Published Date:
03-Jan-2012
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The company's comprehensive reviews are critical to its effort to mount one of its biggest production increases in years. Chicago-based Boeing aims to boost output by about 60% in the next three years -- or nearly 300 more jets a year. After winning a series of big contracts, it is sitting on a backlog of 3,500 commercial jets, valued at more than $270 billion.

At Vaupell Holdings Inc., one of about 1,000 suppliers subject to exhaustive reviews of its production materials, schedules, finances and even tools, Boeing's test regimen prompted the 60-year vendor this year to make such changes as replacing shop-floor management software.

Boeing has bolstered its ranks of supplier examiners with about 200 engineers and other supply-chain specialists in the past 18 months. Its teams visit vendors more frequently and conduct evaluations that can take days to complete.

"Boeing has become much more pro-active," said Joe Jahn, chief executive of Seattle-based Vaupell. "They've got someone here almost every day."

The intensified scrutiny is a key component of Boeing's strategy to speed up production of nearly all of its commercial jets without the kinds of costly bottlenecks and delays that hobbled it in previous major ramp-ups.

Looming over the company isn't just its backlog. Its archrival, Airbus, also is aiming for record output, as airlines increasingly demand more fuel-efficient jets and air travel expands in Asia and the Middle East.

Airbus has capitalized on some Boeing production delays. Airlines including Qantas Airways Ltd. and Virgin Atlantic Airways Ltd. decided to buy Airbus 330 jets in recent years because of Boeing's delays in delivering the 787 Dreamliner.

Quality issues are on the rise as suppliers scramble to meet the growing demand for aircraft. Tom Williams, Airbus executive vice president for programs, said: "It's happening fairly frequently that a process that has never given problems is suddenly causing problems."

The unit of European Aeronautic Defense & Space Co. is in the process of hiring a total of 70 specialists who are "trying to get a smell of what's going on in the suppliers," Mr. Williams said.

Some smaller aerospace vendors face trouble financing their expansion due to the economy's woes, according to Mr. Williams and other industry officials.

"We're definitely seeing tension in the supply chain," including longer lead times for ordering parts, Marc Ventre, deputy chief executive of French jet engine supplier Safran SA, told analysts recently.

At Vaupell in Seattle, Mr. Jahn said his company has been working with Boeing to find a replacement for a material used in some Boeing window shades that Dupont Co. has decided to stop manufacturing.

Boeing's intensified reviews are helping Vaupell stay on top of its game, Mr. Jahn said one morning as he walked across the Seattle plant's shop floor, where some workers wear dust masks as they polish luggage-bin trim, air nozzles and other airplane components.