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Applied TPS and Future Innovations

for the Aviation Industry

Sanjeev Venkatachalam

Reviewed and approved by instructor

Dr. C. Richard Liu IE, Purdue University

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TABLE OF CONTENTS

1 Executive Summary

2 Porter’s 5 forces Analysis

3 Sun Tzu’s Art of War

4

Toyota Production System

5 Boeing 737

6 Airbus A330

7 Cause Ranking Diagram for Aviation Industry

8 Other Innovations Proposed

9 References

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Executive Summary

This paper takes a look into how the Concept of TPS has

become a mainstay strategy both in production and in Business

for the Aviation Industry .

From the Adaptation of the TPS concepts of Kaizen and Kanban

all the way upto adopting Toyota’s Continuous Flow Processing

system, we will look into what makes the Customer demanding

Aviation Industry tick and we will look into the possible

innovations that can be incorporated into the existing system

to improve the productivity and reduce handling /Lead time.

In an Industry monopolized by 2 major players the scope for

new entrants are low .Both Organizations are always evolving

to try to stay one step ahead , giving little to no room for new

players in the market .

We will be focusing on 2 major planes for this paper, Boeing

737 and Airbus A330, both were planes that were a class

beyond their respective predecessors [1] .The 737 is the best-

selling plane in the history of aviation [2] . Since its launch, the

A330 has allowed Airbus to expand market share in wide-body

airliners. Competing twinjets include the Boeing 777 [3] . We

will also use the tools learnt in the classroom to give a more

detailed idea of this massive industry and what drives it.

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Aerospace Industry – Porters Five Forces Analysis( with

degree)

Competitive Rivalry ( HIGH )

• Competitive rivalry exists between 2 main entities –

Boeing and Airbus . The Aerospace Market is has been

under their Stranglehold since the turn of the 20th Century

. High Competition means better Products in the market to

get more market share.

Threat of New Entrants ( LOW )

• The threat of new entrants is very low because of the

Stranglehold of Boeing and Airbus in the Global Market .

Substitute Products ( LOW )

• The threat from substitute products continues to be low,

since innovations are being made only by these 2 players ,

which have led to almost no chance of new substitutes in

the market to compete with these giants .

Bargaining Power of Suppliers ( MEDIUM )

• Standardization means only there are a few specialized

manufacturers of parts . It is important that they are kept

happy , so that the quality does not reduce over time .

• Although there are few specialized manufacturers , there

is still not too much bargaining that can be done as

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Aerospace purchase a number of components and will

always be a major retail outlet , hence an agreement is

usually reached .

Bargaining Power of Customers ( LOW )

• Since there are only 2 possible options , the bargaining

power is very low for consumers

• But competition between them means that travelers will

benefit from reduced cost and increased comfort .

6 principles of Sun Tzu’s Art Of Business-Aviation Application

1. Capturing the market without Destroying it :

“Generally in war, the best policy is to take a state

intact; to ruin it is inferior to this….For to win one

hundred victories in one hundred battles is not

the acme of skill. To subdue the enemy without

fighting is the acme of skill.” Sun Tzu

Since the goal of your business is to survive and

prosper, you must capture your market. However, you

must do so in such a way that your market is not

destroyed in the process. [4]

Airbus and Boeing have been pioneers , by continuously

creating and evolving they have captured the market

without destroying it .

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2. Avoid your competitor’s strength, and attack their

weakness “An army may be likened to water, for just as

flowing water avoids the heights and hastens to

the lowlands, so an army avoids strength and

strikes weakness.” Sun Tzu

The Western approach to warfare has spilled over into

business competition, leading many companies to

launch head-on, direct attacks against their competitor’s

strongest point. This approach to business strategy

leads to battles of attrition, which end up being very

costly for everyone involved. Instead, you should focus

on the competition’s weakness, which maximizes your

gains while minimizing the use of resources. This, by

definition, increases profits.

Airbus has concentrated on increasing the number of

passengers in their carriers , as can be seen from the

A380. Boeing on the other hand is the second largest

Defense Contractor and has hence both companies

have managed to co-exist while still competing .

