1 / 75

Defence Advisers Council Presentation

Defence Advisers Council Presentation. “The Impact of the Strategic Defence and Security Review” Thursday 17 March 2011 A valuable and essential seminar for companies looking to solve the problems of selling into the defence sector. “£38 bn Budget hole at the MoD”

sheng
Télécharger la présentation

Defence Advisers Council Presentation

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Defence Advisers Council Presentation “The Impact of the Strategic Defence and Security Review” Thursday 17 March 2011 A valuable and essential seminar for companies looking to solve the problems of selling into the defence sector

  2. “£38 bn Budget hole at the MoD” “Future carriers – saved but delayed” “Nimrods – Scrapped” “Harriers and Ark Royal decommissioned” “MoD to name shame contractors” SDSR THE HEADLINES

  3. Europe’s largest (20% market share) Worth over £30bn in 2010 MOD ~ UK industry’s #1 Customer ~ 23,000 contracts annually ~ 200,000 Service personnel (almost)! UK Defence Industry

  4. The Defence Advisers Council (DAC)

  5. The Defence Advisers Council AGENDA 09.00Arrival, registration, coffee 09.30 Welcome & Introduction 09.40 The Impact of the Strategic Defence & Security Review 10.30 Mitigating risks to future business(Part 1) 11.00 Coffee 11.30 Mitigating risks to future business (Part 2) 12.00 Enhancing Capabilities & Competencies 12.45 Q & A 13.00 Networking buffet lunch 14.00 One-to-One meetings with presenters 1600 Depart

  6. BUT……..there has been the: Strategic Defence and Security Review (SDSR) UK Defence Industry

  7. What does the Strategic Defence and Security Review mean for the Aerospace and Defence Industry?

  8. Background • Aerospace and Defence sector have been under pressure due to the global economic environment. • SDSR focuses on industry specific issues: • - need to increase operational efficiency • - cut costs • - diversify and globalise to survive. • MOD will be looking to increase and broaden the provision of support services. • Few surprises, but difficult decisions still to be made. • Detailed planning required to balance the books and avoid pushing the problem out to the right, or reducing flexibility.

  9. Secretary of State for Defence Policy Principles 1.Operational commitments are top priority and must be conducted effectively. 2. Strategic Defence & Security Review will be cross-Government, policy-led and resource informed. Core of UK security will remain NATO; US will be our major partner and bi-lateral co-operation with France will be stepped up. MOD’s relationship with defence industry will be reset and Government will proceed with acquisition reform.

  10. Is this a storm Industry can ride out? • Big players with diversified products and global opportunities will remain well placed • Civil side recovering well since 2009 • M & A expected to increase as bigger players look to manage risk in the supply chain • Larger players could be exposed if suppliers are over reliant on UK defence market • Big contractors have had close contact with MoD – too close? • Smaller providers may not have same visibility and may not have such a good understanding of the requirements for survival.

  11. So what does it mean for potential suppliers to the Defence Sector? Opportunities to provide cost savings for MOD Procurement. Opportunities to buy up parts of MOD which they are offloading. Opportunities for M&A activity as Primes look to consolidate.

  12. Working together to procure equipment better How we see it : Industry already diversifying and globalising, the military is under the most pressure to change. Budgets have shrunk and provider base may shrink too . Suppliers will look to other markets. MoD needs its equipment suppliers to offer more by: decreasing their margins taking on more risk accepting more responsibility for R&D expanding their services to cover “models” such as availability contracting & maintenance and support. MoD needs a more commercial focus, faster & more flexible contracting and a more holistic approach eg through life expenses.

  13. Contract Renegotiations Very clear signal from the Prime Minister that contract renegotiations will be a strong focus. MoD is expected to save £4.7bn from reducing the defence estate, civilian headcount and allowances, (and renegotiating contracts). Not yet clear how much of that is expected to come out of the margins of suppliers. BUT…. Industry can expect to face a Customer : - adopting “a much more aggressive drive for efficiencies” - looking to write significant amounts off existing contracts.

  14. A new range of services bring opportunity New opportunities are likely to attract increased interest Areas likely to be on the table include facilities management , equipment maintenance and training Some demand likely to be met by larger business service providers who operate in other sectors Expect some mergers in the market Not many start ups,asscale and robustness required and cost of entry likely to be high - therefore look at increased partnering, JVs etc Offering these services will require a more customer-centric culture than before.

  15. Risk Some industries might look to have come through relatively unscathed, but beware complacency. Need to balance short termcrisis managementand long termambition. Strategic ambitions likely to be dependent on military operations being scaled back in Afghanistan by 2015, to create the headroom necessary to realise the vision for 2020. If we are still in Afghanistan at the time of the next CSR, industry can expect a similarly challenging focus on budget cutting. BUT…the difficult work of deciding the detail of “how” to reduce costs is yet to be done. And these “how” decisions will impact on defence suppliers.

