Doing business with Us
Our suppliers are critical to Kongsberg Defence & Aerospace’s success, and we are committed to creating and maintaining strong relationships with a network of competent suppliers. Strong relationships throughout the supply chain are built with clear communication of expectations, alignment of goals, mutual trust and cooperation.
The relationship between Kongsberg Defence & Aerospace and our supplier base is based on mutual trust, integrity, and commitment to world class performance. We want suppliers who strive to provide competitive solutions in the areas of cost, quality, continuity of supply, capacity and reliability.
We select and qualify suppliers on based on our business needs and capabilities. Criteria may include product or service suitability, technology capability, competitive pricing, delivery terms, financial viability, robust quality systems, and continuous improvement programs.
In addition to supplier specific criteria, other factors may also influence our selection process, e.g., Kongsberg Defence & Aerospace's overall sourcing strategy, customer requirements/constraints, offset/industrial participation requirements, or other national/governmental requirements or strategies.
Kongsberg Defence & Aerospace strives to coordinate procurement across its business units. For suppliers with whom we have strategic and frequent business, long-term supply agreements strengthen our supply chain and the integrity of the components in our products. Long-term supply agreements facilitate and reduce the time and effort needed to negotiate and award individual agreements, allowing us to issue purchase orders more quickly.
Long-term supply agreements increase predictability for both Kongsberg Defence & Aerospace and the supplier in terms of pricing, terms and conditions, and other requirements. They also reduce the time it takes for pre-screened/qualified suppliers to respond to requests for proposal/quotation (RFP/RFQ) issued by Kongsberg Defence & Aerospace.
We expect our suppliers to strive for 100% on-time delivery performance. We monitor our suppliers’ delivery performance and request corrective actions when appropriate.
SUPPLIER PERFORMANCE MONITORING
We use a quantitative and consistent process to compile performance data for assessing supplier relationships and measuring performance in categories we have deemed critical to success. Through this process, we aim to bring about continuous improvement in our supplier relationships.
Current areas of assessment include delivery precision, non-conformance, the supplier’s quality assurance system, corporate social responsibility (CSR), and overall risk assessment.
MANAGEMENT OF SUPPLIERS' OWN SUPPLER BASE AND FLOW-DOWN
We expect our suppliers to take responsibility for managing and assessing their own (lower-tier) suppliers’ performance. This includes securing a commitment, as well as flow-down of applicable Kongsberg Defence & Aerospace requirements.
In addition to Kongsberg Defence & Aerospace's specific requirements, we may need to present our suppliers with certain flow-down requirements set by our customers.
Kongsberg Defence & Aerospace has contracts (either as a prime or lower-tier sub) with many government entities around the world, all of which have specific national legislation that regulates public-funded acquisitions and many of which have additional rules that regulate contracts related to defence acquisitions. One example is the US government, which is by far the largest public acquisition entity in the world and consequently has high negotiation power due to its sheer size. This has led to acquisition rules that are restrictive and, in many cases, non-negotiable.
It is our responsibility to ensure that suppliers adhere to flow-down requirements and, in some cases, provide ‘open book’ access (certified cost or pricing data or other audit rights, including access to data).
SUPPLIER DEVELOPMENT AND VALUE ENGINEERING INITIATIVES
Our suppliers are critical to Kongsberg Defence & Aerospace’s success, and we are committed to creating and maintaining strong relationships with a network of competent suppliers. We operate in a business environment that is more competitive than ever before. We need suppliers who demonstrate commitment to continuous improvement and who can help us deliver products better, faster, and smarter.
We encourage our suppliers to pro-actively engage in discussions and make suggestions with a goal of better the competitive position of both Kongsberg Defence & Aerospace and the supplier. We believe that such initiatives will both enable us to be responsible and flexible, as well as upgrade our suppliers’ capabilities to meet changing competitive requirements, and ultimately result in an increase in profitability for both parties.
Topics related to value engineering initiatives may include the supplier working with its own suppliers to reduce costs, or making other cost savings thanks to innovative. Other initiatives may be process improvements or other manufacturing related proposals that reduce inventory and manufacturing costs, as well as cost reductions from ‘lean’ initiatives or other cost-avoidance ideas.
Periodic business reviews may be conducted with suppliers who have a strategic impact on our products, who have a high overall spend, or who are deemed high-risk. The purpose of these reviews is to increase communication between Kongsberg Defence & Aerospace and the supplier. Topics that may be discussed include long- and short-term goals, performance metrics, new product introductions, ongoing technical issues, and reviewing any open or unresolved issues. During these reviews the supplier is expected to present the current state of business at their company, including financials, key initiatives, new capabilities, and expansion plans. In addition, we welcome feedback on Kongsberg Defence & Aerospace as a customer and we appreciate suggestions as to how we can improve the relationship.