3. Use foreknowledge & deception to maximize the

power of business intelligence.

“Know the enemy and know yourself; in a hundred

battles you will never be in peril” Sun Tzu

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To find and exploit your competitor’s weakness requires

a deep understanding of their executives’ strategy,

capabilities, thoughts and desires, as well as similar

depth of knowledge of your own strengths and

weaknesses. It is also important to understand the

overall competitive and industry trends occurring around

you in order to have a feel for the “terrain” on which you

will do battle. Conversely, to keep your competitor from

utilizing this strategy against you, it is critical to mask

your plans and keep them secret.

In an industry where market share is of utmost

importance, Boeing has secret bases all over the US [5],

while Airbus kept their facelift under wraps , which finally

helped them overtake Boeing [6]

4. Use speed and preparation to swiftly overcome the competition.

“To rely on rustics and not prepare is the greatest of crimes; to be prepared beforehand for any contingency is the greatest of virtues.” Sun Tzu

To fully exploit foreknowledge and deception, Sun Tzu states that you must be able to act with blinding speed. To move with speed does not mean that you do things hastily. In reality, speed requires much preparation. Reducing the time it takes your company to make decisions, develop products and service customers is critical. To think

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through and understand potential competitive reactions to

your attacks is essential as well.

Airbus and Boeing have both applied TPS to this end , and have seen exponential reduction in lead time [6]

5. Use alliances and strategic control points in the industry to “shape” your opponents and make them conform to your will.

“Therefore, those skilled in war bring the enemy to the field of battle and are not brought there by him.” Sun Tzu

“Shaping you competition” means changing the rules of contest and making the competition conform to your desires and your actions. It means taking control of the situation away from your competitor and putting it in your own hands. One way of doing so is through the skillful use of alliances. By building a strong web of alliances, the moves of your competitors can be limited. Also, by controlling key strategic points in your industry, you will be able to call the tune to which your competitors dance.

Airbus took control of the Commercial Aircraft Industry after the 1980’s , forcing Boeing to enter the Defense Industry and this has meant that even both are aviation Giants , there is a clear Niche carved out for each organization .

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6. Develop your character as a leader to maximize the potential of your employees.

“When one treats people with benevolence, justice and righteousness, and reposes confidence in them, the army will be united in mind and all will be happy to serve their leaders.” Sun Tzu

It takes a special kind of leader to implement these strategic concepts and maximize the tremendous potential of employees. Sun Tzu describes the many traits of the preferred type of leader. The leader should be wise, sincere, humane, courageous, and strict. Leaders must also always be “first in the toils and fatigues of the army”, putting their needs behind those of their troops. It is leaders with character that get the most out of their employees.

As TPS says , people are the drivers behind an organization , both Airbus and Boeing have a structured Management system to get the most of their employees and the application of TPS has helped them empowering and motivating their entire workforce .

Toyota Production System

The Toyota Production System (TPS) is an

integrated socio-technical system, developed by Toyota,

that comprises its management philosophy and practices.

The TPS organizes manufacturing and logistics for the

automobile manufacturer, including interaction with

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suppliers and customers. The system is a major precursor

of the more generic "lean manufacturing." Taiichi Ohno,

and Eiji Toyoda developed the system between 1948 and

1975.

Originally called "just-in-time production," it builds on the

approach created by the founder of Toyota, Sakichi

Toyoda, his son Kiichiro Toyoda, and the engineer Taiichi

Ohno. The principles underlying the TPS are embodied

in The Toyota Way [4].

The Spark that Started it all

It is a myth that "Toyota received their inspiration for the

system, not from the American automotive industry (at that

time the world's largest by far), but from visiting a

supermarket." The idea of Just-in-time production was

originated by Kiichiro Toyoda, founder of Toyota. The

question was how to implement the idea. In reading

descriptions of American supermarkets, Ohno saw the

supermarket as the model for what he was trying to

accomplish in the factory. A customer in a supermarket

takes the desired amount of goods off the shelf and

purchases them. The store restocks the shelf with enough

new product to fill up the shelf space. Similarly, a work-

center that needed parts would go to a 'store shelf' (the

inventory storage point) for the particular part and 'buy'

(withdraw) the quantity it needed, and the 'shelf' would be

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'restocked' by the work-center that produced the part,

making only enough to replace the inventory that had

been withdrawn

Terminology and Key Concepts involved

• Kaizen (We improve our business operations

continuously, always driving for innovation and

evolution.)

