UK Defence Industry Research Articles

Hidden costs in different stages of advanced services – A multi-actor perspective of performance based contracts

Performance based contract (PBC) is an innovative advanced service strategy for offering product service solutions. PBC aims at increasing customer value and reducing the costs of operations. However, manufacturers incur unquantifiable “hidden costs” while implementing PBC. This paper uses agency theory and service-dominant logic to build a theoretical framework to study the hidden costs of PBCs. The research uses a multiple exploratory case study approach to unravel the drivers of hidden costs during the design, delivery and adaptation phases of PBC. This paper derives findings from five PBCs from the UK defence industry. The analysis reveals four major hidden cost drivers (supplier relations, contract complexity, customer relations, and cost estimation problems) of PBC. The research refines the theoretical framework by linking the hidden cost drivers, PBC life cycle stages and engagement of the service network partners. It develops a set of propositions for guiding future research and managerial practices.

Let Women Take the Lead: Insights from the UK Defense Industry

In this paper, we discuss how gender diversity in the workplace is managed (or not) within a non-traditional environment, specifically a UK defense company, aiming to gain an understanding of the impact on female employees. Our study revealed that there are currently no female role models within the senior ranks; and few women had progressed into middle management. We position the study within debates around diversity and inclusion and human capacity development in the UK defense sector in general, and specifically the armed forces. We also show how issues of equality are addressed in diverse ways.

Some Challenges for the UK’s Combat Air Strategy

Among the challenges which must be overcome by the UK’s Combat Air Strategy, David Kirkpatrick highlights the sharp decline in UK defence research, and the destruction of many UK aeronautical test facilities, since the end of the Cold War. He discusses the erratic evolution of the Ministry of Defence’s relationship with the UK defence industry, and considers critically the various management initiatives proposed to facilitate its acquisition of a sixth-generation combat aircraft.

Supplier sustainability assessment for the UK defence industry

Purpose – The purpose of this paper is to design a framework for assessing supplier sustainability (in terms of survivability) within the defence industry based on financial and operational dimensions. Design/methodology/approach – The research employs a case study approach to identify a research gap in the area of supplier performance measurement and proposes five dimensions to assess supplier sustainability from the review of literature and industry practice while employing a systematic approach to generate measures for each dimension with suggested actions to improve sustainability. Findings – The sustainability measures, dimensions and improvement actions developed were validated with industrial experts from three defence companies and implemented as a sustainability system. A case study was applied and the results were generated. Research limitations/implications – Future research could include further case study application and application of dimensions and measures to other industries. Practical implications – The paper offers managerial implications about the need to consider the survivability of suppliers in the long term, especially in the current economic climate and think about mitigation strategies to enable economic sustainability. Originality/value – This paper adds to the existing knowledge in the supply chain area and proposes a novel approach to supplier performance measurement and management which is holistic.

Incentive issues in performance-based outsourcing contracts in the UK defence industry: a simulation study

Traditional outsourcing literature has claimed gains for the customer in terms of quality and costs. However, such gains are illusory in outsourcing of high-risk, complex tasks. The use of contracts and governance mechanisms for handling complex procurements is essential in obtaining rewards from outsourcing. Powerful incentives and risks are normally used in industrial service contracts to transfer risks to measure compliance with performance measures. The availability contracts for complex engineering services provision are forms of outsourcing contracts that transfer resources from government to external service providers on a substantial scale. The change moves the contractor role from creating resources to managing resources. Such role change mandates collaboration with customers and suppliers in supply/value chains. The management task is then perceived in terms of linking and optimising alignments rather than increasing service levels. Incentive design is one mechanism for linking the coordination of resources required in availability contracting to the business model. This article studies the impacts of agreed contract type and incentive mechanism on the customer and service provider profits using agent-based discrete event simulation model under multiple risk sharing scenarios.

The development of a tool to predict team performance

The paper describes the development of a tool to predict quantitatively the success of a team when executing a process. The tool was developed for the UK defence industry, though it may be useful in other domains. It is expected to be used by systems engineers in initial stages of systems design, when concepts are still fluid, including the structure of the team(s) which are expected to be operators within the system. It enables answers to be calculated for questions such as “What happens if I reduce team size?” and “Can I reduce the qualifications necessary to execute this process and still achieve the required level of success?”.The tool has undergone verification and validation; it predicts fairly well and shows promise. An unexpected finding is that the tool creates a good a priori argument for significant attention to Human Factors Integration in systems projects. The simulations show that if a systems project takes full account of human factors integration (selection, training, process design, interaction design, culture, etc.) then the likelihood of team success will be in excess of 0.95. As the project derogates from this state, the likelihood of team success will drop as low as 0.05. If the team has good internal communications and good individuals in key roles, the likelihood of success rises towards 0.25. Even with a team comprising the best individuals, p(success) will not be greater than 0.35.It is hoped that these results will be useful for human factors professionals involved in systems design.

