Australian success stories.
AIDN National President Article for the APDR July / August Edition Global Supply Chain feature.
I thank Mr Kym Bergmann the editor of APDR for the opportunity to contribute to the magazine’s feature on Australia’s defence industry small medium enterprises (SMEs) experience in marketing and selling their equipment and services in the global supply chains of Australian based Prime and overseas defence industry companies. AIDN represents over 800 Australian defence industry SMEs and while our organisation works with Government to promote our members’ interest in the development of defence industry policy, skills development and capacity building, our main aim is to maximise the business opportunities for members, both in the domestic market and those overseas. Our members’ participation in global supply chain of large international Prime defence industry companies and their major suppliers is one strand in achieving this aim.
The Government’s ‘Building Defence Capability: A Policy for Smarter and More Agile Defence Industry Base’ announced in June 2010 and more commonly referred to as the Defence Industry Policy Statement (DISP), detailed that the global defence industry had undergone significant change in the last few decades resulting in a more globalised environment, dominated by a small number of large multi-national industry ‘players’. The impact of which provides challenges and opportunities for Australian defence industry SMEs, which had previously operated primarily in the domestic defence market.
While some Australian SMEs have, through their own initiatives, either marketed directly to overseas governments, or participated in large company global supply chains, the scenario depicted in the DISP was that more companies should do so in order to survive and then thrive. To assist SMEs to participate in global supply chains the Government established the Global Supply Chain (GSC) Program in 2009, which is managed by the DMO.
As detailed in the DISP, the GSC Program has $59.9m of funding to cover its operations 2009 to 2019. To date the GSC Program has signed three active Deeds with large international Primes and is negotiating with a number of other large international companies to implement more Deeds. To date the revenues gained by Australian SMEs directly attributed to their participation in the GSC Program exceeds $200m. While this is good return on investment, the number of companies which have successfully gained work through the Program number is around 20. Therefore the Program would be enhanced by achieving a broader participation rate, which would be welcomed by AIDN. The first step to achieve this is for prospective companies to register their details and intention to participate in the GSC Program on the Defence ePortal.
However, despite the GSC Programs success, defence industry SMEs should not solely focus on this Program as an avenue to integrating into large international Primes global supply chain, participation has previously been achieved through SMEs identifying opportunities and demonstrating innovative and costs effective solutions directly to large international companies.
There are a number of examples where equipment developed by Australian SMEs was first purchased by overseas Defence organisations before being brought into ADF inventory.
The success stories in this supplement demonstrate that SMEs in each AIDN Chapter have been able to gain work in the global supply chains of international Prime companies and the major suppliers, either through the DMO’s GSC program, or other initiatives. Some of the stories detail how an Australian company has been able to assist its domestic suppliers into the larger global supply chain for its overseas orders. In each case the participation in the global supply chain has enabled the SME to work, or deliver product, for opportunities that they would not have realised on their own. As well as assisting the individual SME, this participation helps to strengthen the domestic defence industry.
Finally, I thank all of the AIDN contributors to this supplement for providing their time to write their articles and secondly, I thank Kym Bergmann and his team at APDR for inviting AIDN to participate.
President, AIDN National