  16. What should industry do? Expect to see similar budget cuts from defence reviews across the world. Diversifying into other markets won’t mean the pressure on price will disappear. Next UK review is in 5 years. Many cost cutting projects have been initiated in industry already. Bigger players should consider more transformational corporate simplification programmes. For those who have made acquisitions, consolidation and standardisation across entities, properties and processes will support efficiency, effectiveness and agility improvements.

  17. What should industry do? We recommend: Now is the time to review your strategy, aims and objectives Make your structures/models agile enough to deliver the efficiencies required, as existing contracts come under price pressure Realign your market focus Therefore ….revisit your overarching business planning and the operational model supporting it. Knock-on effects likely to be: A requirement for improved customer service An ability of the workforce to deliver new services The capability to up-skill to meet any gaps.

  18. BUT - Life goes on ... Existing contracts will need strong programme management and governance. New contracts can expect even stronger government/customer focus. Delivering to time and on budget critical. Governance will be important. The new bribery bill: pressure will increase in a sector where anti bribery and corruption compliance has always been key. Still a big sector with lots opportunity. Competitive advantage will be important, all aspects of operational and financial efficiency should be scrutinised.

  19. The Defence Advisers Council (DAC)

  20. STRATEGY &PLANNING

  21. WHY PLAN? “The nice thing about not planning is that failure comes as a complete and utter surprise and is not preceded by long periods of worry, anguish and self-doubt.” “By failing to prepare, you are preparing to fail” Benjamin Franklin

  22. THE OPTIONS OPTION 1 – The Business Miracle “Do today what you did yesterday and expect a different result tomorrow.”

  23. THE OPTIONS OPTION 2 –Manage The Future: Produce a Road Map Define your Vision Identify your Objectives Set your Goals/Targets Create a Strategy Make a Plan Communicate your Actions

  24. Acquisition Operating Framework “The AOF is the authoritative source of policy and good practice for all members of the MOD and our Industry partners concerned with acquisition” • Strategy Considerations • Invitation To Tender • Tendering And Contract Award • Contract Administration • Alliancing • Conflicts of Interest www.aof.mod.uk • Due Diligence • Influencing the Supplier Network • More Effective Contracting • Partnering • Private Finance Initiatives • Public Private Partnerships

  25. KEY MESSAGES • Prepare and Plan …………………………….…. • Define your company’s products/services … • Determine why MOD should buy from you … • Decide on your ‘routes to market’ …………… • Identify your ‘strategic’ funding options …… • Organise Strategy Reviews …………………… think strategically clearly “USP” the tactics rationally regularly James Short 07818 054645 james.short@augmentor-uk.com

  26. The Defence Advisers Council (DAC)

  27. Supply Chain Management & Development Submarine Solutions Irshad Booly MCIPS MILT Supply Chain Project Leader/Manager

  28. Supplier Management in BAE Systems • Within BAE Systems we take a tiered approach to supplier management, ranging from full strategic and operational performance partnerships with our most strategic major suppliers to performance management with our general supply base. • We use the SBAC 21st Century Supply Chain Programme - SC21 tools and techniques for operational performance management and improvement with our suppliers. • We recognise improvement in performance is dependent upon open communication and clear improvement plans which must be two way to be effective.

  29. Integrated Supplier Management Fragility Study Category 1 Category 2 Category 3 Category 4 COTS or near – easy to change Non Critical Critical equip to boat integration Cost/ Qualification/ availability not normally an issue Less critical items that are Expensive in Time/Cost to change supplier Critical equipment Or materials that would require extensive development to change 43 suppliers

  30. Category 4 Sources - The Situation today Of the 43 sources identified in this category: • 22% assessed as financially at risk • 65% stated products unique to Submarines • 26% stated processes unique to Submarines • 16% stated resources unique to Submarines

  31. Integrated Supplier Management Process Fragility Study QBR PPA Supplier Performance Review SC21 Supplier Management and Development Category Management Supplier Forums 2 Year Improvement Plans

  32. Fragility Study looks at: • Section 1 - Organisation Structure • (Contacts, Ownership Structure) • Section 2 - Industry & Markets • (% T/O to Naval, Other Markets, Exchange Rate) • Section 3 - Product Profile • (Technology, Obsolescence,) • Section 4 - Staff & Employment Profiles • (Balance of Skills, Retention, Training) • Section 5 - General Opinions & Influences • (Relationship, Defence Environment & Impact)

  33. SC21 is an industry change programme designed to accelerate the competitiveness of the aerospace & defence industry by raising the performance of its supply chains. • It is a national strategy, executed regionally

  34. SC21 National Progress • 600+ companies now signed up including MoD • Implementation phase underway : >200 companies actively engaged in multiple customer working groups - 65 Self Starters added to the national plan since Jan 09 • Regional aerospace partners have now secured collectively over £8m to roll out SC21 across the country – steering groups established. • Twelve (12) recognition awards made to date – 12 months continuous world-class performance • Trials commenced on joint customer technical oversight of suppliers • SC21 is linked with technological innovation through the A&D Knowledge Transfer Network (KTN) • Ethics – one of the seven key commitments : each SC21 signatory has been asked to sign the Common Industry Standard Ethics document.

