11 Supply Chain Management – ES4C9 Negotiation in the Aviation & Defence Sector BAE Systems, PLC. James Fairbairn 18/11/2013
2 Introduction FTSE 100 Company Sale (2012) ~ £16.6 bn Gross profit (2012) ~ £1.37 bn 84,000 Employees worldwide Stock/Current WIP value ~ £665 m ~25,000 Suppliers worldwide FAME, Company report: BAE Systems PLC (UK) Limited [online]. Brussels: Bureau van Dijk [viewed 11 November 2013]. Investis.com, BAE Systems, 2013 Half year results [online]. Accessed 11 November 2013http://bae-systems-investor-relations-v2.production.investis.com/
3 Negotiation – Current state Challenges faced Contract winning Expertise & technology acquisition Specification adherence Process improvement in existing relationships Reliance on Government Contracts Impact Reputation Profitability Future contracts Financial performance linked to political climate Yousigma.com, BAE Systems PLC (SWOT Analysis) [online]. Accessed 11 November 2013http://yousigma.com/comparativeanalysis/baesystemsplc.html
4 Negotiation Style Dr Dawei Lu, MSc Supply Chain Management module
5 Negotiation on two fronts Contract negotiation Utilising teams of in-house & external experts with both technical and in-field experience to define key points Analysing and proposing alterations to specifications Ensuring contracts provide value for both parties Secure Intellectual Property Rights Supplier negotiation Establishing trust Ensuring capability & capacity within schedule Satisfying security requirements Agree on roadmap to integration into chain & pull systems Utilise expertise in other business areas – further integration All-or-nothing scenarios can still elicit extreme responses
6 Conclusions Quality as the primary driver restricts negotiation styles High value to supplying BAE Systems for suppliers Industry demands infer a high cost of failure Trust is a prerequisite to business Building long term relationships is key to improvement across multiple product lines Company negotiators hold most of the cards when dealing with suppliers, but a fully collaborative approach must be taken to secure quality, integrate companies into the pull-system and reduce waste throughout the entire chain
17 Thank you for listening