Exploring the social and organisational aspects of human factors integration: A framework and case study

In this paper we first outline a framework which aims to capture some of the social and organisational aspects of human factors integration (HFI) which have been outlined by previous research. The framework was partly used to design a set of interview questions that were used with a case study of a human factors team working with the UK defence industry. The findings from the case study revealed a number of barriers which accord with previous research in the domain of HFI (e.g., attitudes and perceptions towards HF), as well as providing insights into the improvement strategies used by the HF team in order to improve HFI. These included attempts to build relationships and establish a working rapport with other groups in the company, as well as other activities aimed at addressing the organisational culture within the company as a whole (e.g., attempts to raise the profile of HF within the company). We use the framework for social and organisational aspects of HFI to discuss our findings alongside other research on group behaviour and boundary management within large organisations. The conclusions of the paper point to the utility of the framework as a means of planning HFI improvement strategies which can help to overcome some of the social and organisational barriers to HFI.

UK defence change and the impact on supply relationships

PurposeThe paper's aim is to evaluate the changing patterns of defence requirements and their implications on supply chains and relationships within the UK defence industry.Design/methodology/approachThe paper builds a case study on the UK defence industry comprising 22 face‐to‐face interviews with senior management from the Ministry of Defence (MoD) and major first tier suppliers, as well as senior officers in the British armed forces.FindingsThe results suggest that there are major changes currently taking place that have major impacts on defence supply relationships. The authors find a consensus in the industry concerning a shift towards through‐life management (TLM), where major equipment platforms are kept in service for several decades. TLM is widely acknowledged as requiring much closer partnerships in the defence supply chain, in which suppliers assume much greater responsibilities in areas such as in‐service support and maintenance. Yet the findings with MoD and suppliers reveal different perceptions of the feasibility and practical implications of the proposed changes.Practical implicationsProduct‐service specific capabilities need to be developed especially in areas such as accurate lifecycle costing. The development of integrated supply partnerships requires greater emphasis on openness, risk and reward sharing, trust and long‐term commitment in supplier relationships. There is also a need for early supplier involvement to ensure not only design for manufacture, but design for maintainability and logistics, instigated and managed by the customer (i.e. MoD).Originality/valueThe analysis demonstrates the importance of adopting a through‐life perspective when considering industrial contexts characterised by very long product lifecycles. This study shows that a through‐life perspective creates a blurring of the boundary between customers and suppliers, and increases long‐term supplier responsibility. This gives rise to new considerations, such as sophisticated risk and rewards sharing mechanisms, design for maintainability, and technology insertion.

Migrating from products to solutions: An exploration of system support in the UK defense industry

This article explores the acquisition of business solutions in complex systems environments, through insights drawn from current literature and a study of the UK defense industry. We seek to counter-balance the dominance of literature focusing on the supplier perspective, as well as provide richer distinctions between different kinds of system suppliers involved in providing business solutions. We do this through the detailed examination of customer support offerings and business relationships that exist at the system customer–supplier interface. Our findings provide a map of solutions models that exist in the UK defense context. These include: (1) product system support, (2) life cycle product system support, (3) functional system support, and (4) enterprise system support. Using these models, we highlight the continued relevance of a product orientation and the challenges involved in adopting a true customer orientation when delivering business solutions. System suppliers seeking to reposition from the supply of product system support towards more integrated and customer-oriented forms of support require a significant organizational step change.

The importance of knowledge management for ERP systems

Enterprise resource planning (ERP) software provides a coherent integrated electronic business management environment, frequently controlling all logistics and billing for an enterprise. Many companies are now reliant upon these systems for their daily operations; maintaining and adapting them in parallel with their business as it evolves, adding new suppliers and customers. The process of managing the development of the ERP software requires detailed knowledge of systems. ERP systems often become unique to an enterprise and may have tens to millions of pounds being invested in their development. The value of knowledge management (KM) specifically for the management and operation of ERP systems is becoming evident. Managing ERP systems knowledge has been identified as a critical success factor if a firm, its suppliers and logistics providers are to retain control of their business and not be controlled by their systems. Case studies of KM practice for three global organisations from within the UK Aerospace and Defence industry have been undertaken. This study identifies leading practices, with references to the literature, for effective KM of ERP systems.

Chains, networks and shifting paradigms: the UK defence industry supply system

Industrial supply chains have emerged as the focus of much economic and business research over the previous decade and defence is no exception. This paper reviews contributions made to the body of knowledge in this field with particular attention given to primary research undertaken on the UK defence industrial supply system. In doing so, the author assesses the quantity and quality of knowledge available to researchers, analysts and policy makers. There have been a number of valuable contributions to the literature and this paper reveals a subject that is extremely complicated, dynamic and yet under‐researched. It is suggested that it may well be this complexity and dynamism, coupled with difficulty in accessing data, that has inhibited research development in this field. Defence industry supply systems are repeatedly referred to as ‘chains’; however, primary research consistently suggests this is a misnomer – the author concludes that future analysis of the UK defence sector must embrace directly the economics of networks if understanding of the same is to progress and industrial ‘invisibility’ is to be avoided.

