{"id":26063,"date":"2017-11-15T21:46:26","date_gmt":"2017-11-16T02:46:26","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/delivering-jets-for-bumpier-warmer-skies-boeings-supply-chain-pressures-from-climate-change\/"},"modified":"2017-11-15T21:46:26","modified_gmt":"2017-11-16T02:46:26","slug":"delivering-jets-for-bumpier-warmer-skies-boeings-supply-chain-pressures-from-climate-change","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/delivering-jets-for-bumpier-warmer-skies-boeings-supply-chain-pressures-from-climate-change\/","title":{"rendered":"Delivering Jets for Bumpier, Warmer Skies: Boeing\u2019s Supply Chain Pressures from Climate Change"},"content":{"rendered":"

Building Aircraft for a World Grappling with Carbon Emissions<\/strong><\/p>\n

Supply chains must deliver the advanced technology needed by aircraft operators in a world dominated by climate change. Boeing is one of the two largest manufacturers of commercial aircraft in the world. Climate change is not only a business risk for customers of Boeing\u2019s jets: Boeing must alter and strengthen its supply chain to deliver products required by a customer base responding to climate change.<\/p>\n

Climate change has two relevant consequences: first, more stringent regulation of carbon emissions, and second, more challenging operating conditions for aircraft. Regulators have continued to tighten carbon regulations around commercial aviation, led by Europe.[1]<\/a> Fuel-efficient aircraft are essential to meeting these regulatory curbs. Meanwhile, aircraft will have to operate under harsher weather conditions and deliver the same performance: for example, higher temperatures will limit the take-off weight of airplanes. Lighter, more technologically advanced aircraft are needed.<\/p>\n

Boeing has to actively engage in mitigation of carbon emissions. Air traffic has doubled in size every fifteen years since 1970, and Boeing predicts delivering more than 41,000 aircraft over the next twenty years.[2]<\/a> In order to maintain its ability to sell that many aircraft, Boeing needs to improve the carbon footprint of its commercial aircraft. Delivering on more fuel-efficient, technologically advanced aircraft requires a nimble and durable supply chain.<\/p>\n

 <\/p>\n

Towards cleaner, lighter jets<\/strong><\/p>\n

In the short term, Boeing has invested heavily in delivering fuel-efficient jets. This has involved two programs. First, Boeing continues to invest in production of its 787 Dreamliner, a jet made primarily out of carbon fiber. Use of this light-weight material reduces weight and creates a much more fuel-efficient airplane. Second, Boeing has developed new, sophisticated engines that are much more efficient than previous generations. Boeing has committed to delivering legacy versions of aircraft (those without carbon fiber) with these new engines, helping improve fuel economies across its product lines. Meanwhile, over the next ten years, Boeing\u2019s investments in biofuels are a way to reduce the net carbon impact of operating its planes. Boeing has experimented with developing a supply chain for these new fuel sources.[3]<\/a><\/p>\n

Sourcing each of these necessary innovations requires that Boeing has a top-tier supply chain. Bringing these innovations to market proved particularly challenging in the mid-2000s. Boeing\u2019s 787 arrived more than two years late and had cost overruns of more than $2.5 billion.[4]<\/a> These costly overruns stemmed from an overly complex supply chain designed to handle the needs of carbon fiber development. Meanwhile, delivering advanced, fuel-efficient engines has stretched the aviation supply chain. Forging specialized metallic parts needed for new, efficient engine designs has proven a costly bottleneck.[5]<\/a> In short, in an attempt to design appealing products for a world influenced by climate change regulation, Boeing has pushed (and occasionally broken) its global supply chain. Traditional, disparate supply chain models have been unable to cope with delivering these highly advanced and extremely time-sensitive components.<\/p>\n

 <\/p>\n

Charting a more sustainable route<\/strong><\/p>\n

Boeing has had some success sorting out supplier hiccups. But it needs to further shore up its supply chain in order to meet the demand for more sustainable, efficient aircraft. Boeing should consider simplifying its supply chain over the next two years. This is not without precedent. In 2009, Boeing ended up acquiring a production plant from a supplier to flatten its supply chain and fix production delays.[6]<\/a> Ongoing challenges around engine suppliers and future demand for carbon fiber aircraft highlight the continued need for greater control over its supplier base.<\/p>\n

Over the next ten years, Boeing needs to take market leadership on two innovations that the market will need in a world impacted by climate change. First, it needs to invest and deploy new technology that can better predict \u201cclear-air turbulence.\u201d This sort of turbulence is nearly impossible to detect using traditional radars. Yet because of rising temperatures, this sort of turbulence will greatly increase \u2013 passenger injuries from it will triple by 2050.[7]<\/a> Second, Boeing needs to spur greater adoption of biofuels. While it has so far moderately supported this new fuel type, Boeing hasn\u2019t kickstarted an ecosystem to support it. Boeing should invest in building a supply chain for biofuels.<\/p>\n

As Boeing looks ahead, it must consider two key questions: first, to what extent should Boeing bring manufacturing and supplier networks in-house, versus left to a supplier? And second, to what extent should Boeing seek to kickstart the potentially valuable, but nascent and still-emerging biofuel market?<\/p>\n

 <\/p>\n

Word Count: 736<\/p>\n

[1]<\/a> Economist. \u201cAirlines are to cough up for cross-border flight pollution.\u201d October 16, 2016. https:\/\/www.economist.com\/blogs\/gulliver\/2016\/10\/clearing-air<\/p>\n

[2]<\/a> Economist. \u201cAirlines are to cough up for cross-border flight pollution.\u201d October 16, 2016. https:\/\/www.economist.com\/blogs\/gulliver\/2016\/10\/clearing-air<\/p>\n

Boeing. Current Market Outlook: 2017-2036. http:\/\/www.boeing.com\/resources\/boeingdotcom\/commercial\/market\/current-market-outlook-2017\/assets\/downloads\/2017-cmo-compressed_091917.pdf, 4<\/p>\n

[3]<\/a> Chad Garland. \u201cBoeing, South African Airways to develop jetfuel from tobacco.\u201d LA Times. August 6, 2014. http:\/\/www.latimes.com\/business\/la-fi-tn-boeing-biofuel-tobacco-20140806-story.html<\/p>\n

[4]<\/a> Economist. \u201cUpwards and onwards.\u201d December 17, 2006. http:\/\/www.economist.com\/node\/15127526<\/p>\n

[5]<\/a> Peggy Hollinger. \u201cAirbus and Boeing put pressure on supply chain.\u201d Financial Times. July 26, 2016. https:\/\/www.ft.com\/content\/e0d51872-516c-11e6-9664-e0bdc13c3bef<\/p>\n

[6]<\/a> Doug Cameron. \u201cBoeing to Boost Dreamliner Production.\u201c Wall Street Journal. September 13, 2017. https:\/\/www.wsj.com\/articles\/SB124696971307105465<\/p>\n

[7]<\/a> Gavin Haines. \u201cMore turbulence and longer runways \u2013 seven ways climate change will affect air travel.\u201d Telegraph. October 4, 2017. http:\/\/www.telegraph.co.uk\/travel\/news\/ways-climate-change-could-affect-flying.<\/p>\n","protected":false},"excerpt":{"rendered":"

Building Aircraft for a World Grappling with Carbon Emissions Supply chains must deliver the advanced technology needed by aircraft operators in a world dominated by climate change. 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