One of the wonders of the shipping industry is how ship suppliers are often somehow able to find and deliver vital items that a ship suddenly realises they need, literally at hours’ notice during public holidays or over the weekend. These heroic efforts have saved the head of many – an engineer or captain who was a bit late on ordering something which the ship could not continue its voyage without.
The ability of ship suppliers to respond to quotation requests and fulfil orders with short lead times before the ship’s arrival to the port of supply has turned late ordering into a common practice in the industry. However, this convenience comes at a significant price. The reliance of ship suppliers to work wonders is fraught with risk; despite their best efforts, the particular item that the ship needs may simply not be available at short notice, resulting in a vessel being delayed or off-hire with all the associated costs. Moreover, one does not have to be a procurement professional to know that when something is ordered last minute from whoever can supply it, it often results in higher prices. On top of the higher product cost, add the costs of airfreight and other logistics costs, when urgent essential items are ordered at the last minute from wherever they can be found, and need to reach ships in time for the next port of call.
For serious suppliers keen on fulfilling all order requests with the required items whenever a loyal customer has a need, late ordering can be a source of frustration and anxiety, which the potentially higher margin on orders fulfilled doesn’t cure. Disappointing a good customer in need is bad enough for a supplier, but the costs in terms of time spent sourcing an item you don’t have in stock can be significant and will not always be covered by the margin when the order is small.
The good news is that better-planned procurement is possible and brings significant benefits for both buyers and suppliers.
Ships are large, complex pieces of machinery and sometimes things break down unexpectedly, or an item in stock onboard turns out not to be the right type or usable for whatever reason, resulting in an urgent order. However, for most of what a ship needs in terms of stores, provisions, spare parts and key commodities, the requirement is predictable, and procurement can be planned and executed well ahead of required delivery times.
Research shows that better-planned procurement and early order placement allowing longer lead time brings lower prices, higher delivery consistency and overall better service from the supplier:
On top of these quantifiable benefits, longer lead times also reduce stress and headaches both on the ship and at the supplier, as the surety of fulfilment goes up.
However, to achieve the full benefits of better-planned procurement, longer lead times is not the only lever. Using reliable consumption data and clear definitions of the items used makes it possible to build a repository of standard, frequently used items that can be shared with potential suppliers and mapped to the supplier product catalogue to ensure that what the ship needs is exactly what it gets. The right item at the right quality – on time, every time.
Planned maintenance systems are a great help in this analysis as far as requirements for spare parts and specific categories of technical consumables are concerned. However, there are still many essential items for a ship that are not in the scope of planned maintenance activity lead procurement.
This is where a ship supply e-marketplace like Moscord focuses its efforts, working with buyers and suppliers to develop itemised standard shopping lists with prices for each item, per port of delivery.
Moscord is bringing a rapidly growing list of suppliers to their virtual marketplace, making their marine relevant products available on Moscord in a standardised, easily searchable structure, all with the necessary detail required for a buyer to pick the right item. Moscord works with buyers among leading shipping companies and managers to develop their standard items lists, enabling them to select products and negotiate items catalogues directly with their preferred suppliers. In addition, Moscord’s shopping cart function makes it possible to gradually build up requestions over a period of time through individual contributions from different officers on the ship and then push out for approval and ordering when the list is complete.
With these itemised product lists in place between a buyer and their suppliers available onboard their fleet of ships in their procurement system or directly on Moscord, the ship and the procurement team ashore can plan early, get better prices and move more of their procurement from spot to direct buying, saving time and costs in the process. Moreover, the supplier gains more lead time to search for the unusual or last-minute items, taking stress out of the process and securing a higher-order fulfilment rate. A win for both sides in the transaction!