Ship Supply Optmisation

Introduction

we are going to analyse the optimizing the supply chain solutions using information technology in ship supply. The new IT system which can enhance the supply chain solution and improve the supply chain process effectively. Shipping is a volatile business and firms are concentrating on cost minimising in every aspect from bunker, crew, spares, chartering & operations etc., But investing IT also in long run will lead to cost efficient in the supply chain process.

Ship needs a wide range of spares ranging from tiny screw to big engine spare parts. The replenishment of spares takes periodically in every port. The replacement of provisions and paints were more periodic than other materials. Therefore it is essential to analyse the inventory, consumption and fill rate of the product. Understanding the consumption pattern of the ship will have a better overview and result in the supply chain process.

Presently International ship supplier Association ( ISSA Code ) and International marine purchasing associations ( IMPA code ) publishes the catalog which list all the ship supply material with 6 digit codes for the reference to all parties common in the shipping industry. This association gives the certificate to the members stating the reliability of the supplier and have authority of removing from the membership for the wrong doing. They have registered with thousands of member in different countries.

There are many factors to be considered for the cost efficiency in the supply chain process in the supply chain management. The key factor to achieve the efficiency in supply chain process is by converting the current decentralized shipping business model into centralized business model like Amazon. The economies of scale in the shipping industry will be efficient by choosing the hot spot in the shipping routes and buffer the inventory from the spot.

We will analyse the current method of the hip supply process and then we will review the changes which can be expected due to improvement in ship supply process. The margin of error in the ship supply process will have a huge loss. Suppose an engine piston has to be delivered in the ship which is underway in Cape Town but due the unexceptional circumstances like wrong dimensions, Timings will lead to the loss. The engine piston cannot be delivered to the other vessel since it is specified to that particular vessel. So careful attention is required for the ship supply and the IT & internet can play a huge role in this.

Traditional Method of ship supply

Various actors like ship suppliers, Agent, customs, Ship owners, Ship management companies etc. plays a role in the ship supplying industry. The ship owners impose a budget allocation to each shop for the year. The master mariner or the manager has to manage the budget for whole unless there is an exceptional emergency case. Budget is the key criteria in ship supplies. Also each company uses the IT system for the purpose for communicating between the office and vessels.

Each shipping company uses ship software’s like Shipsmart, Bassnet, Amos etc for the data management for the inventory and liaison between the shipping company and the ship. The master of the vessel has to send the inventory of the ship every month to the company and also the status of the inventory. If there is any replenishment has to take place, master mariner will place the request for the spares through the company software. Now the company will review the inventory and the inventory request.

The firm has the major challenge in supply the ship spares when it is high cost countries like South America where the cost of supply chain process. The firm will only try to provide the inventory which is most required and try to cut the spares as much as possible it can. They will try to provide the inventory at the next cost efficient points like Singapore, Rotterdam, china etc. The master and the manager have to agree on which spares they are going to cut and which they won’t.

If the ship is in fixed route, then the ship owner will have fixed ship supplier and agent to provide the ship supply. But if it is not routine port of the vessel or it is in tramp trade then the ship supplier will get quote from the ship suppliers. The manager has to choose between the quality and cost of the supplier which is the challenging task since the port is unknown area for the ship owners. After the negotiations between the ship owners and the ship chandlers, the stores will be supplied to the vessel after its arrival.

The decentralized warehouses due to many ship suppliers will increase the cost of the supply chain efficiency. The key successive factor for efficiency will be knowledge and information sharing between the shipping companies and ship suppliers and to exploit the economies of scale in key shipping routes. The information technology and communications can be utilized to integrate the players and to give the supply chain efficiency to the customers.

 

New approach in Supply chain

 

In the new approach of supply chain, Amazon model of the logistic and supply chain management will be adopted in the shipping industry. The inventory buffer will be triggered from the hot point of shipping routes. The supplier, owner and the ship are connected seamlessly through internet (Believing the internet will play future role in the shipping industry). In the way supplier can hold the minimum inventory instead of multiple supplier holds various inventory.

The following places will be ideal to buffer the inventory based on concentration of shipping Routes:

Continent Buffer Point
Europe Rotterdam, Algeciras and Piraeus
Asia Singapore, Shanghai and Dubai
Africa Cape town and Suez canal
America region Panama, Vancouver, New York, Rio de jeniro and Callao
Australasia Melbourne and Indonesian islands

The ship owner can aggregate the ship supplies from fleet of ship and can predict the demand of fleet using the history and integrate the ship supplier and ship. The inventory of all the ship will be visible to the ship supplier in which supplier can gain the insight on sales and can accumulate the inventory which has high demand. By creating the economies of scale in this buffer point area, the price of the ship supply can be bring down.

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2 thoughts on “Ship Supply Optmisation

  1. Interesting read. In your attempt to establish buffer points did you conduct any data analysis that you can share regarding demand in the area that each of them is servicing and the required stock levels?

    1. Thank you for reading the blog and commenting. I never conducted the research on data since numerous shipping company and chandlers data is involved which is exhilarating task. But I thought of bringing every players in single platform to optimize the ship supply.

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