Learn how to succeed with a digital maritime procurement system. This article presents the complexity of marine procurement and demonstrates why regular ERP systems are not the perfect match for shipping companies.
- The complexity of Marine Procurement
- Data access without internet connection
- The Benefits of Data Transparency
- Integration to Third Party Systems
- Track your data to stay competitive
The complexity of Marine Procurement
Most ERP systems are designed to manage the same element every day. This is perfect if you are a ballpen manufacturer producing thousands of pens every day. But in the maritime business days and productions are not alike.
Each shipping company has its own organizational structure, flows, processes, vessel ownership, budget, account layouts, OPEX and CAPEX management, approval matrixes and IT landscapes (just to name a few). The ERP vendors and standard procurement systems simply cannot satisfy these requirements and needs.
The need for a flexible system matching these specific workflows sometimes pushes a shipping company to create and develop their own Procurement system. But developing a procurement system takes a lot of effort and time as the maritime business is constantly changing. New regulations and requirements are introduced all the time and shipping companies often give up with their home-made systems.
We all know that marine procurement is not a straight line from A to B — something unexpected
can and will happen. This could be a supplier who cannot deliver on-time, price changes, damaged goods, freight costs that are not as expected, the port of call changes, urgent situations — and we could keep going with examples.
This complexity is one of the main reasons why shipping companies need a Procurement system developed specifically for the maritime industry. It needs to support the special flows of the industry and the specific shipping company.
In addition, it allows shipping companies to control costs and analyze how to reduce costs without compromising quality and operations.
Data access without internet connection
Land based procurement is easy to plan because you can get fast and easy delivery of spare parts, materials or manpower directly to a fixed location – and you always have internet connection!
Marine procurement is much more complex because vessels move from location to location. You need to plan according to when a vessel is in port and be creative in your planning in case a vessel changes its itinerary. The only thing you know for sure is that plans can quickly change, and you have to deal with bad internet connections.
The internet connection (or lack hereof) is one of the reasons why the shipping industry is divided into two worlds.
You could probably argue that shipping companies operate with two procurement systems: one at the office and one onboard the vessel.
The office has pioneered in adapting e-procurement and shipping companies have agreed to a standard communication enabling them to exchange data such as prices, delivery terms, payment conditions and order confirmations electronically.
E-procurement is another story for the crew onboard the vessels since they often have bad internet connection. But even if the vessel is sometimes off-line, it still needs to be able to operate the Procurement system. The people onboard the vessels need be able to create request for spares, goods and services.
To overcome this challenge, your Procurement system must include offline functionality and a strong synchronization engine to ensure both office and crew have access to the same data – even without internet connection. This data exchange is a vital element to ensure easy operation even in an environment with bad internet connections.
Shipping companies need to be able to trust the data and have constant access to the system.
The Benefits of Data Transparency
Ten years ago, many shipping companies practiced decentralized data management. Each vessel built its own data based on daily tasks and procedures. This resulted in great flexibility and each individual ship could control its own data.
Today, the tendency in the business is moving towards a more centralized data management and data control. This data transparency enables fleet managers to compare data from sister vessels to improve internal workflows and KPIs.
When data across vessels and departments is centrally controlled, managed, and streamlined, you can achieve huge advantages. Data knowledge and information sharing across the various departments, vessels, fleet, and groups of interest can be achieved without any retyping. You avoid using other communication tools such as e-mails. All is centralized in your fleet management system.
By including all status flows onboard the vessels, at the office and suboffices, at the central warehouse and freight forwarder, data is shared at the correct moment. You can even ensure the correct delivery of spare parts by including technical details from the maintenance system and estimate procurement needs with a direct link.
Centralized data management and digital procurement makes it easier for you as Procurement Manager to work smarter and spend time more wisely.
EXAMPLE: Naming a spare part the exact same name on all vessels
If data is not centralized, the same spare part may be named differently on each ship making it time consuming as Procurement Manager to ensure that you order the exact spare part needed. With several different names for the same spare part, you may also risk buying parts you already have in stock. If one spare part is named the same name on all vessel, you can easily search for the spare part and create bulk orders to save money.
- Reduce duplications, misunderstandings and errors
- Streamlined and high-quality data
- Saved time and costs
- Spare part forecasting
- Better budget planning
- Stronger contract negotiations with vendors
- Better maintenance data and planning
- Better delivery terms and prices (due to volume)
- Move stock from one vessel to another