Wednesday, I reviewed a white paper on the topic of supplier risk management. Well, I ran across an article this week that demonstrates the timeliness of this issue.

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Boeing, the second-biggest aircraft manufacturer, made a statement on Wednesday that it would not be able to increase production rates because they felt their suppliers would not be able to fulfill the increased demand. As it stands now, Boeing produces about 31-32 of its 737-model aircraft each month and plans to increase production to 34 or more a month. They are also planning to increase the production of larger models, such as the 777 and 747, over the next two years.

Now, Boeing is not the only aircraft manufacturer looking to increase production; their main rival, Airbus, and several other competitors will be ramping up as well. Boeing fears that this collective increased demand will stretch suppliers too thin.

Recognizing the risk that this poses to their operations, Boeing is “working very methodically through different scenarios,” noting which suppliers may need to invest more in plant and/or equipment, those that may need to renegotiate standing contracts, and those that may need additional training.

I would have to imagine that Boeing is establishing a risk management plan to deal with anticipated supplier failures. Hopefully, they are not being too short-sighted and only monitoring their suppliers, but their supplier’s suppliers as well. It will be interesting to continue to follow this Boeing story over the next couple of years and see if they successfully managed their supplier risk.

To your career,

Megan Tyrseck, SPSM
Senior Marketing & External Relations Coordinator
Next Level Purchasing, Inc.

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Charles Dominick, SPSM, SPSM2, SPSM3

Charles Dominick, SPSM, SPSM2, SPSM3 is an internationally-recognized business expert, legendary procurement thought leader, award-winning entrepreneur, and provocative blogger. Charles founded the Next Level Purchasing Association in 2000, oversaw its incredible growth, and successfully led the organization to its acquisition by the Certitrek Group in 2016. He continues to blog and provide advisory services for the NLPA on a part-time basis as he incubates his upcoming business innovations. Charles is also the co-author of the wildly popular, groundbreaking book, "The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals."

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