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OEM engineering and logistics service expertise combine to develop a compelling aftermarket service proposition of real customer value but ‘a key part of their machine’ is missing.
The Situation
A consortium involving two defence Original Equipment Manufacturers (OEM), two facilities management service providers and a logistics service provider were bidding for a £1.5 billion logistics services contract with the UK Ministry of Defence (MOD).
The consortium was well resourced, had a strong relationship with its potential customer and a very good understanding of the customer’s requirements. It was also utilising the services of a consultancy company with special skills in the defence market. The two consultants deployed on the bid had transport and aerospace backgrounds respectively.
The consortium had spent a lot of time and effort developing its win theme and benefits offering but was having great difficulty turning this into a compelling value proposition for its customer.
The Problem
The defence OEMs were keen to capture the new service contract because it would be a major step forwards in enabling contracting for availability (performance based logistics) of their major platforms. But physical logistics activities such as warehousing and transport were not their primary expertise.
Knowing how to deliver a logistics solution and explain the benefits of an outsourced service was the expertise of the logistics service provider, hence their inclusion in the consortium. However, they were new to defence and the public sector and were finding the routines, governance, language and acronyms very heavy going. Most of their time was taken up analysing the customer’s data and crunching numbers to develop/price the service solution.
The customer, meanwhile, could understand why the defence OEMs were interested in winning the logistics services contract but could not understand what additional benefits their involvement was bringing to the table. In other words, why would the customer not be better off contracting directly with the logistics service provider in the consortium or one similar? This would apparently have the benefit of reducing a layer of prime contract management and additional consortium partner costs without reducing the delivered value.
In summary, to have any chance of winning the bid, the consortium needed to demonstrate the incremental synergy benefits of the defence OEM and logistics provider consortium approach beyond that of a simpler logistics provider approach.
The Solution
A forward-looking case study was required to explain to the customer how things could work in practice. One of the defence OEMs chose a major fixed wing aircraft platform for which it was bidding to develop an availability contract.
Working with the defence OEM, the other consortium partners and the defence consultants already involved in the bid team; an understanding of how things would operate traditionally was developed and documented. This became the baseline scenario within the case study.
From previous experience of working with defence OEMs, UK MOD, logistics service providers and facilities management providers within the service parts aftermarket industry we were able to uncover and develop opportunities that had hitherto been overlooked. Additional benefits were derived that could only be realised through the combination of the deep platform product knowledge and engineering expertise of the defence OEM with the business process and logistics information systems expertise of the logistics service provider. After testing the ideas with the customer, the findings were written into the to-be scenario of the case study and the incremental benefits clearly highlighted.
Having got this far, similar case studies were developed for four other key programmes involving rotary wing aircraft, armoured vehicles, naval vessels and munitions. Finally, the synergy benefits and case studies were developed into a revised win theme for the bid and written into the executive summary, proposal documents, corporate video and customer visits by existing members of the consortium team.
Benefits
The consortium was provided with the following:
Five distinct but related case studies that defined the synergy benefits case for the bid; A strategic way forward for a variety of defence programmes should this bid be successful; Assistance in integrating the benefits case into the overall bid strategy and proposal package; A compelling value proposition for the customer.
Learning
Business development often involves an extension of a company’s abilities into new products, services or markets for which they have not yet acquired the necessary skills or knowledge. Even when a consortium is formed, some activities require someone to have that totality of experience and, when it is missing, can result in the difference between winning and losing a bid.
The aftermarket parts and service business is a complex one and creates specialist challenges on a regular basis as it continues to develop. Generalist consultants struggle to keep pace with it. If you have a business development challenge that requires specialist aftermarket parts and service experience then Servispart Consulting may be able to help. Contact us... now for a confidential, no-obligation discussion regarding your business situation and how we might support you.
Keywords
oem original equipment manufacturer logistics service provider consortium ministry of defence business development value proposition aftermarket platform availability contracting for availability performance based logistics defence service parts consultants win theme outsourcing
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