• Genchi Genbutsu (Go to the source to find the facts

to make correct decisions.)

• Respect (We respect others, make every effort to

understand each other, take responsibility and do our

best to build mutual trust.)

• Teamwork (We stimulate personal and professional

growth, share the opportunities of development and

maximize individual and team performance.)

• Use the "pull" system to avoid overproduction.

• Level out the workload (heijunka). [4]

Toyota Production System is one that focusses on the

potential of the workforce and believes that training is the

key to make sure the workforce is an asset that will be a

major driver in the company’s fortune .

Even if an organization has cutting edge technology the

workforce needs to be empowered to get the most of the

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resources at Hand . The pillars of TPS are best highlighted

below .

Figure A

The TPS follows a pull system , where need is the

incentive to produce . But varying demand is a possible

pitfall of this system .

We will look into the concepts of ANDON and ONE PIECE

FLOW in later pages . At this time let us look at a

representation of the pull system and Kanban .

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FIGURE B and C

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Boeing – The Perennial Superpower

The Boeing Company is an American multinational

corporation that designs, manufactures, and

sells airplanes ,rotorcraft, rockets and satellites. It also

provides leasing and product support services. Boeing is

among the largest global aircraft manufacturers, is the

second-largest defense contractor in the world based on

2013 revenue, and is the largest exporter in the United

States by dollar value .

The Boeing Company's corporate headquarters are

located in Chicago and the company is led by Chairman

and CEO James McNerney. Boeing is organized into five

primary divisions: Boeing Commercial

Airplanes (BCA); Boeing Defense, Space &

Security (BDS); Engineering, Operations &

Technology; Boeing Capital; and Boeing Shared Services

Group. In 2013, Boeing recorded $86.623 billion in sales,

ranked 30th on the Fortune magazine "Fortune 500" list

(2013), ranked 95th on the "Fortune Global 500" list

(2013), and ranked 26th on the "World's Most Admired

Companies" list (2013) [5]

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BOEING 737 INNOVATION CASE STUDY

FIGURE D

Quick Facts

• Boeing first implemented TPS by working with suppliers to

use a JIT system on the 737 line

• Flow time reduced from 28 days to 22, 15, and now 11

days

• Moving line is set at 2 inches per minute, calibrated to

team task times with point of use kits

• Boeing worked backward from the plant exit to reorient

the line, from a 2 line slant build to a single nose to tail

• This change helped implement a moving line system

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• 60% of the time was spent away from the plane, so point

of use kitting was incorporated [6]

Boeing Lean Academy

OBJECTIVES: Create a cohesive, uniformly trained team

centered on an identified Value Stream based on

• A common understanding of Lean principles

• Integrating Lean strategies into a system easily understood at

every level.

• One plan for improvement

• Top management involvement

DIFFERENCE: The Academy:

• Integrates a Value Stream TEAM in BPS training and

implementation

• Includes Managers

• Uses powerful simulations

• Uses graduates (and ONLY graduates) as instructors and

facilitators

• Gives you an implementation plan for your Value Stream

Future

• Promotes and enables linkage of Lean activities [7]

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Establish Feeder Lines

Previously the task that took 16 hours was brought down to

less than 8 hours .

900 + parts were reduced to 200 parts and quality standards

were maintained by standardizing the components . [7]

Standardization of parts

Fastest way to perform the task at the lowest cost with The

fastest way to perform the task at the lowest cost with the

highest quality every time the task is performed the highest

quality every time the task is performed [7]

Cross Functional Team Support – Andon System

• Andon is a manufacturing term referring to a system to

notify management, maintenance, and other workers of a

quality or process problem which Support cell next to

airplane . [8]

• Andon board visible from floor Andon board visible from

floor and from support cell and from support cell Put

Visuals in Place Put Visuals in Place 737-757 Cross

Functional Support Teams 757 Cross Functional Support

Teams – Andon System .

