Assignment 2 - Cost of Quality

Quality, Strategy and Value Creation - QUAL8000

Professor Mohammed Malek

February 26, 2023

Executive Summary
The accidents of Ethiopian Airlines Flight 302 and Lion Air Flight 610 shocked the aviation
sector, prompted several investigations, and led to the worldwide grounding of hundreds of
Boeing 737 Max aircraft. In 2018, Lion Air Flight 610 departed Jakarta, Indonesia. Pangkal
Pinang, the main city on Indonesia's Bangka Belitung Islands, was its destination. The jet
crashed into the Java Sea twelve minutes after takeoff, killing all 189 people on board, including
the crew. About five months later, Ethiopian Airlines Flight 302 departed Addis Ababa, Ethiopia,
and crashed six minutes after takeoff near the Ethiopian town of Bishoftu, killing 157 persons
on board. Both crashed Airplanes were Boeing 737 Max, a variant of the most popular selling
aircraft in history.

In 2010, Boeing hurried to create its version of the new fuel-efficient and cost-effective aircraft.
That design was a 737 Max aircraft. Airbus was going to surpass Boeing with ease in the market
for narrow-body aircraft. Boeing would not have to go through the same certification
procedures; it would have to develop an entirely new airplane because the 737 is an already
approved airframe, which includes the body and wings of the aircraft. Suffix to say that both
737 and 737 Max are the same. When the Max aircraft was being developed, officials decided
that since it was the same as earlier generations, pilots could fly them without undergoing
considerable retraining. This helped Boeing compete with Airbus to release newer, more fuel-
efficient aircraft by saving the corporation a lot of money on further training. After the Lion Air
610 tragedy, the FAA didn't alter such regulations. The certification procedure for Boeing's Max
airplanes was hurried and could have been corrupted. According to an initial report by
Indonesian investigators, Lion Air Flight 610 crashed because a malfunctioning sensor falsely
suggested that the aircraft was stalling. An automatic mechanism called the Maneuvering
Characteristics Augmentation System, or MCAS, triggered the erroneous report. According to
the investigators, the angle of attack data from both planes showed significant similarities.

This article will examine Boeing's present state using four different cost-of-quality metrics:
appraisal cost, prevention cost, internal failure cost, and external failure cost. This section also
discusses the underlying causes of the problem, what might have been done to stop the
present scenario from arising, what Boeing did to address it, and how Boeing is handling the
crisis right now.
 Boeing 737-MAX crisis and the four Quality Costs

Internal Failure Cost

The Boeing 737's aerodynamics were altered after adding new, marginally more significant
fuel-efficient engines, which led to handling problems at high angles of attack. Their answer
to this issue was MCAS. When looking at this from a cost of quality perspective, Boeing
should have thought of a better way to approach this problem; rather than spending money
on a less expensive solution like a software update, they should have engaged in engineering
efforts to address the issue. They also could have trained the pilots better. So they could not
control the aircraft. Boeing failed to conduct an adequate failure analysis of the testing
failures using MCAS. If they had performed a failure analysis of MCAS, it would have brought
attention to the problems in advance, and these disasters may have been avoided. Boeing
attempted to cut expenses related to minor internal failures, but it ultimately paid
significantly more due to poor quality.

Prevention Cost

A new jet was not precisely what Boeing wanted. Many other preventative costs go into
constructing a new airplane, including those for new product design, planning, new product
reviews, quality, quality inspection, and training. Boeing cut costs significantly on potential
quality prevention costs. They did not even test the MCAS's characteristics. Boeing also
promoted the no training required for pilots as a significant selling point. New aircraft models
typically require pilots to undergo lengthy training for hours in several ground cockpit
simulators to approximate the actual flying experience. In the case of the 737 MAX, the pilots
were only permitted to take miniature courses on an iPad. Boeing could invest the money it
would have spent on further training on the development of more fuel-efficient aircraft,
keeping them competitive. Even after the initial disaster, the FAA didn't require Boeing to give
the pilots adequate and thorough training.

Appraiser Cost

If Boeing had launched the 737 MAX as a completely new aircraft, then the FAA's lengthy
certification process and high-quality appraiser costs, like inspection, test, and evaluation,
would have been necessary. The schedule for aircraft launch was prioritized over the correct
certification procedure. The FAA technical personnel needed more time to complete a suitable
certification. Why FAA was so ready to approve the certifications for the 737 MAX is not fully
evident. The safety review for the 737 MAX was hurried to keep up with the Airbus, and it had
several flaws, which the FAA should have addressed.

External Failure Costs

Boeing's stock market worth dropped nearly $42 billion after the crashes. So, it's teaching us
that sacrificing safety and quality is not a genius move. The situation has already cost Boeing
billions of dollars and affected several of its airline clients' global expansion ambitions. The
external failure costs, including complaints adjustments, warranty charges, liability expenses,
and other indirect costs, were where Boeing suffered the most considerable losses because of
this issue. A business like Boeing is likely to manage the immediate costs, such as software
modifications, but it will be challenging to regain the perceived quality in the eyes of its airline
clients, both monetarily and in terms of reputation.
 Conclusion
Boeing should have built a new plane instead of modifying what they have. The corporation is
currently working to fix things up to persuade international regulatory bodies to lift the ban.
The Boeing senior management absolutely failed to handle this matter effectively. Although
MCAS failure is the issue's technological core cause, the 737 MAX problem was mainly brought
on by the lack of integrity and high standards in the project's development. Boeing might have
invested in retesting and fully certifying the aircraft while allocating money to internal failure
analysis. There was a lack of proper training and manual documentation for the new MCAS.
Quality and safety were not given first consideration while expenses were being reduced. If
Boeing had made wise choices on quality and the associated expenditures in an appraiser and
internal cost, this problem may have been averted.

Reference
1. Corrupted Oversight: The FAA, Boeing, and the 737 Max.
https://www.pogo.org/analysis/2019/10/corrupted-oversight-the-faa-boeing-and-the-737-max
2. NTSB says bird strike likely caused deadly Ethiopian Airlines 737 MAX
https://www.upi.com/Top_News/US/2023/01/24/national-transportation-safety-
board-ntsb-ethiopian-airlines-crash-bird-strike-boeing/2061674593236/
3. Everything you need to know about the Boeing 737 Max airplane crashes
https://www.theverge.com/2019/3/22/18275736/boeing-737-max-plane-crashes-
grounded-problems-info-details-explained-reasons#Y84LP9