BAE System ranks among the first few global defence and aerospace companies to establish roots in India. The long list of their India specific endeavours include building the first Air Force Technical College in 1949, designing of Leander Class frigate – INS Nilgiri, establishing of manufacturing facility for Hawk Trainer aircraft and many more such projects.
Nitin A Gokhale, Founder and Editor-in-Chief of Bharatshakti.in caught up with Mr Paul Smith, Chief Procurement Officer, BAE Systems at the 2nd annual Suppliers’ Summit in New Delhi held on 10 April 2019, for a peep into BAE System’s priorities, goals and roadmap for India.
Nitin A Gokhale (NG): Tell us about the success of the Suppliers Summit and how it benefits BAE Systems.
Paul Smith (PS): As a reflection of BAE Systems’ commitment to support the Indian economy and to build capability of Indian suppliers, we are excited to host the second edition of our annual Suppliers Summit in the country. The event has been a great success for us. Last year, we saw a great gathering of various companies, both large and small and this year it has even increased further. We have over 100 suppliers as part of our supply chain today.
The event has number of advantages for us. It allows interaction between BAE Systems and the suppliers, who we consider to be our partners besides providing an opportunity of suppliers to network amongst themselves. Moreover, in building any successful supply chain, the keyword is ‘chain’, so it’s critical for series of suppliers and sub-suppliers to support each other and work together in a seamless manner.
Talking from the feedback of our previous Suppliers Summit, we have noticed that suppliers not only benefit from BAE Systems but also through exchange of knowledge amongst themselves.
NG: How does BAE Systems view the Indian supply chain and what positive impact does the Summit bring?
PS: We view the Indian supply chain as presenting an enormous opportunity for us. There is series of suppliers here in areas including composites, energetics that can help us in different ways. Moreover, these are all areas where we have had success stories over the last few years and we stand optimistic to witness the opportunities that these will reap in future too.
Also, there are few other areas such as machining, forging and engineering services, which India has been great at for a long time. We have some stellar companies here from technical and quality standpoint that can supply forgings and machining. We have also noticed a great deal of support in the electronics sector as well. So, this covers a wide array of suppliers and capabilities that we need and thankfully, we have all that available in India.
This creates a positive overall impact for us, as we get support for our local customers and orders. It allows us to manufacture things locally, which is great for customers and great for us. However, on top of it, it also gives us an opportunity to do export as well. This is something, where we are able to utilise the talent, the intellect and the capability of the supply chains for items externally.
NG: What are the parameters for choosing Indian suppliers in BAE Systems?
PS: BAE Systems follows a standard process for selecting suppliers and ensuring quality across the world. So, parameters for choosing suppliers here in India are the same to the ones that we have worldwide. The key parameters for getting qualified to our supply chain includes quality, the ability to make a quality product, capacity to deliver on time and support around cycle time. Apart from these, the suppliers have to clear our compliance process. As part of our due-diligence, we have a series of rules that are in line with our suppliers’ principles. Moreover, we do ensure that our existing suppliers also go through a rigorous qualification process on the individual components or assemblies that they are making. So, while they may be suppliers on our suppliers’ master file, they have to be suppliers capable of making individual product as well.
NG: How does BAE Systems intend to increase sourcing from Indian vendors for its global supply chain?
PS: One of BAE Systems’ strategic imperatives for 2019 and beyond is to identify and work with greater numbers of ethical, qualified, and capable Indian suppliers, and our annual Suppliers Summit is central to achieving that goal. We’re focused on developing domestic industrial capabilities and expanding our supply chain network in India. Our intention is to continue utilising various categories, ranging from composites to energetics to forging to electronics for building supply chain. That edge will come through collaboration with myriad of suppliers. To ensure success of our supply chain, it is critical for not only the suppliers to support one another but for us to put together the final assembly, whether it’s for use in India or export besides providing enough support and strengthening partnerships. Our teams continue to regularly visit local suppliers. And, we really find that in person interaction is a great way to answer questions, to really form that relationship and that partnership, going forward. It’s a great deal of onsite support and then last but certainly not least is the ‘local teams’. One of the things that’s been fun for me in my couple of years in the job is to see the growth of the team both in the quantity of the people that are here and the quality of the knowledge that they have acquired in the last couple of years and that’s something that make great deal of help to us.
NG: What are the offset programmes that have been executed/initiated in India by BAE Systems till date?
PS: We are aligned with the Indian government’s vision of developing India into industrial defence manufacturing hub. As a founding partner of defence manufacturing in the country, we view India as presenting both the opportunity to partner with the local industry and also a tremendous sourcing advantage for our global supply chains. We are steadily building an effective and robust Indian supply chain by identifying, qualifying and selecting Indian companies of every size to address our global requirements, above and beyond offsets. The Make in India programme besides other policy interventions have indeed precipitated our ambition to place India on our $12 Billion annual global sourcing map, and in the past years, Indian industry has demonstrated the capability and enthusiasm for this integration. The response to second edition of annual Suppliers summit, evidences that, with close to 100 Indian companies registering their interest in our plans for sourcing from India.
Developing an in-country supply chain is instrumental to our India commitment and we are delighted to see the same being galvanised through the commencement of the Make-in-India M777 programme, which allow us to harvest the capabilities of a number of Indian defence suppliers and make an investment of more than $200 million in these suppliers, providing them with access to the BAE Systems group across Air, Land, Sea and Security program.
NG: How does India compare with other destinations as a sourcing base?
PS: India as a sourcing base is very similar to other markets. Of course, there are special and certain areas including engineering services, forging, composites, energetics amongst others that allows us tremendous scope for strengthening the supply chain base here. While there are myriad of capabilities from across commodities, we still continue to work through the cycle team and speed of execution of projects. So, it certainly takes time to understand our commitments to initiate any program, to start with the raw material and execute to a final assembly or a shipment. Together with our partners, we stay focused to improving the speed of execution, through which we can bring a product through qualification and then eventually final product assembly within a specified timeline.
NG: Can you update us on the Partner 2 Win program?
PS: Our partner 2-win program has greatly expanded since the last year. BAE Systems has over 2100 suppliers globally that run the program. The key with ‘Partner 2 win’ program is that it measures the quality and delivery of the suppliers. Our goal is to achieve a 100% on-time delivery from the supplier and a 100% quality. The keyword here is ‘Partner’. The supplier here is to ask questions to understand our drawings and our specifications. It’s really a two-way street for both the supplier and BAE Systems to work together. The goal is to reach ‘100%’ and when a supplier can reach a 100% for delivery and quality over 12 months, we consider them to be a Gold supplier. And this is really a tough achievement for a supplier to reach. Roughly, globally only one in five suppliers at any one time are gold suppliers. It has been a great program for us. On top of it, just last week I was in New Hampshire for our Electronics Systems business. We were able to celebrate the Gold award for Kineco Kaman Composites India. This is a great award for the supplier which has had a perfect performance.
This global program for us is something we continue to expand and utilise to partner with suppliers. We also have some tough goals that we want to have suppliers at gold level or at least at the bronze level or above. This is something we are partnering with suppliers to improve greatly on both sides and we look forward to having more golden and silver suppliers.
NG: Mr Smith, thank you very much for talking to BharatShakti.in.