Transcript Slide 1

Tendering Masterclass Course
17th January 2011
Winning and Keeping Business
Ian Burns, Head of Supply Chain, BAE SYSTEMS Submarines
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Contents
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Submarines
Astute Class Submarines
Successor Deterrent Programme
BAE SYSTEMS Submarines Supply Chain Spend
Supply Chain Management Model
Key Differentiators between suppliers
Local Suppliers
Bidding for Work
Keeping Work once you win it
21st Century Supply Chain (SC21)
Supply Chain Relationships
Supplier Forums
Supplier Performance Management
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Submarines
– The most complex product in the world, operated by few nations and
designed and built by far less
– Putting up to 145 men in the most hostile environment for 3 months, living
next to a Nuclear Reactor surrounded by weapons
– 15 – 20 year Design and Build Programmes
– 7 – 9 year Build Programmes
– Well in excess of 1 million parts per Boat
– Over 50% of the cost of a submarine is externally procured products and
services
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Astute Class
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Astute Class
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Astute Class Submarine Programme – 7 Hunter Killer Attack Submarines, c. 7,000
tonnes each
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HMS Astute
HMS Ambush
HMS Artful
HMS Audacious
HMS Agamemnon
HMS Anson
HMA Ajax
- Delivered and in service
- Launched, leave Barrow December 2011
- Full submarine in Build Hall
- Units in Build Hall
- First units in Build Hall
- Long Lead Materials ordered
- Long Lead Materials during 2011
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Successor Deterrent Programme
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Successor Deterrent Programme
– Submarine provides the Nuclear Deterrent of the UK operating an unbroken 24 /
7 / 365 patrol
– 4 off Submarines at c. 16,500 tonnes each
– 150m long
– Crew of c. 145
– Concept Study from 2007 to 2010
– Collaborative approach with a joint team from MOD, BAE, Rolls Royce and
Babcock Marine, supported by Electric Boat (a US Submarine Builder)
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VRP Post SDSR Level 0 Programme
Main Gate Sep 15
Stage 1 Entry April 2011
Cut Steel Sep 16
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Launch Dec 23
Exit Barrow Feb 25
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2006 – 2010 BAE Submarines Supplier Spend
Indirect £375m
Sub-Contracts £84m Europe = £68m / 4.5%
Direct £1,069m
North
America &
Canada
= £53m /
3.5%
UK = £1,407m / 92%
Total 2006 – 2010 Supplier Spend = £1,528m
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Spend by Region
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Integrated Supplier Management System
Supplier
Performance
Review (SPR)
SC21
Supplier
Management
& Development
Supplier Forums
Category
Management
Collaborative contracting arrangements
3 / 6 monthly supplier reviews
Fragility Study
2 Year Improvement Plans
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Key Supplier Differentiators
– Those with current sustained high performance (this beats a history of previous
good performance which in turn beats a promise of future good performance)
– Those who engage in live and meaningful Continuous Improvement activities
– Those who demonstrate real engagement with the opportunity, but not an over
or under reliance on it
– Those who demonstrate a “can do” attitude – positive “glass half full” people
– Those who demonstrate Innovation and can embrace Change
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Local Suppliers
– Being local is NOT a differentiator per se
– However being local should allow you to offer a service advantage
– We are tasked with sourcing the most effective solution regardless of
geographic location
– I would like to see a healthy and divergent local supply base but the impetus for
that must come from you
– I would not like to see a local supply base too reliant on BAE SYSTEMS – that
is not healthy for your business and our funding streams can be disrupted by
political considerations
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Bidding For Work
– Understand who the key BAE Engineering and Procurement people are with
regard to your products or services
– Be sure to fully sell your capabilities in advance of any bidding
– Show yourself to be competent, competitive, flexible and innovative
– Try to judge the likely success criteria weightings in advance – Cost,
Schedule, Service etc.
