supply chain quality

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Decades ago, aerospace manufacturing moved from a quality model of “a second set of eyes” to “build quality in, rather than inspect it in”.  Those like me who were there when this change happened will know what that means.  But for those who do not, the basic concept changed from Quality representatives directly approving all operations to delegating the buy off of some operations to the operators themselves.  Thereby eliminating a “second set of eyes” approving the work.  Why does this make sense?  There are many reasons, but I will focus on two.  First, if operators view it as Quality’s responsibility to detect errors, then the operators abdicate responsibility for the quality of the part.  Second, it speeds production and frees Quality to provide more systematic support of a Total Quality Management System.  I must confess that I initially thought it was madness but eventually embraced it.  When done well, it works well.  When not done well though, you get what we have all seen in the past few years.

The MAX problems are well documented so I will spend a little time discussing the 787.  Boeing made their last delivery of a 787 in June due to quality problems both internally and in the supply chain.  Fit up problems between fuselage sections, fit up problems of doors to fuselage sections and use of unauthorized release agents in bonding are all examples.  The companies involved are major Tier Ones like Leonardo, Mitsubishi Heavy Industries and Spirit.  The view of the FAA at this point is that Boeing does not have its arms around quality control internally or in its supply chain (“Boeing Dreamliner Defects Bog Down Production”, Wall Street Journal, 11/22/2021).  Boeing will have to generate corrective action this time that yields tangible evidence of change.  To accomplish that, they will in turn need the Tier Ones to do the same thing.  Tangible evidence of change will not mean sending out teams to provide training and commitments from the suppliers to do the same, although that will be part of it.  That, unfortunately, is evidence of an effort to change, not change itself.  In my opinion, it will take measurable, demonstrable steps.  Hiring additional inspectors and taking back some delegations of authority both between companies and, perhaps more tellingly, on the shop floor within companies. I should probably note here that I am not advocating one way or the other, just pointing out that this is my expectation.

What is contemplated above is a significant change in the production process throughout the supply chain. I do not expect it to be limited to Boeing either. Ultimately the additional oversight and publicity around the change will cause regulators to pressure Airbus and others. The position will be that if the problem exists on a supplier’s Boeing products, then the problem exists on the products of their other customers. Added to that is, in general, companies do not want multiple operating systems on their shop floor and should gravitate towards meeting the strictest requirement. The result will be delays in production. Some examples might be helpful here. Anyone who has ever waited on source inspection knows how long that can take. It will only get worse as many suppliers at once are waiting on source inspection at the same time.  Unfortunately, this comes at a time when there is a shortage of experienced personnel (see https://www.linkedin.com/posts/cliff-collier-a3818061_opinion-when-a-bountiful-orderbook-is-not-activity-6742127745351901184-gI8r for more insight from a year ago).  Inexperienced source inspectors by the way are much more likely to reject parts. It is simply safer to say you have to refabricate the part rather than rework it from the view of the inspector. So, there will be delays between suppliers in the chain but perhaps more important will be delays on the floor. To give just one example, one advantage of training operators to do their own buy offs is they can proceed to the next operation without waiting on inspection. While this is important in daily operations, it is particularly important for second shift and weekend operations. Those are precisely the operations that will be needed as the industry ramps up in an era of limited skilled, experienced employees.

The shortage of skilled, experienced workers was something we predicted a year ago. The tightening of supplier quality oversight was something we predicted two years ago. My view now is that the two forces will interact to provide noticeable headwind to production rates for the next eighteen months.