may outsource mission critical design work to other companies.
Synchronizing the deliverables: In case you do not choose a right partner for
outsourcing, some of the common problem areas include stretched delivery time frames,
sub-standard quality output and inappropriate categorization of responsibilities. At times
it is easier to regulate these factors inside an organization rather than with an outsourced
partner
Hidden costs: Although outsourcing most of the times is cost-effective at times the
hidden costs involved in signing a contract while signing a contract across international
boundaries may pose a serious threat
Lack of customer focus: An outsourced vendor may be catering to the expertise-needs
of multiple organizations at a time. In such situations vendors may lack complete focus
on your organizations tasks

Unemployment in the Home Country: Outsourcing can cause low employments rate in
America which happens to be Boeings home country.

Question 3: In 2007 and 2008 Boeing ran into several well-publicized issues with regard to its
management of a globally dispersed supply chain. What are the causes of these problems? What
can a company like Boeing do to make sure such problems do not occur in the future?
Answer: An overly complex supply chain with weakness in the management and oversight has
led Boeing to problems of time and quality of products. Some Boeing's suppliers had difficulty to
meet the project delivery schedule (Italy Alenia) and the Parts that were delivered to assembly
did not meet the Boeing's standard and quality. Some of the main suppliers outsourced missioncritical design work to other enterprise (Vought Aircraft Industry).
CAUSES:
Poor management design.
Boeing must have not delivered the standards properly.
Language difference issue must not have been addressed properly that is why some of the
assembly products instructions were in Italian.
WHAT SHOULD BOEING DO AS FUTURE PRECAUTION?
The company should have their standardized design in house and give them to their
suppliers while placing orders and make them realize that following these standards,
designs and quality measures is a must.
Company should focus on R&D and introduce new technology to suppliers to increase
the quality of products as it is good for Boeing and it is Boeings moral responsibility as a
Global company.
Rather than having a large number of suppliers all around the world, company like
Boeing should chose for them only few good suppliers.
The company should have a monitoring system of its suppliers and their work and strictly
forbid further outsourcing from its suppliers.

Question 4: Some critics have claimed that by outsourcing so much work, Boeing has been
exporting American jobs overseas. Is this criticism fair? How should the company respond to
such criticisms?
Answer: From a global perspective, the mere utterance of the word "outsourcing" sometimes
incites controversy. Outsourcing often serves as a major topic of debate during American
presidential elections, as both parties suggest that their candidate is more equipped to preserve
American jobs and boost domestic employment. Companies sometimes use ads to point out
when
competitors
hire
a
significant
amount
of
foreign
workers.
My point of view in accordance with the Boeings planning to outsource is that outsourcing

overseas means you are not hiring locally, which results in fewer jobs, or even lost jobs in your
country. Outsourcing results in a flow of cash out of your country into another, potentially having
a negative impact on your economy, causing local businesses, who employ locally, to lose
business to cheaper overseas groups, and possibly even close up shop completely.
Boeing should response to such criticism with valid arguments of their own, such as;
As a Global company it is their moral duty to assign work abroad
The competitive pricing strategy
Outsourcing had lead Boeing to build the most advanced commercial aircraft.