One of Boeing’s stated goals and marketing strategy cornerstones was the idea of service readiness from day one. Previously, airliners took delivery of a plane that spent weeks getting the "bugs" worked out before it was ready to carry passengers. In addition, many Boeing engineers were assigned to the sole task of making design modifications after final assembly. For example, after the first 747-400 went into service, there were still over 300 engineers still "re-designing" the plane. The idea of day one service readiness is obviously an important selling point to the airlines who do not like to see a $150 million investment sitting in a hanger depreciating, instead of earning its keep flying passengers.
The largest competing products to the 777 may be those produced by Boeing itself! Many airlines are discovering that it is less expensive to retrofit older airplanes, Boeings and other models, with newer engines to meet the new noise requirements and improve efficiency than to purchase new aircraft. Much of the airline fleet is reaching the end of its 15 year useful life and Boeing was counting on those airlines as customers for the 777. However, since Boeing is not in the retrofit business for every refurbished 737 or 747, one less 777 is built. If this trend continues, the market for the 777 will be reduced to the area between the 767 and 747, that of the long range twin jet.
Perhaps the strongest selling point of Boeing’s marketing strategy is the idea of customer involvement and giving the customer configuration flexibility. The initial mandate from the Boeing board of directors was to make the 767-X a "market-driven" aircraft. Teams from four customers, United Airlines, British Airways, All Nippon and Japan Airlines, were heavily involved from the beginning of the 777 program. Cathay Pacific and Thai airlines have also been involved but to a less extensive degree. Boeing gives airlines great flexibility in configuring the cabin by making the galleys and lavatories completely modular.
Boeing has set targets for reducing costs by 25%, defects by 50% and order-to-delivery time by half to six months. A large step toward achieving the cost reduction goal is going to just-in-time management of the nearly $8 billion inventory Boeing keeps on hand just-in-case. As a Boeing manager points out "the idea was not to delay a $100 million plane for lack of a $2,000 part." Boeing currently has an annual turnover ratio of just over two as compared with ten at other world-class manufacturers. Fortune magazine estimates that reducing the inventory in half would save one billion dollars annually in financing, storage, and handling costs.
Originally developed by Shadd Shokralla
