Originally Posted by
Fly Aiprt
Just to complement, even before WWII, components like pumps, filters, fittings, instruments, electric motors, propellers were outsourced and certified by their respective manufacturers.
Yes, but in World War II they didn't have
problems getting paid. If you were to put yourself in the shoes of a supplier who has to pay for the raw materials 30 days after delivery, but whose customer will not pay for 120 days you can see how at the very least quality could suffer, and at worst how suppliers could go out of business -- these same suppliers who are supposed to be holding the parts. This means, by the way, that instead of having to carry the bill for two months you have to carry the bill indefinitely. Imagine that I order five planes from Boeing on the condition that they build 20 more planes and keep them in a hangar just in case I decide that I need to buy some more.
One could imagine that a company who made this sort of super intelligent decision to maximize their cash flow might find that they had a shortage of parts on the floor, as well as a shortage of suppliers willing (or able) to supply them.
Boeing Co is stepping up efforts to conserve cash, cut costs in its supply chain and trim inventory of parts in its factories, while telling vendors that it will take longer to pay bills, Boeing and aerospace industry executives said. Under the new terms, Boeing is taking up to 120 days to pay, rather than 30 days in the past, these people said. The new payment schedules are being rolled out this year. Boeing is reducing its factory inventory and relying on suppliers to hold parts instead, these people said. These moves come at a time when investors are closely watching Boeing's cash flow.
By the way, I am not a supplier or anything like that, just a water rat who hears things on the Seattle waterfront. What Boeing was doing was an example of how to boost the stock in the short term, a technique that I became familiar with when working for a company that was often on the verge of bankruptcy back in the wild west days of the tech industry. (We played the game and got bit by it when a huge customer bought a bunch of multimillion-dollar machines and paid for them on net-never.) You haven't really improved your cash flow, you have simply shifted your liabilities to your suppliers in the short term. 90 days does come eventually.