• Floor to Support Cell Floor

• Automatic Support Cell paging Automatic Support Cell paging

when line stop. [7]

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FIGURE E

In Wing Assembly

• The robotic system, known as the Panel Assembly Line, or

PAL, replaces older-generation machines that drilled the

panels, but left workers the task of installing rivets, a

laborious process that led to occasional injuries and

defects.

• PAL is designed to cut injuries in half, slash defects by 66

percent and reduce production “flow” time by 33 percent

– all on half of the factory footprint.

• The OEM’s existing machines in Renton install about 4,000

fasteners and mechanics install roughly 2,000, often

requiring them to contort their bodies into unnatural

positions. The automated system not only eliminates the

need to perform fatigue-inducing acrobatics, it promises to

reduce repetitive-motion injuries. [9]

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FIGURE F

New Panel Assembly Line

• The production system that promises to support a

reduction in final assembly times for the Boeing 737 from

10 to 9 days this year should become still more efficient

with the introduction of a new automated panel assembly

line (PAL) by early 2015 .

• Built by Mukilteo, Washington-based Electro impact,

the PAL fastens stringers to wing skin panels at twice the

rate Boeing now can manage using the current process at

the 737 plant in Renton, Washington [9]

• Electro impact designed the machine to “normalize” to the

panel with an array of lasers that “see” the surface

without touching it, allowing it to follow the panel

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curvature or contour. The process improves accuracy,

consistency and “repeatability,”

FIGURE G

• This is the current 777 Assembly line

• This is a huge jump from the existing line which has a

stationary assembly line and batch production system

which lead to higher lead time and more material handling

.

• The U shape makes sure that the Space is ideally used . But

this system though ideal , still has a few flaws which will be

addressed in further slides .

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OUTSOURCING PROGRESSION (Figure H)

ASSEMBLY LINE (FIGURE I)

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FIGURE J

Before and after applying TPS (FIGURE K)

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BOEING 777 by the Numbers

• Factory build time reduction -- 24%

• Factory unit hours -- 34%

• Inventory turn rate -- 71%

• Lost workday case rate -- 37%

• Crane moves reduced by 39%

• Flow times improved by 30%

• Inventory levels dropped by 42%

• Floor space reduced by 216,000 square feet [7]

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AIRBUS A330 INNOVATION CASE STUDY

Airbus SAS is an aircraft manufacturing division of Airbus

Group(formerly European Aeronautic Defence and Space

Company). It is based in Blagnac, France, a suburb

of Toulouse, with production and manufacturing facilities

mainly in France, Germany, Spain and the United

Kingdom.

Airbus employs around 63,000 people at sixteen sites in four countries France , Germany ,Spain and the United Kingdom. Final assembly production is based at Toulouse, France; Hamburg, Germany; Seville, Spain; and, since 2009 as a joint-venture, Tianjin,China . Airbus has subsidiaries in the US ,Japan , China and India [10]

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In four years, the Airbus factory in North Wales, which

produces wings for all the company’s airliners, has reduced

quality defects by 62%

• They began leading a formal implementation of lean

initiatives that by 2001 had boosted on-time delivery to

100%, where it has stayed ever since.

• To achieve these results Airbus appointed Unipart Logistics

as a supply chain partner and Lean Logistics Service

Partner for the Broughton operation.

• They began leading a formal implementation of lean

initiatives that by 2001 had boosted on-time delivery to

100%, where it has stayed ever since.

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FIGURE L

AIRBUS A330 by the Numbers

• Inbound processing time reduced by 70%

• 80% reduction in lead time and kitting inventory for A320

Family production

• 16,000 man hour savings identified throughout the

internal Supply Chain and Manufacturing areas

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• 30% recorded improvement in stock integrity levels

• 51% improvement in internal customer satisfaction score

• Consolidation of kitting operations allowing for integration

of processes creating cost and space reductions

• Improved layout and material flow releasing required floor

space [6]

FIGURE M

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Causes ranking 1

causes

innovations Insert the key cause ranking #1

Rankin

g innovations

1

More capacity of

both Boeing and

Airbus Aircrafts.

