A few weeks ago, I wrote a blog on accountability in outsourcing, i.e. the accountability of the client/ buyer as something that can never be outsourced. The trigger for the article was the incident in January when a door panel blew off an Alaska Airlines 737 Max 9 midflight. The news story focused predominantly on Boeing, but when digging deeper, it became clear that Boeing relied heavily on one of their subcontractors Spirit Aerosystems. Further analysis highlights the dependency between the two companies. The National Safety board issued a preliminary report during its investigation where the regulator found that four crucial bolts that were supposed to hold the door plug in place went missing when a Spirit crew went in to fix some damaged rivets and when Boeing workers signed off on restoring the plane’s interior following the repair.
In context of a quality system, it has the appearance of being in control in that the client company signed off on work performed. But clearly the oversight was insufficient. In coming up with a plan to resolve the quality issues that have developed, Boeing are now in negotiations to buy Spirit. On an interview of Calhoun on CNBC, he stated that Spirit “is a critical supply for us, critical. It’s our fuselage. When you go out in the factory, the first thing you’re going to see is our fuselage. It’s a Boeing fuselage. Our job is to make sure mechanics and engineers freely travel between the shop floor and the design effort, and that they can help one another every step of the way. Vertical integration is the only way to accomplish that.” [My highlights]
In other words, the conclusion is that the quality issues can only be resolved through a major effort by buying the subcontractor. Spirit used to be part of Boeing before it was spun off in 2005 so it may feel like a natural conclusion.
My interest in this story is from an outsourcing management perspective and I can’t help thinking about how it could have gone so awry. Boeing has been focused on cost management for several years. Did they pressure Spirit too much on pricing? Did the focus on cost result in a reduction of staff in oversight roles? Did it impact investment in these areas? How did the culture of the combined companies change and is the best solution to bring them together again? How will such an effort change their culture? I don’t know the answer to these questions although there is publicly available information that can provide insight that may confirm some of the hypothesis.
Reflecting on these events serves as a reminder to all of us in the outsourcing profession whether as a buyer, supplier, or advisor that we always need to be mindful of who is accountable, enable accountability and be mindful when focusing on cost that we don’t lose value. I have worked for several years defining and managing third party agreements and when these partnerships become critical to the company’s success or identity, the quality management systems become key combined with transparent collaboration that encourages open dialog. I am sure there are many other reflections and I hope to hear some of yours!
