BAE Systems expects e-trading to save millions

BAE Systems is implementing an electronic trading system linking it with 15,000 suppliers and predicts it will deliver £2.5m a...

BAE Systems is implementing an electronic trading system linking it with 15,000 suppliers and predicts it will deliver £2.5m a year savings when it is fully deployed in 2004.

BAE Systems has consolidated back office systems around five platforms - Oracle, Baan, Manugistics, IFS and SAP - and linked them using Webmethods integration software, said Dave Bergin, head of e-trading.

The armaments and engineering company is using Axway gateway software to link these internal systems to the outside world.

When the project is complete, BAE Systems will link to the Exostar military/aerospace exchange, which is run in partnership with Boeing, Raytheon, Lockheed Martin and Rolls Royce and to up to 15,000 suppliers.

For BAE Systems the trading network will ultimately supply about 80% of the requirements for commodity products such as metal and electronic goods to 23 manufacturing plants.

Bergin said, "The savings will come in a number of ways - reduced headcount, by getting 1-2% discount on contract price by being able to trade electronically, by spending less time progressing orders and by integrating procurement information directly into manufacturing planning schedules.

"Today it is all done on paper with some EDI links. We don't get many acknowledgements of orders and, because we don't get those responses we get difficulties, so the new system will iron out some of the errors which get into our planning."

"It is, essentially, a cost-cutting measure but I believe we will have to trade this way in future. We want to get to a situation where we are integrated with our suppliers as if they were within our own business."

Clive Longbottom, director at analyst Quocirca said, "BAE Systems is somewhat behind and is using the Webmethods and Axway technology to play catch-up and get onto Exostar, as Lockheed Martin and the others already have done."

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