BAE Systems Australia

BAE Systems is Australia’s largest defence contractor. Our supply chain includes more than 3,000 businesses and in 2009 we spent more than $900 million purchasing goods and services from these companies. More than 2,600 of these, or around 85% are Small and Medium Enterprises (SMEs) based in Australia. Their share of our outsourcing amounted to $450 million or roughly 50 per cent annually.

Our supply chain is vital to our success. We engage our major subcontractors and SME suppliers as part of a tried and trusted process known as Life Cycle Management, which directs our efforts from identification of an opportunity right through to the end of a project. We form partnerships within our supply chain early in this cycle to build up the total capability required to win and successfully deliver a project. As a prime contractor, BAE Systems Australia aims to identify and partner with other Australian companies to put together the right package of capability and to perform the systems integration role.

BAE Systems Australia supports SMEs within our supply chain to expand and prosper in various ways. Central to our commitment is working with SMEs to increase their capability in order to deliver product in accordance with Quality, Cost and Delivery (QCD) requirements to both our Australian and global businesses.

We also support suppliers to increase their profile across our chain and thereby boost their potential order intake. This includes implementing joint development and performance plans to improve the performance of specific projects, standardising quality assessments, and ensuring that all our relationships are built on effective communication.

An example where local businesses have recently entered our global supply chain can be found in a project originating in Rochester, UK. The Electronics & Integrated Solutions business is involved in the design and development of an `Active Stick` to suit a range of military aircraft (fixed and rotary), and specifically adapting the design for use on the F35 Lightning II Joint Strike Fighter.

The UK business engaged four Australian SMEs through an International Participation Program (IPP) to be involved in a strategic sourcing event. The package included complex five-axis piece part and assembly components, manufactured from aluminium and exotic titanium alloy materials.

Working with our UK colleagues, a BAE Systems Australia team deployed an auditor to assess and approve each SMEs management system and processes. As a result of this audit activity, Levett Engineering Pty Ltd, based in South Australia, was engaged as the prime in Australia to manage the work and the sub contract activity.

We are currently working with Electronics and Integrated Solutions in a new strategic sourcing campaign to identify and review a number of mechanical suppliers who can support the aggressive production requirements over the next five years.

Our company is also responsible for in service support at Williamtown NSW and Pearce in WA of 33 BAE Systems designed and built Hawk advanced jet training aircraft which are operated by the Royal Australian Air Force.

These aircraft are part of a global fleet of trainers that are sustained by a host of suppliers. BAE Systems Australia has assisted in the development of in country repair capabilities for a number of aircraft systems and components.
This capability has matured over the past ten years since the aircraft first entered service in Australia to the point where several of our local Tier 2 suppliers now enjoy similar business from non-Australian customers. Examples of industry growth include the development and manufacture of specialist equipment including repair stands and other ground support equipment.

Crucially, BAE Systems Australia supports SMEs to develop at the earliest phase of the lifecycle - business winning - to ensure that these firms are not only capable of delivering requirements but also understand the complexities of contracting within the defence market. A key element of this is our Supplier Capability Assessment Tool (SCAT) which enables us to benchmark potential SMEs against world’s best practice, including CMMI. This tool also benefits our suppliers by enabling them to introduce improvement plans to ensure they are competitive within our local and potentially, our global, supply chain.

The SCAT evaluation uses on-site assessment and “open questioning” techniques to gather relevant data around areas such as strategy, communication, production planning, continuous improvement, production, logistics planning, sub-tier management, and project management. Supplier data allows robust decisions to be made about selection and provides for impartial feedback.

Feedback from suppliers that have undertaken the process has been positive. Roger Vale of Royal Wolf Trading explains

“The ‘warts and all’ review of our corporate strengths and weaknesses and our ultimate value as a vendor as assessed by others is a formidable exercise and not one that organizsations necessarily rush to participate in…… the greatest benefit from the exercise was the enhancement of trust between the entities.”

Another example where we have recently brought local suppliers into our global supply chain can be found in our Unmanned Autonomous Vehicle (UAV) capability.
BAE Systems in the UK has funded the University of Sydney to research autonomous technologies which can then be embedded into our unmanned platforms. Similarly, we have engaged several local suppliers to manufacture and test components within the UAV sub-systems which are then assembled in the UK. While this work is currently in the prototype stage we expect to enter into high rate production over the next two years.

BAE Systems Australia has also supported local defence industry SMEs through a close relationship with Enterprise Connect. We are currently assisting a number of suppliers who have found it difficult to `break-in` to large defence companies at a strategic level. For example, we are working closely with SAGE Automation, a national industrial control and automation provider, to help build a relationship with Spanish shipbuilder Navantia SA (our major subcontractor on the Landing Helicopter Dock construction program).

Looking ahead, BAE Systems is constantly seeking new ways to engage with Australian industry. Central to this will be the signing of a Global Supply Chain Deed with the Defence Materiel Organisation later this year that will formalise our joint commitment to increasing local participation in our global supply chain.

For more information about BAE Systems Australia’s global supply chain initiatives, please contact Debra Fillingham at or telephone 08 8480 7688.

APDR at a glance