Risk is a function of the breadth, depth, and complexity of a product or system. Boeing has experienced this repeatedly throughout the development and launch of its model 787, the Dreamliner. The program has seen numerous setbacks and delays, due (no doubt) to the number and variety of subcontractors and their sometimes remote locations.
The Boeing 787 Dreamliner has been called an “advanced carbon-composite airplane”. No airplane has ever been made quite like it – and may never be again, if certain problems aren’t addressed quickly and effectively.
For instance, there is the issue of overheating batteries that has grounded all Dreamliners since the start of 2013. Lithium-ion batteries have been used – albeit, in a more compact form – in laptops and other mobile devices for a couple of decades.
Lithium-ion batteries were at one time notorious for overheating.1 Was this issue overlooked because someone assumed it was no longer a problem? Or, because “our situation is entirely different”? In any case, the likelihood of the problem was underestimated and the risk misjudged.
With any product that is significantly different from its predecessors – especially where safety and airworthiness are involved – rigorous testing under real-world conditions must be done. This is inherently more difficult to ensure as supply and manufacturing chains lengthen and intertwine. The likelihood of timely, effective communication is diminished.
The prime contractor, subcontractors, vendors, and outsourcers – all must take the utmost care to communicate effectively, whatever the situation. In a situation as complicated as that of the Dreamliner, one can’t expect perfect communication and coordination. However, if the companies hope to be “in compliance” with standards and regulations, they have to aim for perfection.
What Boeing Could Have Done (and What You Can Still Do)
Keep in mind that as you increase the distance between point A and point B, you naturally take on more risk. Furthermore, as you increase the complexity of the route (or project), you increase your risk of miscommunication, misunderstanding, and failure.
If you plan to outsource processes / functions, carefully consider which you can most afford to outsource, weighing the various risks against one another. One way to look at it – if the process were to fail, how much of an impact would that have on your project?
Risks associated with outsourcing include:
- Outsourcer access to confidential information (i.e., security risk);
- Lack of control over day-to-day functions/activities (including whether they’re outsourcing) and reporting;
- Movement of an outsourcer’s employees among projects, losing experience and knowledge;
- Inadequate or insufficient training of outsourced employees;
- Less process discipline and control;
- Failure to deliver the correct item(s) on time
- Failure to deliver items that meet or exceed quality and safety requirements; and
- Differing compliance issues, especially between countries.
Please understand – I’m not suggesting you don’t outsource. It’s not like you’ll never encounter risks if you don’t outsource your operations. In fact, outsourcing is sometimes necessary and often beneficial. It’s where you outsource core activities that you can run into serious problems.
If you are a prime contractor, you are responsible for every action of your company and your subcontractors. ISO 9001 tells us that “(w)here an organization chooses to outsource any process that affects product conformity to requirements, the organization shall ensure control over such processes.”2 AS9100 says the same thing, word for word.
Keep this in mind when you feel like you’re ready to do some outsourcing. Also, keep me in mind when you need help.
By the way…
What have your experiences with outsourcing been like? Let me know in the “Comments”, below, or write to me.
1“Dell Customers Respond to Recall”, MSNBC, 16 Aug 2006 – http://www.msnbc.msn.com/id/14350403/ns/technology_and_science-tech_and_gadgets/t/dell-customers-respond-recall.
2Clause 4.1, “General Requirements”