[bell-cot]

However much you can "save" by outsourcing...in a sufficiently fraud-plagued business environment, it's seldom worth it longer-term.

Conveniently, modern businesses and their leaders are judged and rewarded purely on short-term metrics.

[icegreentea2]

What was the problematic outsourcing decision here? Buying your titanium from a titanium supplier? Is Spirit supposed to be refine and foundry all their own metal alloys?

I agree that it's a little bonkers that Boeing spun off it's own aerostructures, but since it seems like Boeing has it's own problems with internal fraudulent inspection reports, this sure doesn't seem like an out sourcing problem per-se.

[josefx]

> What was the problematic outsourcing decision here?

Buying from an untrusted source without any verification of your own in place.

> Buying your titanium from a titanium supplier?

For all we know they bought it on wish.com.

> Is Spirit supposed to be refine and foundry all their own metal alloys?

Random sampling of materials to determine if the delivery is fit for purpose should be the absolute minimum.

[constantcrying]

But the problem isn't outsourcing, it is failed incoming inspection.

[mrguyorama]

Spirit itself is an "outsourcing" from Boeing's point of view. They spun it off so they could put more aggressive downwards pressure on labor price and then play dumb when it had the obvious and well understood outcomes like "buying underspecced materials to save money" and "workers don't do all the work they should, to save money" and "having different systems to control work so you can massage the official one, to save money by doing less work"

[e44858]

Sounds like they outsourced the inspection too.

[Beijinger]

"For all we know they bought it on wish.com."

Source?

[2k3r11s]

For your future reference, the colloquial English expression "For all we know" implies that a humorous exaggeration follows.

[caminante]

That's the point.

The parent is blaming quality control steps of outsourced materials at Boeing (not third party).

"Outsourcing = bad" is missing the point.

[pfdietz]

If sufficiently intense oversight is needed at the boundary then outsourcing becomes uneconomical. This is something SpaceX found (and also because external sources were often slow and expensive.)

[everforward]

Are you sure that applies to commodities with extremely high capital costs like mining and refining ore?

It sort of makes sense to me with SpaceX. They’re presumably buying fairly boutique parts that likely already require custom manufacturing, so someone is spending capital either way. I can see how it might make sense for them to build a custom manufacturing line instead of paying someone else.

That seems odd for commodities like titanium, though. Even if Boeing were to do it themselves, that oversight process is already a subset of the mining and refining process. They’re going to have to build out their QA lab either way.

[pfdietz]

The weasel word "sufficiently" was doing the heavy lifting.

[caminante]

> If sufficiently intense oversight is needed at the boundary then outsourcing becomes uneconomical.

1. That doesn't make outsourcing "bad" before the cost benefit analysis. Commenters above are broadly blaming outsourcing.

2. As a thought experiment, specialized suppliers could be able to manage risks and costs cheaper due to absolute advantages. That's the whole point of outsourcing.

3. Mitigating the consequential and indirect damages to Boeing from this identity crisis could easily (my SWAG) justify hundreds of millions of dollars (another SWAG) in spend on better quality control audits.

[pfannkuchen]

Other countries in some cases seem to have much less enforcement of anti fraud. In the US if a company is knowingly selling fraudulent material, I’m guessing they can get in legal trouble for fraud? Does that happen in e.g. China?

[caminante]

If it does, it does. If it doesn't, it doesn't.

How is your question relevant?

[therealpygon]

That is an interesting point of view, however, needing to distrust and expect fraud from every outsource agency sounds exactly like their point, which was not the elementary “outsource = bad” that you make it out to be.

[caminante]

No.

The parent said that the quality control should be on the supplier, not Boeing. This is instead of a joint problem with Boeing validating.

Look at the repercussions.

Boeing gambled on shaving procurement oversight and lost.

[chaostheory]

Not sure if this was technically outsourcing, but moving maintenance overseas to developing countries where agencies like the FAA have a much harder time to inspect the planes.

https://www.vanityfair.com/news/2015/11/airplane-maintenance...

[therealpygon]

A company willing to have employees accidentally die when they come down with a case of the whistleblows would do things to make oversight more difficult? I’m shocked, shocked I tell you.

[spywaregorilla]

The problem was buying titanium* from titanium* suppliers.

[datavirtue]

They certainly have to perform their own metallurgical analysis and certify the parts. Like, WTF?

This is just hillbilly mom-and-pop bullshit.

[constantcrying]

>However much you can "save" by outsourcing...in a sufficiently fraud-plagued business environment, it's seldom worth it longer-term.

Outsourcing is mandatory if you are a company in aerospace. How would you even start making an airplane without outsourcing?

[bell-cot]

Literally, true.

But, just like that fraud-plagued business environment, scale is what really matters. If you had 10X fewer suppliers, each with 10X fewer second-tiers, and so on down the chain...then how much easier would it be for Purchasing's QC people to stop sub-spec crap from reaching your factory floor?

[drsnow]

I'd imagine by insourcing.

[constantcrying]

Probably Airbus single most important supplier is CFM who is making most of their engines. CFM is a JV of Safran and General electric. How do you insource that?

[stn8188]

I feel like this goes for personal life too. My particular problem du jour: some parts internal to my lawn mower engine crankcase self destructed and the engine needs a total rebuild or replacement. I replaced the camshaft 2 years ago with a cheapo Amazon part and I'll forever be kicking myself wondering if saving $20 on that destroyed a $1k (new price) engine.

[therealpygon]

Don’t beat yourself up…you’re probably right. Joking aside, with Amazon, you just never know whether you are going to get a hardened forged steel item, or pot-metal. You can’t even count on that “stainless steel bowl” actually being stainless at all these days. That whole marketplace is a grand example of the exact problem with outsourcing. These days you can’t even rely on price or brand being an indicator of what you will receive (with the counterfeits and intentional overpricing of sub-par items).

[datavirtue]

Amazon has turned into WalMart. Literally all of your choices for a product are a variation of the same cheap crap with different brand names. I would love to have a midling priced item of better quality. Not available.

The retailers job used to be offering the best value to their customers by filtering out the crap that was too cheap or overpriced.

[janalsncm]

It’s one of the things that’s fundamentally broken in our economic algorithm. There is genuine innovation, and then there is simply borrowing against the future. It’s really hard to tell the difference, and even if you can, the market can still behave irrationally.

Even ignoring the political question of how things could be changed in practice, I am struggling to imagine ways to align incentives better.

[pimlottc]

For the company as a whole, no, it's not worth it long term.

For the division chief who smashed their targets, got a big bonus and a promotion, and used it to jump to a higher-paying role at another company? You better believe it was worth it!

[Lisdexamfeta]

It seems like Boeing has an exceptional amount of normalizing deviance.