As BAE Systems moves to e-enable itself, the defence supplier
expects to draw considerable benefits from gaining access to the
aerospace industry trading hub. Julia Vowler reports
If John Donne was right when he wrote, "No man is an island, entire
of itself; every man is a piece of the continent," the same is also
true of companies - none exists on its own, they are all
interlocking pieces of the same economic continent, suppliers and
customers to one another in an end-to-end value chain.
At BAE Systems, e-business director Chris Coupland is putting the
"e" into the company. "My remit is to e-enable the business across
the board," he says. "We have between 15,000 and 20,000 suppliers
which, by value and volume, works out at a few hundred major
suppliers per site, and we have between 15 and 20 key sites."
Two years into a five-year programme, the first areas to be
e-enabled are up and running, with another six to eight scheduled
for next year. Fittingly, the pilot project is IT itself -
e-enabling the interface between BAE Systems and its global IT
outsourcer, CSC.
"We have put all our CSC spend online," says Coupland. "We've got
full requisition-to-pay processes for catalogue [procurement], and
we're well into rolling out proposal-issuing for things like
application development."
The rationale for e-enablement is clear. Coupland wants to
establish what he describes as an enterprise-wide "dial-tone" for
supply chain management.
"With a dial-tone we can talk in a simple, secure way to our
suppliers over the Internet, and conduct transactions with them,"
he says. "My ultimate goal is to have the supply chain visible on
the desktop."
E-enablement should reduce the cost of doing business across the
supply chain, argues Coupland, reducing everyone's cost of sale and
purchase. It will mean faster, more efficient procurement.
"There will be no reworking, no retyping, because suppliers will
have greater visibility into BAE because we'll all be looking at
the same information, because it comes from the same source," he
says.
Smaller suppliers, which may not be able to afford their own
product data management systems, will be encouraged to trade with
BAE because they will be allowed [restricted] Web-based access to
its product data systems.
But suppliers need not worry, Coupland says. E-procurement is not
about "beating up suppliers," though it can "widen competition in
some areas", he says. "Because it's easier to use, some suppliers
see this as a very good route into BAE Systems," says
Coupland.
It also works in the other direction, with BAE as the supplier.
"We're working towards a single way of facing off to the Ministry
of Defence instead of having many different ways of doing so," says
Coupland.
The underlying architecture of e-enabling BAE Systems will create
an enterprise application integration layer to serve as a "ring
main" for the whole company.
"Like every large company we have multiple enterprise resource
planning (ERP) systems. Putting in the ring main allows each
business to connect its ERP into it, and the ring main then
connects to the external world via Exostar," says Coupland.
Exostar is the e-marketplace set up by the world's major aerospace
and defence companies, including US giants Boeing and Lockheed
Martin. Because of the
complex and international nature of the business aerospace and
defence tend to be highly collaborative, and competitors can find
themselves working in partnership with fierce rivals on joint
projects that can last years, as with the Eurofighter and Joint
Strike Fighter projects.
In the past, says Coupland, such massive projects have required,
and justified, having their own dedicated lines and bespoke
infrastructure. Moving to browser-based communication will, again,
reduce costs all round.
"We're seeing shorter cycle times and better configuration control
of data," says Coupland. Joint project management via the Internet,
especially for projects which do not warrant their own dedicated
inter-company communication infrastructure, is a key advantage. "It
is a question of using the Internet in a collaborative project way
so we can have more professional project management disciplines and
interactions between suppliers.
"We will be able to have virtual meetings and monitor milestones,
securely, and then close down the project professionally at the
end.
"We will deepen our relationships with suppliers because though
there will be less face-to-face communication, there will be much
greater frequency of interaction and more common data and
documentation," he says.
Other companies in the defence industry are becoming e-enabled, and
all are at different stages of maturity and specialisation. "We all
lead the way on certain things," says Coupland. "In the US, because
of the distances, they have more on-line meetings than in the UK.
Our culture hasn't got there yet. But I would challenge anyone to
find any company that's further ahead on [Web-based]
catalogues."
The company is also using Exostar internally between its own
business divisions. "We do not want multiple trading systems," says
Coupland.
His goal is, "To have broken the back of e-enabling the business
within three to five years - when 80% of transactions, buying and
interaction on projects will be e-enabled. We have moved out of the
evangelical phase, and into pilot testing and engaging business,"
he said.
Meanwhile, Donne's 17th century understanding of interconnectedness
finds an unexpected echo in 21st century e-technology.
Benefits of the e-marketplace
- It is easier and simpler to trade with suppliers and customers
over the Internet, via cheap desktop Web browsers. This reduces
costs to everyone, bringing benefits to the whole supply chain
- Because there is only one source of data, and the whole
transaction is visible on the Internet, there is less error and
less reworking
- Smaller suppliers, which may not be able to afford expensive
product data management systems, can see into approved areas of BAE
Systems' product data management systems, making it easier for them
to trade with the aerospace giant
- Internet auctions can be used to flush out timely "windows of
capacity" among suppliers, speeding up the procurement process
- The Internet can be used for collaborative project management
on complex joint bids, making project management more efficient and
less costly
- BAE Systems' own internal businesses can also use the Internet
infrastructure to trade and communicate among themselves
- Internet-based supply chain management speeds up the
procurement process, which can be crucial for meeting
deadlines
- Being e-enabled may help to win business. BAE Systems is hoping
that its e-enabled spares and support division may win business
from the Ministry of Defence looking to outsource its own spares
and support procurement.
Coupland's rules for e-enablement
- Focus on the processes, rather than the technology
- Engage the supplier base - there must be advantages for
them
- Choose champions who are keen on proving its success, which
will get others to follow.