Outsourcing is a symptom of a larger move towards cost-cutting. Like many large bureaucracies, the aircraft industry is siloed by department. Instead of taking a comprehensive look at the system, managers analyze the business under a microscope. Each slice of the organization is responsible for minimizing their own costs instead of reducing costs for the organization at-large.
Systems, though, are interconnected. An improved engineering process can reduce the cost of designing or manufacturing a product. Rather than minimizing costs in isolation, Smith advised Boeing to take a bird’s-eye view of the manufacturing process. After all, one system-wide cost reduction is worth more than 20 small and isolated efficiency gains.