Annual Report PDF - Black Sun Plc

Directors’ Report: Business ReviewResourcesThe Group’s key resources and arrangements include its relationships with customers,subcontractors and other suppliers, people, research and development, and intellectualproperty. These resources, together with the application of the mandated policies andprocesses in the Operational Framework, help the Group to achieve its strategy.CustomersThe Group’s core businesses are primarily defence andsecurity-related, selling products and services in its homeand export markets both directly and indirectly, mainly togovernment, but also to commercial, customers. Customerrelationships often extend over decades, and span the fullproduct and service lifecycle from initial concept definition,through the system development phase, into production andthen on to support for the system in service.– Improvements in schedule adherence and customersatisfaction achievedPrincipal customersThe Group’s most significant customers are the governmentsof the US, UK, Kingdom of Saudi Arabia and Australia. In the US,BAE Systems is subject to a Special Security Agreement thatsafeguards US national security interests, as a result of whichBAE Systems is allowed to supply products and services of a highlysensitive nature to the US government. Agreements between thegovernments of the United Kingdom and Kingdom of Saudi Arabiarelating to defence co-operation programmes remain essential tothe development of the Group’s business in Saudi Arabia. InAustralia, BAE Systems is subject to an Overarching Deed with theCommonwealth of Australia that protects their national securityand other interests, and allows the Group to own certain Australiandefence-related industrial assets.Indian government policy on Foreign Direct Investment mandatesthat foreign partners can hold a maximum of 26% equity indefence ventures.Lifecycle Management (LCM)The application of LCM, which is a mandated project managementprocess, is fundamental to the Group’s capability to deliverprojects on time, within cost and according to agreedrequirements, thereby meeting customer commitments. Itprovides a structured approach to managing the Group’s projectsthroughout their lifecycles, promoting the application of bestpractice management, facilitating continuous improvement andproviding a competitive advantage in the way that projects aremanaged.The lifecycle of a project comprises business winning and contractexecution phases. During business winning, managementfocuses on the customer’s requirements and the ability of theGroup to deliver a product or service at acceptable risk andprofitability. In the contract execution phase, managementconcentrates on developing and proving the product or service todeliver to customers’ requirements and planned margins.Schedule adherence and customer satisfaction metrics areregularly reviewed by the Board to monitor contract milestoneachievement, and to ensure that the Group is delivering on itscommitments to its customers.Customer ReviewsThroughout the project lifecycle, the Group engages extensivelywith its customers and undertakes Customer Reviews to drivechange, and promote and sustain the growth and development ofcustomer relationships.Under the Operational Framework, businesses are required toundertake a Customer Review at least every two years with theirkey customers, using specified processes. Customer Reviewsalso include questions to determine customer perceptions ofBAE Systems’ ethics.These reviews help the Group to understand how its customersperceive its performance and behaviours, and help to understandcustomer priorities, and to reshape services and behaviours whennecessary.Responsible Behaviour – business conductBAE Systems does not compromise on the way it conductsbusiness, and consistency of this approach is key in defining itsreputation. The Group has four Responsible Trading Principles(see page 33), which underpin all of its business activity.The Group’s corporate responsibility agenda, including itscommitment to be recognised as a leader in business conduct,contributes to successful long-term relationships with customers.KPIThe Group measures the success of its customer relationships through theschedule adherence and customer satisfaction KPIs (see page 18)Working closely with the customer at theGroup’s new design and prototyping centreBAE Systems opened a new state-of-the-art design and prototyping centre inSterling Heights, Michigan, in close proximity to its customer to allow furtherdevelopment of an ongoing, collaborative working relationship. The centrehouses facilities for vehicle and subsystem modifications, integration andtesting, electrical assembly fabrication, software development and systemintegration of vehicle control and crew station electronics.32 www.baesystems.com