Competition driven, to carry more

customers on the same trip to earn

more on each trip.

2

More Dynamic

assembly line

system .

Faster assembly line to meet the

supply demands of the industry.

Reduce Handling time in the process.

3

Checking Quality at

every stage to

reduce possibility

of late detection of

defective goods

This process although a little more

time consuming, makes sure that

problems are detected earlier and

hence resolved before it can affect the

overall production line.

4 Fly –by – wire

Systems

Easier cockpit control , making it

easier for pilots to maneuver the

aircraft( Boeing)

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5 Engine

Configuration

Even if one engine failed mid-flight

the rest would be enough to propagate

the flight for the rest of the journey.

6 Winglet

Introduction

Reduce the air resistance created

during flight( vortex creation ) ,

making the journey more efficient

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Kaizen To reduce Inventory in large

organizations

8 Just-in-time

Manufacturing

‘Pull system’ means there is no

over production and waste of materials

unnecessarily in the production

process .

9 Composite Material

Complete Carbon fiber body structure

drastically reduces weight of the

aircraft and means less fuel

Consumption.

10 Laser

Manufacturing

Precision manufacturing to ensure

high strength of the materials and less

micro-cracks in the structure.

11 Biofuels This is an area where research is being

conducted deeply

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OTHER INNOVATIONS PROPOSED FOR BOTH AIRCRAFTS

• Unclogging Bottle Neck as applied to Manufacturing [11]

FIGURE N

FIGURE O

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• Bottleneck as a concept is something that has been

affecting the aviation Industry.

• Airbus A 330 and Boeing 737 are 2 jumbo-jets that have

always had the problem of excessive idle time , a problem

that the concept of Bottleneck has worsened .

Practical Example

The assembly of the Thrusters requires 200 components of

different shapes and sizes

applying Bottleneck decongestion will reduce the

production time by about 23% as estimated and will make

the most ideal use of the available manpower .

For example , the Thrusters requires pistons , piston-heads

, cam shafts and Housings for all the components among

other components . If all of these arrive at the same time

to a work station , congestion and Hence loss of time

occurs , by reducing congestion , we can improve

efficiency while reducing lead time .

Queueing Theory

Basics : A good understanding of the relationship between

congestion and delay is essential for designing effective

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congestion control algorithms. Queuing Theory provides all the

tools needed for this analysis.

the stochastic (that is, probabilistic or statistical) nature of the

demands, by specifying the variability in the arrival process and

in the service process . [12]

FIGURE P

As Applied to the Aviation Industry

During assembly , each sub-assembly in the moving line has

different lead times and this means that sometimes the

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components that require lower lead times are placed after

once that need more time due to chronology . But this is not

efficient as the subsequent station is ideal till the previous

station sends their completed assembly . This loss of time can

be accounted for by making sure that the Structure of the Shop

floor is such that even if chronology is not maintained order is

maintained such that lead time is minimized . This is something

neither Aircraft assembly line utilizes and should definitely

consider

FIGURE Q

The above is an example , wherein – initially Q1-Q4 were placed

in series causing a lower lead time . A shift to this new

arrangement helped reduce lead time by 17 % . Subsequent

stations were also , hence consequently more productive and

Efficient .

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Methodology To accomplish the objectives of this study, the

following steps were used

• Select a production line to be studied.

• Collect data for each workstation Analyze the arriving and

leaving data by Chi-Squared Goodness Test to determine

its variable distribution

• Conduct performance measures of each workstation by

using equations based on Queuing theory. The

performance measures need to be measured are:

utilization factor (ρ), percentage of workstation idle time,

number of parts in system ( Ls ), number of parts in queue (

Lq ), waiting time spent in queue (Wq ), waiting time spent in

system (W), and task time.

• Determine the efficiency of each workstation.

• The equations based on Queuing theory that is used in this

study can be described as follows:

ρ = λ/μ

where, ρ is utilization factor, λ is average number of parts

arriving in one unit of time and μ is service rate to parts in one

unit of time.