– If you decide not to bid then an early advice of this with a sensible rationale is
important (if you want to retain the option of bidding for future work)
– For high value and / or long term arrangements expect a robust and
challenging selection process
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Bidding For Work
– Timely submission of a comprehensive bid is crucial
– No surprises culture is crucial
– If you are likely to face strong competition on the bid or cannot meet the full
scope, consider bidding with a partner or as a consortium
– However if you do this ensure you have thought it through and can credibly
demonstrate how this entity will work and who is responsible for what
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Keeping Work Once You Win It
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Do what you said you would
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Constantly have a precis of performance to date at hand
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Sell yourselves and what you have achieved – don’t assume it is self evident
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Issues can and do occur it is how you deal with them that matters – early
communication and proactive action is a must
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Understand our perspective (just as we should understand yours)
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Keeping Work Once You Win It
– Always offer proactive suggestions for improvement or issue recovery
– Inexcusable to miss a delivery date without pre advising
– If in doubt check – don’t make assumptions
– Demonstrate ability to constructively challenge the specification and
requirements to help reduce cost and / or lead time
– No surprises culture is again crucial
– We should have the joint objective of reducing the selling price whilst increasing
your margin – cost reduction is NOT a zero sum game for you
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SC21 background
SC21 will deliver
challenges to
industry
supply chains are never
static – they form & reform
around each and every
customer requirement
Customer
• DIS 1 (UK)
• Lower costs
• Increased
innovation
External
• $ value
• LCCs
• Raw
materials
which is committed to
• a new SC21 business culture
• delivering innovation
• through-life solutions
• delivering the SC21plan
• leadership
• ethical practices
• increased pace of change
• better strategic
positioning for your
company
• improved QCD
through the use of
common metrics
• increasing the
competitiveness of
aerospace & defence
companies
implementation
• common audit
processes
• process improvement
framework
• relationship
management tools
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Why is SC21 necessary?
current situation: • disconnected, fragmented
supply base
• non standardised processes,
waste & duplication (i.e.
metrics, auditing)
• business relationships are
often poor
• the interests of different parties
are not aligned
to be successful as an industry
we will need to: -
• standardise
processes
• remove duplication
and hence reduce
costs
• modernise business
relationships
• improve
communications
and collaboration
• increase efficiency
and simplicity
• increase innovation
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SC21 – Scope
1. accreditation:
need to
remove
repetition, and
unnecessary
duplication
4. innovation
initially SC21 will
3. relationships:
need for better
end-to-end
communication
and
collaborative
planning
implement 3 action
streams to drive early
transformation and
improvement
2. development
and
performance:
need
increased
efficiency and
remove waste
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through life
capability
management
6. new business culture
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Category Management
– Category Management is a method of grouping similar spend to deploy
maximum leverage
– Every equipment we purchase belongs in a Category and every Category has a
Category Manager
– They are tasked with fully understanding the marketplace for their Category and
jointly working with Engineering and Operations to secure the optimum sourcing
route
– Promotes cross functional working and allows significant improvements to be
delivered – removing or improving poor suppliers, improving engineering
solutions, generating economies of scale etc. etc.
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Supply Chain Relationships
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Particular emphasis is placed on working productively with SME’s – over 40% of
our Forum Members are SME’s
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Lean Manufacturing and Lead Product Development training and after course
support offered
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SC21 Continuous Improvement engagement – 55 events in 2010
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Ad hoc support offered e.g. supporting overseas sales campaigns, advising on
facility relocations etc.
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Early payment of invoices when appropriate and strong advocates of on time
payment (a message we stress to others at our supplier forums)
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Advance ordering where appropriate and feasible to help maintain throughput and
skill base
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Diagnostic work to help suppliers improve their management of sub tier suppliers
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Supplier Forum Hierarchy
Key Supplier Forum
Submarine Supplier Forum
Continuous
Improvement Forum
General Forum
Local Supplier Forum
return
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Supplier Management
– How do you manage your sub tier suppliers ?
– Do you really manage them at all or do you intervene when you have an issue ?
– Do you know how healthy they are ?
– Do you have a plan B in place for critical suppliers ?
– We work with our key suppliers to understand how they manage their sub tier
supply chain
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Supplier Performance Review
Jan 2008
Dec 2008
Dec 2009
Nov 2010
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