4. To affirm that the airplane is going to revolutionize the future is to be guilty of the wildest exaggeration Scientific American Magazine, 1910

13. Commercial Aircraft Industry - Market Drivers Market demand for large planes –777 filled Boeing’s need for plane sized between 767 and 747 –DC-10, L-1011, and early versions of 747 - aging aircraft needing replacement –Needed to fit existing airport infrastructure

14. Market Drivers Seat categoryModels Intermediate twin-aisle: 230-310767, A300, A310, A330-200 311-399A330, A340, MD-11 747 and larger: >400747, 747X, A3XX 777 filled this need

15. Market Drivers Increased globalization and travel –Higher demand for comfortable, practical business travel due to globalization –Increased market demand for long-haul flights –Boeing had to anticipate types of airplanes needed in the future –Developing countries and emerging markets, especially Pacific Rim and Latin America

16. Market Drivers Competition –Airbus Industrie - consortium subsidized by British, French, German, and Spanish governments –McDonnell Douglas MD-11 –Competing models in seat capacity category (311-399 seats): MD-11, A-330, A-340 –Boeing needed new plane to compete with other new products, vs. extending 767

17. Market Drivers Plane design specifications –Airlines found fault with cabin widths of competitors –Configuration flexibility –Carriers such as United, American, All Nippon Airways, British Airways, Japan Airlines, and Cathay Pacific helped define 777 configuration –Reduced variability in design and production, leads to reduced costs

18. Market Drivers Cost Drivers –Labor - maintenance and operations –Fuel - reduced importance but still significant Aircraft Economics –Fly-By-Wire eliminates need for flight engineer –Twin engine planes are more efficient - lower fuel and maintenance costs –777 reliable enough for transoceanic flights –Lower customer financing costs

20. Why “paperless” paradigm shift? Slow, arduous, and frustrating design & manufacturing process Technology available –767 Engine strut (save time & costs) –Digital flight control (Airbus “fly-by-wire”) –U2 Spy & Stealth (successful design teams) Lower costs (minimize errors & rework) Risky venture

21. Design & Production Software CATIA (Computer-Aided 3D Interactive Application) - Dassault, IBM –ELFINI (Finite Element Analysis System) Solve linear elasticity & thermal problems EPIC (Electronic Preassembly Integration) Check for interference in sub-assembly parts

22. Hardware & Network 1700 WSs (Puget Sound), 7000 worldwide 8 of IBM’s largest mainframes (4 - Puget Sound, 4 - worldwide) Linked by dedicated cable under Pacific Ocean Storage capacity - 3.5 terabytes

23. “Fly-by-Wire” Computerized Flight Control –Twisted pair vs steel cables Limitations Overcome –Pilots in control –Pilots “feel” airplane Replaced Display Units –CRT with flat-panel, full color LCD

25. CATIA Developed by Dassault Alliance with IBM Applications to multiple industries UNIX and Windows NT Modular, scalable Dassault also a competitor of Boeing

26. Shorter Development Time, Improved Quality, Lower Cost Concurrent development in more than 17 time zones E-mail and privacy concerns CATIA, ELFINI, EPIC, CLASH Suppliers’ proprietary software Suppliers’ acceptance of CATIA Component integration; tolerances

27. Japanese supplier consortium Mitsubishi Heavy Industries, Fuji, Kawasaki Fuselage development Dedicated trans-Pacific data cables Shared investment costs Promoted airplane purchases by Pacific Rim airlines

28. IT: Engine Design, Integration, and Performance Pratt & Whitney (PW4000), Rolls Royce (Trent 80), GE/SNECMA (GE90) Airlines select engines FAA certification process shortened GE90: IT leads to performance gains, increased reliability  increased sales Complete engine simulations: The cutting edge of technology

29. IT Tools & Intellectual Capital

30. Impact - People Boeing Employees –Increased Communication –Team approach –Decreased Bureaucracy

31. Impact - People Customers –Boeing’s customer service goal –Customer integration into design process –Passenger satisfaction –Customization –Flexible purchase arrangements

32. Some of 777’s Major Customers American Airlines British Airways Cathay Pacific Airways Continental Delta Emirates Korean Air Lauda Air Malaysia Airlines United Varig

33. Airplane Design Process THEN (after WW II) NOW (after 1990) Make paper drawings & full-scale mockups Test fly to discover blunders Write maintenance manuals last Paperless, e-mockups Computer simulation removes bugs Mechanics involved throughout

34. Impact of Design Process Saves Boeing time and money –Easier design process –Improved accuracy –Reduced production costs More time for testing First-mover advantage

35. Market Outlook

38. Future Issues Production –Replacement of production system with streamlined DCAC/MRM system to be completed this year –Shift to catalogue “made to order” model –Integration with suppliers & customers is proving to be a challenge Seeking 5% price reductions from suppliers

39. Future Issues Asian Crisis –Asian demand originally drove the development of the 777 –Short-term Asian demand has dropped –Offset by long-term growth prospects in demand for airplanes

40. Future Issues Competition –Replication -- Can Airbus copy this technology? –Response Price competition (easier due to subsidies) Design innovations US vs. EU dichotomy

41. Future Issues Spillover applications –CATIA modeling used for: other civil aircraft –737-NG uses innovative production and planning techniques learned on 777 military aircraft the space shuttle –(“because it’s in the direction of goodness”)

42. Questions?