The make-buy boundary

Nigel Whitehead, MD programmes and support at BAE Systems gives a peak behind the barbed wire that surrounds the defence contractor’s operations to explain why it chooses to manufacture and how market forces are driving the integration of its technology and working practices

Nigel Whitehead, Managing Director, Programmes & Support, BAE Systems

As the largest UK defence contractor, BAE Systems is constantly tinkering with the make-buy ratio in the delivery of promised capability to the UK government, and others around the globe.

“We choose to manufacture. And when we make that choice we consider our need to have our arms around everything that defines the safety, performance, cost and scheduling of our products because these create our reputation and our ability to contract in the marketplace,” says Nigel Whitehead, speaking to me just before his presentation to delegates at the Manufacturer Directors Conference in Birmingham.

This obsession with identification and control of the competitive elements in its offerings profoundly impacts BAE’s relationship with its supply chain continues Whitehead. “They must prove that they can protect those issues,” he says – and increasingly this means being able and willing to merge with the electronic interface between BAE and their own company, sharing ERP and design data directly with BAE’s systems.

But make-buy decisions at BAE do more than impacting the size and shape of its supply chain. They also define the company’s working practices and focus on technology integration.

“Interlaced with any choices around manufacturing  is a belief that we can create a construct around the production of that product or technology which will allow us to predict what is coming next in the market,” says Whitehead.

It’s a thought process he says a lot of knowledge intensive manufacturers have, or will go through and, he predicts, it will soon lead to: “onshoring and a significant investment in skills as the working attitudes and practices within teams move away from what has been traditional in industry.”

New coalitions

Fundamentally, what Whitehead is referring to is a blurring of the old fashioned demarcations between production, engineering and design so that manufacturing and delivery products which meet and exceed customer expectations is at the centre of the product lifecycle.

“The manufacturing thought process needs to run from the early conceptual stage, through production and build and into the support and service of a product,” the MD states. “It’s the foundation of our plan to survive and thrive as a company,” he continues. “The integration of technology with new working practices and regard for design intent enables us to manufacture with phenomenal precision and repeatability.”

Technology both enables and demands this at BAE explains Whitehead. Quality and engineering parameters on all products are very tight and need skilled design and craftsmanship to achieve optimised load paths which bring efficiency through reducing the number of components, simplifying the build process and yet meeting compliance.

This need for meticulous precision is ramped up even further when manufacturing for stealth capability. Here, large prismatic components need to be machined to tolerances of 50 microns.

In production technology terms, this precision with repeatability has been enabled at BAE by investment in advanced CNC maching and control equipment and accompanying technical training for staff.

But the overall skills impact of linking design intent and manufacturing more closely is much greater than simply changing the technical skills needed by staff.

Key message

What’s the one thing Nigel Whitehead would like other manufacturers to learn from BAE’s approach to the integration of technology demands, skills and work practices?

“Chose to manufacture, be conscious of why that choice is made, and take pride in doing it to achieve the very best result every time.”

It has also fundamentally transformed team structures, skills sets, management style and shift patterns according to Whitehead.

“We’ve moved to a state where, instead of having a skilled craftsman capable of performing one job with excellence, we’ve got a workforce that can follow a set of work process instructions with a high degree of understanding around what they are doing and why. “We then use their genius to improve and optimise the working process in a factory,” he continues.

“Its about teams. How do you optimise a team’s flow line and improve the hand over between teams? How do you plan for someone being off sick and understand exactly what skills dynamic they brought to the team they work in so that you can optimise your response?”

This is where Whitehead says BAE has made the greatest gains in manufacturing efficiency, flexibility and innovation. “We are moving away from a focus on individual skills to focus more on the overall understanding and intelligence of the workforce.”

This sounds like ‘workforce empowerment’ management-speak, spouted off by any manufacturer that has dabbled in the lean principles. But often such talk is simply lip-service and you find little that is really out of the ordinary about the way work is carried out in the factory.

Whitehead tries to define why BAE’s overhaul of working practices is far more than that.

“We’ve got a much flatter management, where management roles are focused on leadership and inspiration rather than instruction or supervision. This requires a leap of faith.

“For the production staff, It’s not about giving them a set of work instructions [what lean folk might call hyjunka] and expecting everything to be fine. You have to motivate people to want to work in this way.

“Particularly in our environment, this means our manufacturing operations need bright and capable people to want to come and create, all be it in a repeatable way, some of the most advanced machines yet conceived by the human mind.”

Employee motivation to revolutionise the way they work and the responsibilities they are accountable for will come from different sources for different companies acknowledges Whitehead. “You have to understand what people are motivated by. At BAE, our technicians and engineers are motivated by understanding. They want to make outstanding products for our customers – they are already personally empowered. All that might stand in their way is a management environment that does not give them permission.”

People change, process change

Beyond changing management perceptions of their role and style, authorising team autonomy and responsibility for meeting production requirements requires some radical shifts in the organisation of shifts and workforce management. “Everybody matters, so things like dentist’s appointments and changes to the school run matter. You have to develop a degree of flexibility so that you maintain an atmosphere in the factory where the team comes in, sees its tasks and doesn’t go home until they are finished.”

Whitehead is adamant that any manufacturer could benefits from reviewing their technology needs and revisiting their preconceptions about the way production is organised – whether they be an SME, or a sector prime.

The fundamental enabler, he continues, is to have an information management thread which ties all the facets of the business together and makes sure that process and deisign intent never lose sight of one another.

At BAE this means there is an ongoing mission to create seamless interaction between design and transactional IT infrastructure. “By implementing that digital thread and storing the design intent we achieve a degree of efficiency that is not otherwise possible. We store design intent with work instructions in one place. It’s one version of the truth from all perspectives. This is rather than the norm of having a series of handovers and interfaces between traditional business departments – from the supplier to the main contractor or from the logistics team to the manufacturing team.”

BAE’s attempt to merge design and business process information backbones is an pertinent show of strategic IT investment at a time when many manufacturers still consider it to be a necessary eveil in their businesses. “IT isn’t an end in itself,” explains Whitehead. “But it is a receptacle which allows us to achieve what we want in our business.”