Question

Objective

This assignment examines the importance of the cost of quality to an organization. Through this, we will gain a better understanding of how we can measure the cost of quality in an organization and what benefits can be gained from the cost of quality.

Scenario

This is a true story that dominates the global media in 2019/20 and shook an established and trusted company to its core. More details are easily available online but the following summary was taken from Wikipedia.

The Story

Boeing is a major airline manufacturer. The introduction of it’s new Boeing 737 Max plan resulted in 346 deaths.

The Challenge

In March 2019, aviation authorities around the world grounded the Boeing 737 Max passenger aircraft after two new airplanes crashed within five months of each other, killing all 346 people aboard. After the first accident, Lion air Flight 610 on October 29, 2018, investigators determined that the MAX's new Maneuvering Characteristics Augmentation System  (MCAS), which was omitted from flight manuals and crew training, automatically and repeatedly forced the aircraft to nosedive.

The Response

In April 2019, Boeing admitted that MCAS played a role in both accidents. In October, the Indonesian authorities concluded that problems with airplane design, certification, maintenance, and flight crew actions contributed to the Lion Air accident. In November 2019, the FAA revoked Boeing's authority to issue airworthiness certificates for individual MAX airplanes. In December 2019, the U.S. House of Representatives criticized the FAA and Boeing for their inaction despite known risks.

in December 2019, Boeing ousted its CEO over mismanagement of the crisis. Airlines canceled 183 orders for the MAX in 2019. In January 2020, Boeing halted production until regulators clear the airliner to fly again. Boeing revealed derogatory messages between its employees, sent during certification, about the MAX design, FAA regulation, and Lion Air's request for flight simulator training. Boeing estimated the grounding and production suspension will result in an additional $6.3 billion to produce the aircraft, reducing the margin of the 737 program in the future, with $18.4 billion in total future losses arising from the grounding.

Deliverables

Analyze the above scenario using the 4 Costs of Quality given below:

• Appraisal cost
• Prevention cost
• Internal failure cost
• External failure cost

Your detailed analysis and report should reflect:

• Root cause(s) of the issue
• What should have been done to prevent the current situation?
• What was done to turn the situation around?
• How did Boeing officials manage this crisis?

Answer 1

Boeing has estimated the overall cost of the 737 Max problem at $18.6bn, more than twice the previous estimation as it covers for fees to carriers, reduced income over the manufacturing period of the aircraft, and costs associated with halting manufacturing.

Boeing's estimated expenses have ballooned because last year it announced that it will cost $9.2bn to land the aircraft. It has since halted production and extended its forecast of when federal regulators will allow Max to return to the sky by mid-year.

The aircraft manufacturer is already expecting $8.3 billion in penalties to carriers for failure to produce the planes and $6.3 billion in losses over the whole manufacturing process of the Max, according to an analyst update on Tuesday. Boeing also estimates $4bn in "abnormal manufacturing" costs to include compensation to vendors and keeping Max staff on the payroll somewhere else in the business while the assembly line is shut down in Renton, Washington.

The root cause of the Issue:

To prolong the life of the 737 chassis, they fitted larger engines. They had to be positioned slightly forward so that they could be lifted far enough from the ground. If that was the entire update, then minor design improvements to pre-existing simulators would have sufficed to retrain pilots on the small handling variations.

That would have needed new certification from the FAA. The MCAS program was applied to the aircraft in an attempt to offset this cost so that it would function more like the original. The main mistake in this strategy was the inability to disseminate the latest information to all pilots and aside from the two crashes, other recoverable incidents were also triggered by MCAS interference.

When the media started its usual campaign of terror, Boeing said the MCAS details had been widely distributed, but several pilots reported that they had never seen or learned much about the MCAS rise.

A similar query is asked in which the narrator, a pilot, was jump-seating in the cockpit. While he himself understood little about MCAS, he admitted that the unexpected misbehavior of the aircraft involved enabling the machine to do its thing rather than battle it. The goal as more technology is implemented is that the pilots and the machine collaborate, not combat each other.

How Boeing could have saved the accidents:

Boeing could have saved the accidents by informing the companies about the implementation that they have made and enabling the pilots by giving proper training. Max was engineered by Boeing to travel higher and more effectively than previous 737. To do so, Max was fitted with bigger engines, which improved the aerodynamics of the plane and makes it more likely to stall in such circumstances.
To offset the possibility of a crash, Boeing created MCAS, which in certain situations forces down the nose of the aircraft to stabilize the aircraft. MCAS system is supposed to maintain the pitch of the aircraft but due to the introduction of newer heavier engines, the plane tends to have to nose up problem during the flight. MCAS tries to level the plane automatically thus resulting in an uncontrolled dive.

Boeing CEO Muilenburg has also insisted that the plane is safe for the president and others. We learned of the instruction intended to help pilots recognize and circumvent the aircraft's automatic controls if they misplaced their nose. And the context of Muilenburg seems to be: This is a technological issue that we will solve with the pilot training.

It's a normal enough frame for a product failure but we also don't know if the similarity between the two accidents is a mistake or an indication of a systemic question that needs to be corrected. Furthermore, the picture appears to skip the fact that hundreds of human lives have been lost, that many may be at risk, and that authorities have grounded the planes in several countries. The acts of the regulators reflect a "prioritizing human welfare" structure, which seems to further reflect the high levels of ambiguity and danger that Boeing is asking us to consider.

So what will Boeing say? A simpler context will be: This is a technological question we don't understand entirely. In light of this confusion, we suggest that the 737 Max 8s and 9s be grounded so we can be confident that we know what causes these accidents and can reassure ourselves and all global authorities that the plane is safe to fly again.

The formulation leads to a much simpler course of action, which acknowledges a relationship with regulators tasked with defending human life. And it would have been safer for those involved if Boeing had reached at that decision before evidently the president did.

The key thing for leaders here is that first, you need to do the deep work. You need to know what kind of challenge you are facing and you need to explain it in clear terms that will help the people who have to conduct it inside the company, as well as those who judge it from outside, understand how the organization is feeling about the kind of problem they are facing. Framing is an instrument for deliberate use. Well done, it can make a huge difference in encouraging responsible action and trust in the firm's decisions and principles

What has boring done to turn the situation around?

Boeing is now researching ways to sort out this MCAS problem. The possibility of flying of 737 aircraft has been pushed back by several months.

Boeing officials manage this crisis by:

Being is unable to do anything to save its 737. It, however, has recently fired its CEO and an executive that was heading the 737 productions.