Supply Chain Initiative Boosts Competitiveness
30 Jan 2008
Partnering with other companies is essential in today’s business environment and BAE Systems is no exception. Typically, suppliers account for about 70 per cent of the costs of its products and services. That means it is crucial the company works as effectively as possible with the very best businesses it can find.
BAE Systems believes that the best way to establish a strong relationship with its partners and add real advantage to its business is to work as a strong team. By doing this, all involved can improve performance and ensure the delivery of high-quality, cost-effective products and services to customers, within agreed timescales.
Managing a supply chain is both a complex and time consuming business. It requires great skill, effort and careful planning. BAE Systems has worked hard to put together a supplier management programme which allows it to do this.
The programme recognises that optimising the supply chain brings benefits to everyone. It is not only vital for BAE Systems’ own continued competitiveness in the global market, but also for the UK’s defence and aerospace industrial base.
For this reason, BAE Systems has taken a leading role in an exciting UK initiative that will deliver huge advantage to the industry as a whole. The Supply Chains in the Twenty First Century programme – known as SC21 – aims to help deliver increased competitiveness by lowering the costs of doing business.
The programme works to remove duplication, minimise waste and increase co-ordination between suppliers. First launched at the Farnborough Air Show in 2006, it has already secured the commitment of 300 companies.
The key themes of the initiative are accreditation, development and performance and relationships. As the lead prime company in SC21, BAE Systems is undertaking a range of activities to ensure that all parts of the supply chain work together. The programme is also used as one of the reference points in long-term partnering agreements between the company and the UK Ministry of Defence.
The Company is providing a programme of SC21 training and awareness sessions for its suppliers. Industry peers, involved in the SC21 programme, are undertaking similar work with their own supply base.
The result is that some 120 companies are already involved in the initial phase of co-ordinated actions to identify and harness innovations and best practice.
Helen Perthen, BAE Systems’ project manager, supply chain transformation, is an evangelist for SC21. She says it complements the company’s other supply chain initiatives. “We have publicised our own technology and innovation requirements and are working with regional trade associations to find companies which can meet those needs.”
Within the company, the first implementation phase of SC21 has got off to a flying start. Kevin Sharp from BAE Systems’ Military Air Solutions business is leading activities with Honeywell, which is one of his business’s biggest and most important suppliers.
He says: “We’re confident that by working collaboratively with Honeywell and all its key customers, that we will achieve a real improvement in quality and delivery performance to our programmes.”
Colleague Sue Rigby, from the corporate procurement team explains how this phase of SC21 works in practical terms. “We contacted many other companies working with Honeywell. Together we discussed the number of systems audits we carry out individually with Honeywell and shared information about performance and delivery.
‘We used the SC21 relationship measurement matrix to help assess the root cause of any problems which existed between Honeywell and all of its customers.”
She adds: “This was a complicated process because there were so many stakeholders and Honeywell has multiple sites across the UK, Europe and the US, supplying 12 key customers.
Other BAE Systems businesses have also been heavily involved in the SC21 initiative.
In Barrow, North West England, the Submarine Solutions business attracted the first US based supplier to join the programme. Ametek, formerly known as Seacon, is a key supplier of hull penetrations for Astute class boats. Its agreement to join SC21 could lead to other major Ametek suppliers taking part.
At Glasgow based Surface Fleet Solutions, a behavioural charter has been put together to guide the way BAE Systems’ shipyards and their suppliers work together. A roadshow conference has been held and a series of relationship management workshops has also being organised.
The first of these events, held last year with consumables supplier Anixter Industrial, established clear principles for the rest of the series. Michael Boyle, commodity leader, indirect procurement and sponsor of the workshop, comments: “The workshop promoted the development of deeper relationships and greater trust between all parties. It examined changing the culture of how we work together, looking at a much more integrated approach and gave a platform for open and honest discussion on key strategic issues and tactics.”
Helen continues: “We have put engagement plans into our long term partnering agreements and have held workshops and conferences to brief suppliers on the approach BAE Systems is taking and how the wider supply chain can contribute.”
For further information please contact:
John Neilson, BAE Systems
Tel: +44 (0) 1252 384795
john.neilson@baesystems.com
Issued by:
BAE Systems, Farnborough, Hampshire GU14 6YU, UK
Tel: +44 (0) 1252 384710 Fax: +44 (0) 1252 383947
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www.baesystems.com