  35. SC21- Supply chains for 21st Century 1. Accreditation and quality improvement: need to remove repetition, and unnecessary duplication AS/EN9100 3. Relationships: Need for better end-to-end communication and collaborative planning RMM/PPA Initially SC21 will implement 3 action streams to drive early transformation and improvement 2. Development and performance: need increased efficiency and remove waste Manufacturing Excellence Business Excellence 4. Innovative Supply Chains Creation of Partnerships & Collaborations to add value to customers & E business BAE Systems – PPA/SPR 5. Through life capability management

  36. What will the three work streams achieve? • Reduced auditing through recognition of supply chain certification • Recognise and accept certification to AS/EN9100 (or equivalent) • Encourage special process approval to Nadcap • Reduced quality visits through co-ordination between customers quality teams • A consistent approach to supply chain development and performance measurement • Remove duplication of supply development programmes – achieve 80% commonality • Use common metrics (KPIs) Key Performance Indicators • Improved supply chain relationships • Objective measurement of relationships using the RMM • Relationships workshops to facilitate improvement • Creating a relationship platform to address and progress the accreditation and development work streams • Enablers to support development from Build to Print to TLCM

  37. Past Emerging Future Platform assembly System Integrators System Integrators OEMs Large scale integration Value Added Small scale integration Evolution of the Supply Chain to Supply Networks - TLCM Value – added parts & assemblies Make-to-print parts & assemblies Raw materials • Primarily direct supply • Many direct suppliers • No real role for “integrators” • Many “supplier paths” • Fewer, still many direct suppliers • Limited role for “integrators” • Larger role for value adding suppliers • Fewer “supplier Paths” • Fewer direct suppliers • Extensive role for “integrators” • Larger role for value adding parts suppliers

  38. Regional funding for the Aerospace & Defence Industry 2010 North West: Aerospace Alliance: ADS Scotland: Northern Defence Industries North East + Yorkshire: ADS Northern Ireland East of England Midlands Aerospace Alliance: ADS Project office: National oversight and co-ordination of the programme Aerospace Wales Forum: Farnborough Aerospace Consortium: West of England Aerospace Forum:

  39. REGIONAL POINTS OF CONTACT

  40. For Further Information and to sign up for SC21: Visit : Aerospace/Defence/Security (formerly SBAC) www.sbac.co.uk A|D|S is the trade body advancing UK AeroSpace, Defence and Security Industries

  41. ASTUTE BOAT 1 “SUCCESS IS ACHIEVED THROUGH A STRUCTURED PROGRAMME ALIGNED WITH A COLLABOARTIVE AND CAPABLE SUPPLY CHAIN” First in Class Astute exits Barrow 15th November 2009 “It is not the strongest species that survive, nor the most intelligent, it is the ones most responsive to change”

  42. The Defence Advisers Council (DAC)

  43. Crossing the legal minefield • Richard Brown, Aerospace & Defence • Farnborough Aerospace Consortium • 17 March 2011 Lawyers & Parliamentary Agents

  44. Crossing the legal minefield • Richard Brown • Aerospace & Defence Sector • Veale Wasbrough Vizards • - Lawyers to MoD/Primes/Defence suppliers • - Defence Advisers Council • - Farnborough Aerospace Consortium • Helpline

  45. Crossing the legal minefield • Key messages for today: • SDSR will impact on your contracts • Get your contract right • Avoid the mines! • Defence buyers want suppliers to collaborate

  46. Crossing the legal minefield • Impact of the SDSR on defence contracts: • Can defence buyers cancel a contract? • Can prices be renegotiated if a contract has been signed? • Can a defence buyer require a supplier to offer more for less?

  47. What legal documents? • Defence standards (DEFSTANS) • Defence forms (DEFFORMS) • Defence conditions (DEFCONS) • Contracts with the Primes • MoD contracts • Strategic Defence & Security Review • Cancellation rights?

  48. MoD Defence Conditions • DEFCON 534: Prompt payment • Credit period for your suppliers = 30 days • Credit period for MoD = 60/90/120 days • DEFCON 566: Change of control • Duty to advise MoD • Effect on possible sale • Mergers and Acquisitions Section

  49. MoD Defence Conditions • DEFCON 703: Intellectual property rights • What are “intellectual property rights”? • Normal rules under English Law • Ownership of IPR passes to MoD • More beneficial to MoD • DEFCON 649: Vesting • Normal rules under English Law • Title (ownership) passes to MoD • More beneficial to MoD

More Related