Monopolistic pricing drives Boeing away from single-sourcing

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Boeing is rolling back single-sourcing within its supply chain in an effort to reduce the risk of capacity shortfalls and blunt monopolistic pricing attempts by certain suppliers in the midst of a historic increase in commercial aircraft production rates.

Since March 2011, Boeing's Seattle-based commercial airplanes division has weathered the impacts to its supply chain of a tsunami in Japan and a tornado in Wichita, Kansas, but concerns remain about the company's over-reliance on some members of its supply chain.

Without naming names, Boeing vice president of supply chain strategy Kent Fisher says the company will look to add secondary sources for some suppliers that are abusing their monopolistic position in Boeing's view.

"The dual-sourcing [plan] is about business continuity," says Fisher, adding "and getting better commercial terms where we can. There are certainly suppliers who have taken advantage of a unique position in the supply chain and used it, I think, to earn unreasonable profits."

Boeing also wants to qualify more suppliers in areas where a major supply chain disruption caused by a natural disaster could delay aircraft deliveries.

"There are more places that we could employ two sources and we are over time going to implement that," Fisher says.

Wichita-based Spirit AeroSystems, one of Boeing's largest suppliers struck by a tornado on 14 April, will be an exception to the dual-sourcing plan. Fisher praised Spirit AeroSystems' response to the tornado damage, saying the 737 production line was not delayed despite a one-week shutdown and even longer damage repairs by its supplier.

"It was amazing how they overcame the damage that was done to their factories," Fisher says. "I think of a lot of Spirit's statement of work would be difficult to dual-source. I'm talking more broadly we're looking for opportunities to implement dual-sourcing where we can."