Why Is Boeing Failing in Safety and Quality - A Failed Lean Transformation Example

Astronauts Stuck in Space?

Two Boeing astronauts, Suni Williams and Barry "Butch" Wilmore, have been stranded on the International Space Station (ISS) for 9 weeks due to mechanical issues with Boeing's Starliner spacecraft. Their planned 8-day mission has turned into a potential 8-month stay due to uncertainty about their spacecraft's safety.

Boeing Starliner Issues

The Starliner spacecraft, developed by Boeing, has faced multiple issues, including helium leaks and thruster malfunctions. These problems delayed docking with the ISS and raised doubts about the safe return of the astronauts.

Return via SpaceX Dragon

NASA decided that the astronauts will return to Earth using a SpaceX Dragon spacecraft, scheduled for February 2025, as the Starliner is unsafe. The Boeing Starliner will return to Earth unmanned.

Originally, the mission's purpose was to test and evaluate Boeing’s Starliner spacecraft, particularly focusing on its safety and capability to transport astronauts to and from the ISS.

Boeing's reputation has taken a severe hit, as the Starliner project has been plagued by delays, budget overruns, and technical issues. The spacecraft was 7 years late and $1.5 billion over budget, raising questions about Boeing's competence in spaceflight compared to its competitor, SpaceX, which has proven more reliable with its Dragon spacecraft.

As a contingency plan, NASA opted to use a SpaceX Dragon spacecraft to retrieve the astronauts. SpaceX's Dragon has successfully transported astronauts to the ISS for over three years, making it the safer option for their return.

And that's how you lose a major customer.

And that's how you lose a business!

But how?  Let's peel the onion!

Problem Definition?  An Incident as a Symptom

• In January 2024, a door blew off a Boeing 737 Max jet 10 minutes into the flight due to four missing bolts that were not replaced during maintenance, revealing Boeing’s severe maintenance oversight.
• The plane, nearly new, landed safely with only a few injuries, but experts attributed this to luck.  Had the incident occurred at cruising altitude, injuries could have been catastrophic, especially if someone had been in the window seat without a seatbelt.

Containment?  How Bad can an Issue Escalate

• Boeing's CEO (Dave Calhoun) took responsibility but gave an unsatisfactory explanation, citing a "quality escape" without clarifying the specific cause.
• Following the incident, the FAA grounded all Boeing 737 Max 9 planes with plug doors for inspection due to similar issues found on other planes.
• Employee Concerns: A report found that Boeing employees did not understand their safety roles and feared retaliation for raising concerns.

Root Cause Analysis

Peeling the Onion:  Manufacturing and Quality Issues

• The preliminary investigation revealed that four bolts meant to secure the door plug were missing.
• Subsequent inspections found loose bolts on many other planes, indicating systemic quality control failures.

Specific Incidents and Failures

• Dreamliner Issues: The Dreamliner project faced significant problems, including structural defects and quality lapses, highlighted by a promotional video revealing the plane as a "shell."
• 737 Max Crashes: Two major crashes were blamed on flawed planes, further damaging Boeing's reputation.  Their MCAS system, linked to a single sensor, was a key factor in the fatal crashes in 2018 and 2019, resulting in a 20-month grounding of the 737 MAX, loss of orders, and severe financial repercussions.

Technical and Training Issues

• MCAS System: Boeing's decision to not fully inform pilots about the MCAS system, which could cause a plane's nose to dip, was a significant factor in the crashes.
• Pilot Training: Boeing marketed the 737 Max as not requiring additional simulator training for pilots, a cost-saving measure that proved dangerous.

Contributing Factors? 

• Supplier Relations and Quality Issues from Aggressive Cost-Cutting: Boeing’s "Partnering for Success" program pressured suppliers to reduce costs by about 15%, leading to strained relationships and quality issues, as suppliers faced financial stress and production difficulties.

• Regulatory Oversight and Internal Issues: The FAA's oversight has been criticized for being too lenient, often deferring to Boeing's internal assessments.
• Pressure on Pilots: Boeing’s crisis management has shifted responsibility onto pilots, relying on them as the last line of defense against safety failures.

But Why a Lean Failure After an Initial Lean Success?