Collaboration and firm size: some evidence from the UK defence industry

This paper presents evidence on the relationship between collaboration and firm size derived from an empirical study of the UK defence industry. The results indicate that size has a positive impact on collaboration and, in particular, with the propensity to collaborate with overseas firms. However, size has no impact on the propensity to collaborate with UK partners. This lends support to theories which emphasize the resource constraints facing small firms in developing international collaboration. There is a need for a policy debate concerning mechanisms to promote collaboration to assist small firms to realise the benefits of international collaboration.

Exporting as a Strategic Response to Change in the UK Defence Industry

This paper examines the influence of firm size and a number of other variables on the decision to adopt exporting as a strategic response to recent changes in the UK defence environment. It is shown that although a significant link is found between firm size and exporting in a univariate context, the relationship vanishes in more complex multivariate models. This suggests that size is acting as a proxy for variables such as the presence of R&D activities and international collaboration which are related to both exporting and firm size. Future studies of small firm exporting hence need to explicitly model the complex interrelationships between size, exporting and other important variables.

What should smart procurement be?

The defence industry is a key sector of the UK industrial base, as a key employer and key producer and exporter. In the last several years, the industry has undergone radical change which has seen reductions in manpower and also in defence spending. The need to be competitive in the market is today keener than ever, with giant mergers in the US and emerging industries in the Far East. One response to these challenges set by the Government to achieve a strong and competitive defence industry for the future has been the’ Smart Procurement concept, pulling together procurement and industry to make the most of new technologies and tight commercial practices. Here Kevin Smith provides an industrial view of the Smart Procurement issue, outlining the challenges faced by the industry, the need for strong partnerships to meet customer requirements’: under the ‘better, faster, cheaper’ banner and sets out criteria for a new procurement model. A new. environment needs to be created in which the procurement structure and acquisition process provide a solid 1 basis for the future competitiveness of the UK defence industry.

Corporate Strategy in the UK Defence Industry

This paper presents an empirical analysis of the strategic responses of defence companies to the recent downturn in the wave-cycle of defence demand based upon a questionnaire survey of defence firms in South West England. The findings suggest that both diversifying into civilian markets and focusing upon existing defence markets have been popular strategies. Moreover, mergers/takeovers are strongly associated with certain types of strategic change. It is also shown that company size, contractor status, degree of defence dependency, research intensity and involvement in export markets have an important influence on strategic choice.

Diversification and performance in the UK defense industry

This article examines the relationship between diversification and performance in the UK defence industry. The theoretical arguments which have been advanced to support a general link between diversification and performance are examined together with an assessment of their applicability to the defence industry. This is followed by an empirical analysis of over seventy leading UK contractors. It is shown that there is no evidence to suggest that product diversification has had a positive impact on performance and some evidence of a negative impact. Geographical diversification, however, appears to be related to asset and sales growth.

Restructuring the UK defence industry: Market pressures and management initiatives

In response to recent changes in the defence market, many UK companies have undertaken major reviews of their corporate strategy. This article examines the relationship between this strategic change and management change by analysing data derived from a survey of defence firms in the defence-dependent region of south-west England. The results indicate that strategic change has been strongly associated with management change. Large, highly defence-dependent companies are particularly likely to have been involved in management change. However, there is no conclusive evidence that management change has improved company performance. Management change should hence be planned with care and not viewed as a panacea for improved performance.

Competition in procurement—Have we gone too far?

Competition in defence procurement has been the approach of the British Government since the 1980s. This philosophy of competition from any quarter was developed to replace the MoD's inefficient procurement policies. Competition has, however, dealt a fatal blow to the UK defence industry. Wing Commander Wiles here explains why the philosophy of competition has such a strong‐hold on the British Government. He highlights the problems with such a dogmatic adherence to competition, while also looking at possible alternatives. While competition has had the desired effect, of reducing prices, the resultant fall in profits for domestic defence suppliers is evidence that the single‐minded adherence to competition alone is not a valid policy in all cases.

UK and German defence industry change: Some perspectives on strategic marketing

Over the past decade, the European defence industry has had to respond to increasing pressures of reduced defence spending, exacerbated more recently by removal of the immediate military threat from the former Soviet Union. Under the “Options for Change “, the UK has abandoned certain weapons programmes, while Germany has had the additional economic and social problems brought on by re‐unification. The industry's options comprise conversion, diversification or specialization, thus continuing to face structure change and competition from defence imports and “off‐the‐shelf” systems and equipment. Given the high exit barriers and past “cushioning” of the industry by governments, the presence of skills and know‐how to compete effectively is questionable. The case for strategic marketing approach for those suppliers remaining is clear; as buyer (monopsonistic) power strengthens, the threat of new entrants increases and the associated competitive rivalry intensifies. However, the ingrained “defence culture “ in...

Diversification: some lessons from the UK defence industry

In response to major changes in the defence market in recent years, many firms have embarked on a process of diversification into civilian markets. Examines some of the impediments to diversification based on the results of a postal survey of defence contractors in Devon and Cornwall. The results imply that problems related to the economic recession, a lack of marketing expertise and the cost of market entry are major hurdles to diversification. A case study of a local firm which has successfully diverisifed indicates that a change in corporate culture throughout the entire production, supply and selling chain is an important ingredient to success. In conclusion, notes that diversification is no simple panacea for companies suffering from the effects of declining demand from defence customers.