Managing Inventory in the Services & Support Chain

BAE offers enterprise service management for U.K. defense ministry

Rochester, NY  November 26, 2001  British aerospace giant BAE SYSTEMS has turned to software to help the British Ministry of Defense manage its hardware.

And when we say "hardware," we don't mean a bunch of computer mice. We mean the billions of dollars worth of inventory that the ministry's Defense Logistics Organization (DLO) manages in support of the British military's aircraft, submarines, ships and land vehicles.

The logistics organization is working with defense contractors such as BAE SYSTEMS to help manage the DLO's $15.5 billion in inventory with the goal of reducing expenses by 20 percent, while maintaining readiness.

BAE is set to use software from solution provider Xelus as part of its own BAE SYSTEMS-IFS suite of business applications for its aviation customers and in its developing partnership with the DLO.

Xelus offers "enterprise service management" (ESM) solutions that it says helps companies plan, execute and optimize the core business processes of the service enterprise, including service parts and workforce management, service delivery, asset management and asset recovery.

"One of the ways to reduce the DLO's inventory is to proactively manage the repair loop cycle, which is one of the great strengths of the Xelus tool," said Bill Burgess, strategy and capability development manager with BAE SYSTEMS. "By better managing repairable inventory, which tends to be the most expensive, we can see the potential for real savings. With Xelus, we will also be able to provide visibility across the service operation for the DLO."

BAE SYSTEMS chose Xelus primarily due to its proactive demand management, with particular emphasis on reverse logistics  the comprehensive management of returned parts and assets from diagnosis through repair to reintroduction into the supply chain. "We still have a number of divisions using legacy systems in managing inventory and conducting forecasting and planning, and we have a number of business units supporting their customers on an entirely reactive basis," Burgess said. "Now with Xelus we are able to take a proactive approach."

Burgess said Xelus also rated very well in its forecasting ability against the other top three vendors considered at the end of the year-long evaluation process.

In addition to improving efficiency and reducing inventory and costs, BAE SYSTEMS will use Xelus to enhance military readiness for its defense clients. In defense, the primary drivers are not cost and profit as they are in most commercial enterprises, but rather readiness. Having the right mix of parts at the right place and time they're needed is crucial so that weapon systems will be up and operating, ready to perform their mission as needed.

BAE also sees potential usage of Xelus in its civilian aircraft partnerships. The company's Aircraft Service Group provides regional aircraft services and large aircraft conversion and support.