Review of the Defence Sector – Part 2
“It is almost policy that we let these relationships run without much management effort”
In this post on UK Defence sector relationships we continue to build up a picture of the dynamics that drove them. In this episode we expose attitudes to change and the role of commercial staff. In a small number of newer, high tech situations the teams understood the benefits of collaboration and worked together enthusiastically. However in many there was resistance, particularly at ‘grass roots’ level, to new ways of doing business. This was reinforced by the commercial staff who refused to integrate with the teams and, by lack of leadership from senior managers who did what they had always done but in this context it didn’t really work.
Attitude to Change
Resisting change – The collaboration initiative contained many challenges such as adopting completely new ways of working and the inevitable increase in outsourcing. Pockets of active and passive resistance were still evident after two years.
“The supplier’s view of partnering is for us to hand over the whole business to them.”
“There are lots of dinosaurs still in the weeds of both companies which is why behaviours do not yet match aspirations – many see this as ‘just another Management Initiative’ rather than a life changing event.”
“The relationship is still immature and is not ready to face up to the hard issues to come. We have our own problems of adopting new partnering approaches. A long history of ‘pushing water up-hill’ has left the staff sceptical and disillusioned.”
“Their inability to change fills me with despair that they can ever become a partnership-oriented organisation.”
“We have invested by placing a man in the customer’s team but the proposal was not welcomed. They said they could take or leave the idea. We would have to pay his costs.”
There was also a difference in attitude between the levels within organisations.
“In the middle and above they accept the need to change. There seem to be some real barriers to progress at the lower levels.”
“The customer’s board and many staff do not understand fully the strategic and economic importance of the business or the challenges of modern contracts.”
Moving forward – However, a number of organisations had embraced the need to change and were actively taking the initiative forward. These tended to be relationships where technological innovation was high and/or a more modern approach to process and management change was evident.
“We recently held a Kaisan event to talk openly about the ordering process. We are now doing activities in parallel rather than series and have eliminated the nastiness that has existed for years.”
“The supplier surprised us by 18 months ago taking up my challenge to face up to its lack of performance before looking forward to partnering. As a result, an atmosphere has been created for constructive dialogue.”
“They have provided a member of staff to work in our team at their expense. This shows their commitment to the development of the new partnering arrangement.”
Achieving benefits – After two years a number of organisations were already starting to achieve benefits from collaboration.
“My team is only 60 strong and small is beautiful. Many people can’t understand they can do more with less. We concentrate on essentials; the nice to do only encourages growth in overheads.”
“We used to keep a pool of items to feed in to repair. With our new partnering arrangement we track individual items and have significantly cut down on their number.”
“The new framework contract runs for 5 years at a fixed cost. This gives us guaranteed availability and a 20% reduction in costs. The supplier is incentivised to increase reliability. They can plan, cut overheads and home in on fault trends because they have full responsibility for the end product.”
“We are ‘future-proofed’, uncertainty is removed, we can plan and, we can really focus on the customer.”
“Their contribution to the success of the relationship is most apparent when we have to deal with a significant engineering problem. They are responsive, constructive and work hard to resolve it whilst putting aside the commercial aspects.”
“Enabling arrangements with the customer reduces admin costs by not requiring us to compete.”
“Our relationship with the customer has improved significantly since the project has become collaborative. Prior to this the atmosphere was very combatant and occasionally devious.”
“As the reputation of the team within the business has grown this has helped to boost the confidence of the members and spurred them on to further gains. Recognition of the team’s achievements through awards and publicity breeds further success.”
Failure to understand – In some cases there was a fundamental misunderstanding of the meaning of collaborative working.
“The true meanings of integrated and team are still to be learnt by the customer.”
“Time and money constraints and technical complexity will always have a bearing on the relationship success.”
“At the moment we are getting conflicting messages. Our bosses want us to enter into long term arrangements but the finance community is trying to hold back spending. We are not geared up to implement collaborative working.”
The Role of Commercial
Intransigence – A key issue affecting the implementation of collaborative working was the attitude of the commercial organisations that clung to their traditional ways.
“Our commercial staff have resisted integrating with us. They still have their own chain of command. Even the end customer can’t sign anything without their ok.”
“For economy reasons the commercial department has been centralised. This is a big mistake. It is not focussed on the business output and doesn’t appear to be accountable for its actions.”
“Their commercial people still have a ‘cannot-do, jobs-worth’ attitude. They are the main stumbling block to good, timely, efficient relationships. In recent negotiations many standard restrictions were included which would hold both sides back through lack of flexibility.”
“Their commercial attitude is: ‘you have a problem, what are you going to do about it’. Mind you, we screw them into the ground and know every detail of their costs.”
“We just don’t have time to take a strategic view. We are too busy looking after 30 other contracts.”
“Although our engineering relationships are very strong we sometimes suffer problems due to the various commercial requirements and frequently protracted negotiations.”
“The customer’s willingness to competitively tender every requirement to the absolute lowest bidder does not help.”
“The tactical relationships developed between individuals generally are strong but tend to be forged in the face of a common enemy (commercial).”
Positive attitudes breed success – On the other hand, where commercial personnel took an active part in supporting the new ways of working, it provided a significant relationship success factor.
“A major success factor was the unusual combination of commercial staff on both sides with little guidance on the new ground they were breaking who were lateral thinking and open to new ways of doing business.”
“Now that we have a partnering arrangement around a good framework contract we just concentrate on the customer – we no longer refer to the small print.”
“The single-sourcing arrangement is working well because it is jointly micro-managed by the commercial staff.”