As a trusted partner to the UK Government, AWE plays a pivotal role in the defence of the United Kingdom by supporting the UK contribution to international arms control treaties and national emergency response arrangements. AWE’s cutting edge skills and expertise are also used to deliver a range of innovative and integrated support services, including national nuclear security and counter-terrorism solutions.
With an exemplary track record behind it, AWE continues to adjust its services to meet the future requirements of the defence industry.
As a Government owned, contractor operated organisation, AWE’s links to the Ministry of Defence (MoD) and the highly sensitive nature of its operations means that having a secure and effective supply chain is a primary requirement. “Our supply chain is absolutely critical to the services we supply, with approximately 65 per cent of our turnover invested into our suppliers,” explains Elisabeth Butler, head of supply chain at AWE.
“Like many organisations we categorise our supply chain from the more transactional relationship where we deal with proprietary low spend items, through to a small group of 50 suppliers that are strategic to our business. This may be in terms of the critical products and services that they provide, or market places where we have a high spend. As such we look to develop an enduring relationship with these businesses, which goes beyond just our contractual relationship.”
This category management process is at the core of AWE’s supply chain management procedure, which enables the company to focus on each individual market place and research what is available in this sector. “We deal in various different market places, such as our manufacturing area where manufactured items are more common procurement requirements, whereas within our scientific and technical research area we look to secure partners in universities and laboratories.
“We continually seek to drive efficiencies by implementing excellence and best practice across all our processes. To achieve this, we have dramatically changed our approach to category management, and have reinvested in a much more vigorous process,” highlights Elisabeth.
Whilst this diversity is key to the effective management of the various business concerns of AWE, dealing with multiple market places is also a major challenge. Elisabeth expands upon some of the other complexities of AWE’s supply chain: “Another core challenge we face is that within certain markets we are buying very small quantities of materials that are critical to us, but we’re not a big player in that market place. However the market continues to move on, especially in chemicals, polymers, and adhesives, and the explosive market which has changed quite dramatically over the last few years.”
AWE operates two main sites in the UK: Aldermaston near Reading, Berkshire is AWE’s headquarters and is located on a 750-acre former wartime airfield. This site is now a sophisticated centre for advanced research, design and manufacturing. AWE Burghfield occupies a 225 acre site and is responsible for the complex final assembly and maintenance of the warheads while in service, as well as their decommissioning.
At present, AWE is in the midst of a major construction programme across both its sites. As AWE is licensed under the Nuclear Installations Act, the Office of Nuclear Regulation (ONR) – part of the Health and Safety Executive – overseas all of its nuclear facilities. “With the Government having taken the decision to maintain Britain’s nuclear deterrent, our concern is to ensure and that all of our facilities comply with the regulations in order that we can continue to deliver against our customer’s requirements. We are constructing new facilities to meet these requirements, with an estimated completion date of 2024.”
Naturally, as a company operating not only within the defence industry, but also dealing with hazardous materials, safety is much more than a secondary consideration. “The buildings that we are constructing conform to the highest standards required by the Health and Safety Executive, and the ONR, and this is a very specialised and limited market place to be dealing in,” notes Elisabeth. These safety credentials are present throughout AWE’s entire spectrum of operations, right down to its supply chain and suppliers, which have to adhere to a set of specific requirements.
Elisabeth continues: “There are standards set by external regulators, and AWE has to have processes to ensure that we comply with those standards. So if we bring a contractor in to work on our site, then there are very stringent assessment criteria when selecting those suppliers, as well as rigorous criteria that they have to work under whilst on site. It is about always ensuring that first and foremost every operation that we undertake is safe and secure.”
One other key investment for AWE was the introduction of an Oracle-based Enterprise Resource Planning system in 2008, which completely replaced the company’s old business systems. Whilst the change in system was designed to have little impact on face-to-face customer operations, Oracle offered the potential for AWE to manage information more effectively, as well as aid in the management of suppliers.
Elisabeth highlights that by working in partnership with its suppliers, they have found innovative ways of developing technology to meet AWE’s specific business needs. “We have continued to build upon our investment into Oracle and operate a very integrated system – far more so than any other European customer. We also continue to invest in up-to-date training, having just completed an NVQ programme, to ensure that our staff are appropriately qualified. In addition we have our own in-house training, and continue to work on building that programme along with our stakeholders.”
Whilst ensuring performance and safety remains high, AWE has a commitment to its customer and its shareholders to provide a sustainable, yet cost-effective, programme of activity. Looking ahead at some of the other potential developments or changes that may affect AWE’s supply chain in the next few years, and at how the company is preparing for this, Elisabeth concludes: “From a supply chain perspective we are very much watching what is happening on a global scale.
“Not only do we need to be conscious of the financial markets and the pressures on, for example, exchange rates, we also need to be watching other external factors affecting the supply chain that could potentially impact our ability to source materials and equipment. At AWE we are continually seeking ways to improve and innovate so that we can respond to market pressures as they arise. We recognise the strategic importance of the ongoing relationships that we have with our key suppliers to help achieve this”
One of AWE’s relationship-building initiatives with its supply chain is its supplier exhibition, which is held at least once a year. At the end of June 2011, AWE is holding its first key supplier forum working with its 50 strategic suppliers to continue to grow these relationships through shared learning and experience. With AWE having celebrated its 60th anniversary last year, as Elisabeth explains, continuing to develop and strengthen its capabilities remains important to the business: “AWE is extremely proud of its history and of its performance and safety record. By continuing to develop a more collaborative approach with our suppliers, we can work together to achieve mutual success.”
Atomic Weapons Establishment (AWE)
Services: Nuclear deterrent