Early Success and Innovations

• Strategic Move: In 2001, a magnitude 6.8 earthquake damaged Boeing’s Washington facilities,  Instead of relocating or rebuilding, Boeing’s leadership consolidated operations at the Renton campus, a move that brought engineers, machinists, and management closer together, enhancing collaboration and efficiency.

• Lean Manufacturing: Inspired by visits to Japanese companies like Toyota, Boeing adopted lean manufacturing principles, including the 5S methodology and Just in Time principles, which helped streamline production and reduce inventory.

• Production Efficiency: By decluttering and optimizing the Renton factory floor, Boeing achieved significant productivity gains, eventually reducing individual production time from 22 days to just 11, and producing over 30 planes per month by 2010.

• 787 Dreamliner Challenges: Boeing’s ambitious plan for the 787 Dreamliner, which included new technologies like a majority composite airframe, faced massive delays, cost overruns, and initial production issues, delaying its market entry and straining supplier relationships.

• 737 MAX Crisis: Faced with Airbus’s fuel-efficient A320neo, Boeing quickly developed the 737 MAX by modifying the existing 737 design instead of creating a new model, leading to design compromises and the implementation of the flawed MCAS software.  

Lean Management System (LMS) - Good Intentions, Misguided Implementation

• LMS as an Enabler: The Lean Management System was supposed to be used to enhance quality and flow within the production system.
  • Employee Engagement: LMS promoted a hands-on approach where employees are encouraged to experiment, learn, and make improvements on the shop floor.
  • Workshops and Training: Boeing utilized multiple workshops and continuous learning sessions to educate and make everyone aware of LMS principles and goals.
  • Certified Training: Boeing had certified trainers for LMS to ensure consistent and effective training across the division.
• Focus on Lean Accounting: Boeing’s LMS includes lean accounting principles, focusing on operational, capacity, and financial metrics rather than traditional finance-only metrics.
  • Simplified Labor Rates: The division reduced labor rates from 10,000 to three or four, eliminating unnecessary departmental tracking and focusing on controllable costs.  However, if you listen to how they did this disregarding employee's concerns, shows lack of respect for people, a foundation for Lean.
  • Network Structure: A network structure was created to support the leadership team and ensure alignment with LMS goals (financials, financials, financials)...

• Value Stream Mapping: The LMS approach involves mapping value streams to identify and control processes, ensuring continuous improvement and operational efficiency.
  
  • Pilot Activities: The fabrication division piloted LMS in various units, such as the propulsion group, which connects engines to planes using robust LMS processes.
  • Continuous Flow Lines: The 737 production line, producing 31 planes per month, exemplifies LMS in action with continuous flow and process improvement.
  • Operational Improvements: Teams analyzed data and targets to identify bottlenecks and make decisions, such as equipment needs, to optimize productivity.
• All great, but why was safety and quality not part of all these initiatives? 

Whistleblower Revelations

• Unsafe Practices: Whistleblowers like Roy Irvin, a retired quality inspector, and Santiago Perez, a former inspector for Boeing's supplier Spirit AeroSystems, exposed regular safety lapses, including missing bolts, damaged parts, and improper installations.
• Management Pressure: Whistleblowers testified about being ordered to ignore or falsify safety defects. Santiago Perez was pressured to underreport defects, facing threats of punishment for insubordination.

Financial Priorities

• Dividends and Buybacks: In 2018, Boeing diverted 92% of its operating cash flow to dividends and share buybacks, far exceeding its spending on R&D.
• Cost-Cutting Measures: To save money, Boeing decided to modify the existing 737 model instead of building a new plane, leading to significant complications.

Historical Context

• Boeing's Legacy: Founded in 1916, Boeing built a reputation for quality, producing nearly 100,000 planes for the Allied Forces and revolutionizing commercial aviation with the 737.
• Past Excellence: Boeing was once synonymous with quality and safety, encapsulated by the pilot saying, "If it ain't Boeing, I ain't going."

