The Impact of the Boeing Strike on the Supply Chain

One impact of the IAM strike at Boeing has been the pull-back of purchase orders from the supply chain for components needed for aircraft production. Boeing has been planning and postponing a monthly rate of 38 737 MAX aircraft for the last two years, with the pandemic and the door panel blowout substantially impacting Boeing’s capability to deliver. The company has been taking on inventory at higher rates than it has been producing aircraft, which is unsustainable over the long term without a de-stocking event.  

Of course, from the supplier’s perspective, this presents a complex problem, both from the unpredictability of future production and the unknown time frame for the strike, which is not under their control.  A de-stocking will likely lead to a more prolonged cessation in production for suppliers than the length of the strike.  The unknown time frame makes it impossible for suppliers to accurately forecast demand, maintain revenues, and determine whether they need to lay off workers.