FOR IMMEDIATE RELEASE: 4th April 2008

Boeing Dreamliner Delay Shows Problems of Global Supply Chains, Says Robin Jackson

Delays in production of Boeing's new 787 Dreamliner show the problems that can arise when supply chains are extended globally, ADR International CEO Robin Jackson has warned.

Writing in ADR International's latest Business Briefing, he says the cost to the US manufacturer of production hold-ups has been incalculable.

Boeing has admitted that delays have been caused by problems with supply chains after the company ditched local sourcing and outsourced 70 per cent of the plane's components.Jackson says: “It shows that the great bargain of buying from cheaper overseas sources can be prone to catastrophic disruption of supply resulting in costly halts in production.“Unless your procurement team is aware of the complete flow of materials from raw materials to what you are buying, and understand the risk and uncertainty at each stage of the supply chain, disruptions in the supply chain can bring disaster to the bottom line.”

A good risk management strategy must identify risks for the entire life cycle of every product or service the company provides, Jackson says, and offer strategies that can mitigate the effects of any disruption of supplies.

The risk management strategy should be fully integrated into the company's procurement  processes and requires continuing attention and priority.

In the same briefing, ADR International's head of sourcing Simon Aldred tells how buying from suppliers in the UK can give better value than those low cost regions.

A recent sourcing project found that stainless steel fabrications were cheaper in the UK than in the Far East or Eastern Europe.
John McCleland, Managing Director of ADR International Australia, also offers some tips for successful low-cost country sourcing.

Low-cost sourcing objectives must be aligned with the overall business strategy, he says, and a source plan should include risk identification and mitigation and a robust supplier evaluation process.