Reducing BAE Systems' Supplier Base from 163* to Just One
BAE Systems Munitions has been working with BIS Group for about fifteen years and during this time, the working relationship has allowed us to reduce our commodity suppliers from 163 to one, without any deterioration in performance. This is crucially important since our annual spend on low value industrial commodities is over £1.7M.
"This is a great example of one of our main Challenge 20 initiatives” said Anthony Ling, Munitions Head of Procurement. "This supplier reduction programme has resulted in cost savings, process improvements and better schedule adherence, based on implementing LEAN best practice and thinking strategically rather than just on a tactical basis."
"BIS Group has also worked with us on specific Challenge 20 initiatives including kitting; energy reduction; powder coated paint; Henkel Loctite audit and vendor replacement. Every initiative helping us to achieve the Challenge 20 objective of driving 20% cost savings by 2018 from our suppliers."
The control of the mutually agreed Key Performance Indicators is based on a "Big Picture" series on graphs, which are monitored jointly each week between Stuart Dean, Strategy Director, BIS Group and Paul Adams, from Munitions Procurement function.
Observed Paul: "The Big Picture monitoring process was introduced 16-months ago and is already having a positive impact. It is based on 12 performance indicator graphs which focus on driving out cost; improving schedule adherence and giving management the information to make informed decisions."
The graphs cover a 12-month performance period focusing on on-time quotations; total delivery schedules to all sites; urgent schedules to all sites; frequency of schedule amendments; total deliveries per site; total urgent deliveries per site; % schedule adherence; non-conformance; invoice queries; management of obsolescence; monthly spend and spend per rebate.
"One of the main improvements from giving BIS Group the contract for our low value commodities is that schedule adherence has been 100% and our management of obsolescence has significantly improved. This means that a job is no longer stopped for the sake of an unavailable low-cost commodity" summarised Paul, who continued: "It is to BIS Group’s credit that their excellent performance has continued whilst our predicted volume spend has decreased and has set the basis for a long-term partnership."
"With BIS Group’s permission, we now hope to use the Big Picture performance monitoring process as best practice with other suppliers in the near future since the benefits are clear to see."
* Represents 900+ SKUs