Supply Chains

Fast Forward – Marine Cluster Meeting

6th November 2012

A look at an anonymous off road vehicle company..

Pre-2008:– Engineering led decision making & purchasing– Customer is king, suppliers easily replaced– Prices forced down– Stocks removed– Increased payment terms

Result for suppliers:– Quality and supply became an issue– Smaller local suppliers struggle to meet demand– Reduced margins– Erratic cash flow– Reduced capability to innovate

Then the World changed in 2008

– Vehicle production volumes dropped dramatically

– Many smaller suppliers ceased to trade

– OEM difficulties in completing the few remaining orders due to supply chain issues

– Resulting in increased lead times, quality issues and ultimately loss of orders

What did they do?Strategic Partnerships

– Suppliers chosen not purely on price but on stability, reliability, technical innovation and added value

– Seek complete system suppliers

– Long term agreements, agreed pricing structures and payment terms

– Joint marketing and sales approach

– Stock holding agreements

This Company’s Conclusions

– Aggressive purchasing led relationships can be counter productive

– Stable relationships required to allow suppliers to grow and invest

– Product is only as good as the sum of its parts so supply chain investment crucial

– Supply framework agreements allow new technologies to be utilised at earliest opportunity

Any parallels with the Marine Sector?Issues raised to BMF:

– Security of supply/dual sourcing– Increase in overseas sourcing– Lead times, especially on optional parts– Payment Terms– Relationships– Investment in Innovation/R&D – Raw material costs– Lack of finance– Intellectual Property– Skills– Quality, Cost, Delivery

the list goes on........

Instigated BMF Supply Chain Initiative

“To Encourage and Support Closer Collaboration and More Effective Business Relationships

between UK Boatbuilders, Equipment Manufacturers and Suppliers”

• Initiative launched at 2011 PSP Southampton Boat Show• Industry Working Group established to provide direction

to the initiative• March 2012 – 1st Supply Chain Conference• Sept 2012 - Bid for Government Funding

Supply Chain Conference

“An excellent opportunity for creating new innovation opportunities within the UK marine industry.” Stephen Hart, Technology Strategy Board

Widespread industry and stakeholder support for the initiative and the conference:

“The Meet the Buyer element of the event has provided a time and cost effective way of progressing issues with our existing suppliers and exploring new opportunities with other companies.” Grant Hooper, Princess Yachts

“This has been a highly successful event, very well organised and most useful for ZF.  It’s been money extremely well spent and the best networking forum we have attended for many years.” Peter Nelmes, ZF Services UK Ltd

Potential Government Funding

• The Advanced Manufacturing Supply Chain Initiative (AMSCI)

• £125m to support / improve the global competitiveness of manufacturing supply chains in the UK

• Focus on projects that deliver economic growth and generate or safeguard jobs

The IdeaIndustry Supply Chain Standards:

• British Aerospace Industry

• British Automotive Industry

• British Marine Industry ???????

ISO/TS 16949

The BMF AMSCI ProposalMarine Supply Chain Performance Development

Project

• Significant bid submitted September 2012 with industry support

• Operating across leisure marine, superyacht and small commercial marine industry

• The project is made up of a number of workstreams

• Delivered over five years

The Proposal

Industry wide Capability & Gap Analysis

Design Marine Industry Specific Performance Development Scheme

Implement and expand the scheme

Funding support to target technology gaps identified in analysis

What’s next?

• AMSCI decision expected later this month

• 2nd BMF Supply Chain Conference, 5-6 March 2013

• Investigate other potential Government finance initiatives

Thank you

David Elsondelson@britishmarine.co.uk