Percentage of idle workstation = (1 – ρ) 100%

Ls = λ/(μ- λ)

where Ls = number of parts in system

Lq = λ²/ μ (μ- λ)

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where, Lq = number of parts in queue

Wq = Lq/ λ = Ls/ μ

where, Wq = waiting time spent in queue

Ws= Wq + 1/ μ

Where Ws is waiting time spent in system

Task time = 1/ μ

Total task time = setup time + inspection time + task time

+ waiting time in queue

Cycle time = (Production Time available per day /Demand

or Production per day)

Efficiency, e = Σ task time /(number of operators x

assigned cycle time)

Maximum number of operator = Total Time for Task /

Cycle time [12]

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FIGURE R&S

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FIGURE T

Continuous Flow Production System

My last Idea is an system that has a lot of potential in the

current industry scenario . It was an Idea that has it’s

grounding in Toyota’s dominance over the then existing

Ford Batch Production model .

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FIGURE U

Advantages of Continuous Flow Processing over Traditional

Batch Processing

FIGURE V & W

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• Toyota introduced this system over the existing Ford mass

production system.

• The advantage of using a Continuous Flow Processing

system to replace a Traditional Batch production system is

the exponential decrease in production time This was

introduced into the Aviation industry.

• Above is a basic example of how this flow system

compares to a traditional approach. [13]

Where do Major A 330 parts come from ?

• the Hamburg plant manufactures and equips the rear

fuselage sections for Airbus’ A330

• Toulouse’s responsibilities include engineering and final

assembly lines for the A330 is housed here.

• The Saint-Nazaire plant specializes in structural assembly

the forward and central fuselage for the A330

• Nantes also is responsible for manufacturing the randoms

for the entire Airbus family, the ailerons for the A330

Located in North Wales, Airbus’ Broughton site assembles

wings for the entire family of aircraft commercial aircraft,

producing over 1,000 wings per year

• Wings for the A330 are delivered to Bremen from Airbus’

plant in Broughton, UK,

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• The vertical tail planes of all Airbus aircraft are produced

at Stade. The site also makes other carbon fibre reinforced

plastic (CFRP) components and spoilers for the A330. [14]

Where do Major Boeing 737 parts come from ?

• Fuselage, engine nacelles and pylons - Spirit AeroSystems

(formerly Boeing), Wichita.

• Slats and flaps - Spirit AeroSystems (formerly Boeing),

Tulsa.

• Doors - Vought, Stuart, FL.

• Spoilers - Goodrich, Charlotte, NC.

• Vertical fin - Xi'an Aircraft Industry, China.

• Horizontal stabiliser - Korea Aerospace Industries.

• Ailerons - Asian Composites Manufacturing, Malaysia.

• Rudder - Bombardier, Belfast.

• Tail section (aluminium extrusions for) - Alcoa / Shanghai

Aircraft Manufacturing, China.

• Main landing gear doors - Aerospace Industrial

Development Corp, Taiwan.

• Inboard Flap - Mitsubishi, Japan.

• Elevator - Fuji, Japan.

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• Winglets - Kawasaki, Japan.

• Fwd entry door & Overwing exits - Chengdu Aircraft,

China.

• Wing-to-body fairing panels and tail cone - BHA Aero

Composite Parts Co. Ltd, China. [15]

The disorderly Assembly based on the What needs to come

in from where has meant that even though TPS has

drastically reduced lead time and Material Handling , the

next step in terms of delivery of the Product in less than 10

days , an aim of Both companies has not been reached .

My recommendation is that each subassembly is represented

by the outermost fish bone. The center being the major

assembly , i.e like the Wing , this leads to a final assembly

which is the head at the end of the bone . Instead of

assembling by chronology and waiting for different parts to

arrive .

Instead of assembling by chronology and waiting for different

parts to arrive . We can assemble all the parts which are in

proximity to each other and the assembly can be sent for

final assembly , this will reduce the lead time . Since this has

not been tried out before , the validity of this claim cannot

be proven , but I am confident that results will be proof that

such a system will help the industry thrive for years to come .

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