Cultural and Management Shifts

• Merger with McDonnell Douglas: The 1997 merger shifted Boeing's focus towards financial performance over engineering excellence.
• McDonnell Douglas Influence: Post-merger with McDonnell Douglas in 1997, Boeing adopted a new business model where suppliers bore significant design and financial risks, aiming to cut development costs, as seen with the 717 strategy.
• Relocation and Distance: Moving headquarters from Seattle to Chicago distanced management from day-to-day operations, negatively impacting decision-making.

Cultural and Operational Decline

• Declining Expertise: Boeing’s focus on cost-cutting and outsourcing led to a loss of experienced engineers and workers, weakening its ability to maintain high standards and innovate effectively.

• Comparison with Airbus: Unlike Boeing, Airbus pursued a more stable and integrated approach, avoiding extreme supplier pressure and internal cultural battles, contributing to its increasing market success and stability.

• Intimidation and Retaliation: Boeing’s management retaliated against employees who spoke up about safety issues, creating a culture of fear and suppression.  Calhoun, Boeing’s CEO admitted to retaliatory practices against whistleblowers and promised cultural changes within the company.
• Lack of Transparency: Pilots expressed distrust in Boeing due to a lack of transparency and withheld information about safety issues.
• Senate Inquiry: Boeing’s CEO Dave Calhoun was questioned by US Senators about the company's broken safety culture and the allegations of cover-ups and intimidation by management.
• Deferred Prosecution Agreement: Boeing faces potential criminal prosecution for allegedly breaching a deferred prosecution agreement by failing to clean up its safety procedures as promised after the 737 Max crashes.
• Family Reactions: Families of crash victims, like Michael Stumo, who lost his daughter in the Ethiopian Airlines crash, are calling for Boeing executives to be held accountable and prosecuted for their role in the tragedies.
• Financial Health: Boeing’s string of issues over two decades, including cost overruns, production delays, and market losses, has resulted in significant financial strain, high debt, and reduced cash flow, impacting its ability to invest in new aircraft development.

Corrective Action Selection?  Future and Solutions

• Ongoing Engineering Flaws: Issues like chafing wire bundles in the wings and engine anti-ice system failures continue to pose safety risks, despite Boeing's claims of improvements.
• Declining Trust: The public’s trust in Boeing has significantly diminished, with many passengers now avoiding Boeing aircraft.
• Boeing's reputation has suffered greatly, leading to a decline in stock value and loss of customer confidence.
• Industry Implications: The revelations and ongoing issues have sparked broader concerns about the aviation industry's regulatory oversight and the need for stringent safety standards.
• Need for Change: To restore trust and safety, Boeing must address its internal culture, management practices, and regulatory relationships, focusing on engineering excellence, safety and quality over misguided short-term financial performance.
• Commitment to Change: Boeing claims to be taking steps towards transparency and accountability, but skepticism remains among industry professionals and the public.
• Leadership Changes: CEO Dave Calhoun is set to step down at the end of the year as part of Boeing’s effort to address its corporate and safety challenges.
• Is a recovery possible?  To recover, Boeing needs to fundamentally improve its operations, focusing on quality, collaboration, and stable supplier relationships, moving away from the short-term financial focus that has led to its current troubles.
• Future Outlook: Boeing is making efforts to recover by enhancing oversight and addressing quality control issues, but it will take time. The company has a significant backlog of orders and must regain trust and market share in the face of rising competition from Airbus and potential new entrants like Comac.

Course Forward:

• But ultimately, it's up to Boeing and its leadership team!  They need to learn from their mistakes, and not from safety incidents.  They need to go back to the basics of manufacturing.  Safety first.  Then people.  Then Quality.  Then Delivery.  Last, cost.   If you drive a culture that prioritizes these in that order, the financial results will follow.

Sources:

https://www.youtube.com/watch?v=RfCKdc1ACXA&list=PLyVgVZd7jUlrAwzxca3m8pzo6Z3Y1KejV&index=269

 https://www.youtube.com/watch?v=aOJLuh6FQ6E

 https://www.youtube.com/watch?v=Q8oCilY4szc

https://www.youtube.com/watch?v=URoVKPVDKPU

https://www.youtube.com/watch?v=SD3GCMgRswA&list=PLyVgVZd7jUlrAwzxca3m8pzo6Z3Y1KejV&index=235