Business Challenges

• Supplier spend fragmented across multiple budget holders and divisions
• Change of supplier business model from equipment manufacture to service provision
• Declining Defence spend in the UK and EU, increasing focus on value for money
• Drive for value for money through competition has increased market complexity – monopolies and duopolies exist
• High degree of mutual dependence between suppliers and MOD
• Business critical defence capabilities are at risk, as the forward pipeline of business has declined, diversification outside of defence sector is taking place
• Pan-MOD Supplier Relations Group launched to provide a focal point for interactions with industry
• The challenge: how to deliver value for money to the MOD, while sustaining defence capabilities and attractiveness of UK market to industry

Solutions

• Identify which supplier management approaches need to be applied to which suppliers
• Identify joint resources, agree ways of working through joint charter, put in place governance
• Joint data gathering and analysis phase, combined with performance measurement to develop supplier profile
• Identify issues and opportunities, develop strategy options, agree joint strategy at pan-MOD level, with ‘line of sight’ objectives to budget holder levels
• Plan and execute strategic initiatives, refresh profile and strategy to meet market demands, monitor performance

Benefits

• Deployment of objective performance measurement of supplier and customer, endorsed by government and industry bodies, informing acquisition decisions at all levels of the business
• Structured and clear governance and ways of working between MOD and key suppliers to discuss matters of strategic importance to both organisations
• Improved clarity around long term plans, enabling risk on future projects to be reduced through a clearer understanding of what capabilities MOD require from industry
• Potential benefits from savings estimated at around £250M - £350M (~5%), incremental