BAE Systems

Source: Exec Digital UK

Date :18/02/2008 17:03:21

With increasing market challenges, BAE Systems is looking to transform its business – proactively building relationships with key clients and suppliers alike.

Written by Lucy Mowatt and produced by Ben Weaver

BAE Systems is renowned for offering products, services and support to the aerospace and defence sector all over the globe. Its Military Air Solutions (MAS) business operates at 23 sites across the UK (eleven of which belong to the RAF) as well as in export markets. Phil Humphreys, Supply Chain and Procurement Director, explains their mission as: “Working as an integral part of the team, delivering effective air power, our aim is to give real advantage to the men and women of the armed forces.” Effectively, MAS exists to provide through-life military air capability through the successful delivery of design, development, manufacture and support contracts with the UK and overseas customers.

Defence Industrial Strategy (DIS)

BAE Systems works very closely with the UK Ministry of Defence to offer service support solutions, manufacture and indeed upgrade capability developments of the weapon systems and aircraft platforms. The MOD wants more value for money from its Supply Chain, as well as more transparency, not just in terms of cost, but also the assurance that this is flowed through the entire supply chain. DIS has served to identify areas of common interest for the UK customer and for BAE Systems.

This will involve a number of key changes in how the company’s relationships work and also what Richard Hughes refers to as the “interdependency” of each level of the supply chain. “We want to ensure that within BAE Systems and in conjunction with our suppliers and customers, that we actually establish a common supply chain language.” Each company has its own ideas about where a supply chain starts and ends, which can, if not addressed, make for complicated relationships and misunderstandings.

“Collaboration is fundamentally important in a rapidly changing business environment, with an example being a move towards availability contracting, where BAE Systems is actually providing support to the customer either in terms of flying hours or availability of aircraft,” Richard Hughes elaborates. “It means that the whole supply chain proactively works together to ensure that the end customer is able to make the most out of their investments.”

Shared objectives

BAE Systems is further developing its strategic relationships with a number of other major companies in the aerospace market. Richard Hughes picks up on this, saying: “We’re working closely with Rolls Royce to look at developing integrated business imperatives and identifying opportunities where we can work together to provide customers with better and more affordable solutions.”

This could progressively mean that BAE Systems will be looking to divest some of its existing capabilities in areas where its suppliers can do the job at a more competitive price and perhaps more effectively, in order to reduce acquisition costs and ultimately those fed through to the customer; “In a world of diminishing budgets that’s really crucial,” Richard Hughes says.

The 21st Century Supply Chains program, which is supported by the Society of British Aerospace Companies (SBAC) and operated by BAE Systems is looking to develop a standardised measurement for supplier performance, which will improve efficiency and the effectiveness of supply chains. “It also provides an opportunity to develop improvement frameworks between each tier of the supply chain, and to drive a more effective service and delivery to customers. There is a process in place to reward suppliers and industry partners striving to achieve improvements in their performance and output,” Richard Hughes explains.

Broader capabilities

BAE Systems is developing its people in order to ensure that they are able to work to their full potential. Within the Supply Chain environment BAE Systems has done a considerable amount of work to develop broader individuals; bearing in mind that many of its supply chain staff have come from a quite traditional world in terms of supply chain awareness and skill set. Therefore, BAE Systems as a whole has developed a range of training and development programs.

The company has worked with the University of Warwick for ten years in order to create a range of “DY programs”, including one entitled ’Supply Excellence in Business’. These courses are considered to be the industry benchmark and as such, the company is creating additional supply chain modules, which can also be offered to its partners and suppliers in order to encourage best practice, these include Arising Rate Management, Repair Management and Inventory Optimisation.

In addition, BAE Systems is looking to support its export markets more effectively. Phil Humphreys says, “We’re actually shifting the emphasis of the capabilities of our company towards a range of ‘home markets’ where long-term in-country capability will be developed.”

Click here to read the corporate brochure on BAE Systems