ABSTRACT
Prior to its serious issues with the 737 Max, Boeing had adopted an innovative supply chain program in the early 2000s when it decided to outsource 70% of its activities for the development of its 787 Dreamliner. This was done in conjunction with transformation of supplier relationships from a purely contractual basis to a more strategic relationship where suppliers were made responsible for developing and producing sections for Boeing rather than the earlier practice of just manufacturing parts. Much of this also required Boeing to transform the supply contracts from fixed price to risk-sharing based. 1 Part of the change in sourcing strategy of Boeing was attributed to reduced development time and cost and reduction in supply chain risks. While not all of Boeing’s supply chain risks were mitigated, it certainly indicated a strategic shift in the way sourcing as a function was viewed. What risks do companies face in sourcing? What are the various sourcing strategies that companies adopt? Why is developing strategic supplier relationships critical to firms?
