ABC Company is a global transportation and Logistics Company. The company operates around 200 ships, mainly container vessels, gas tankers and bulk carriers. ABC Company ships are trading worldwide. ABC Company transport cargo to more than 100million tons a year to 6000 destinations worldwide. Company’s sales network includes 200 international branch offices and 30 corporations.
This report represents the current context of the ABC Company management practices and current problems having in the SSC and present performance of the company.
The report covered a review of the management control framework in place to establish better solution for the next year in ABC Company and to ensure that shipping company departmental procedures are effective, efficient, and provide value for money and ensure financial integrity.
In summary, found that how about the present performance of the ABC Company and develop effective recommendation to implement next year to get competitive advantage.
Background of the ABC Company
Shipping by its nature is a very competitive and a very complex industry. Shipping companies have to operate on a global scale and manage offices all around the world and work with a diverse work force. Merchant shipping is one of the most highly regulated industries in the world. Hence information systems play a very important role in the management of the shipping company.
ABC Company is a global transportation and Logistics Company. The company operates around 200 ships, mainly container vessels, gas tankers and bulk carriers. ABC Company ships are trading worldwide. ABC Company transport cargo to more than 100million tons a year to 6000 destinations worldwide. Company’s sales network includes 200 international branch offices and 30 corporations. Over all the company is expanding rapidly on a global scale and is also venturing into new shipping related business.
As part of the SSC Indonesia Group in Indonesia, SSC taps the marine and land transportation support capabilities of the parent company, a synergy that allows the Group to provide value-added services to its customers.
In the Bulk and Tanker shipping business, ABC Company ’s fleet of bulk carriers and tankers are chartered out to shippers for the transportation of dry bulk, liquid, gas and off shore projects. The vessels are deployed either on time charter, contracts of affreightment, or single-voyage basis. In addition, the Group serves the off shore oil and gas industry with off shore support vessels that are capable of handling challenging environments.
The Group also offers ship manning, vessel operation and maintenance management services for its customers in this business segment.
1.1 ABC Company Vision
“Global Connectivity to Meet People’ S Needs”
Organization vision, “Global connectivity to meet people’s needs”, describes the organization’s guiding principle, in terms of providing customers access to pivotal service routes from smaller centres to larger hubs and then to other destinations in the world.
1.2 ABC Company Mission
“Providing High Quality Services in Goods Transportation and Logistics”
In ABC Company , employees focus not just on the results of the transaction, but on all aspects of serving the customers and making the whole process one of quality in both areas of transportation and logistics
1.3 Current Problem in ABC Company
ABC Company was increasing its global operations by opening new container terminals, buying new large ships, going in alliance with container lines. ABC Company lacked the logistics required to be competent in the container industry. Its 10 year old ERP systems lacked functionality and flexibility required to operate such a complex and big organization. ABC Company understood that without end to end logistics solutions they cannot compete in container business. ABC Company also faced problems controlling procurement costs and to meet the global regulatory requirements. The data collection system was done manually and hence it was time consuming and prone to errors. ABC Company have a work force of around 4000 which are employed all around the world. It was increasing difficult for ABC Company to manage such a large and diverse work force.
2. The Purpose and working of ABC Company for the next year
To realize, SSC mission, ABC Company newly uphold five principle value centered on customers, peoples, integrity, innovation, partnership and community for the next year.
- Deliver the best for the customers.
- Value people
- Do company works with integrity.
- Encourage Innovation.
- Respect partnership and community.
Currently ABC Company faced several type of problems. So, in next year aims to solve that problems with in end of the next year.
2.1 Solution to ABC Company Problems
As a solution to the problems ABC Company was facing due to its global expansion it decided to launch Process innovation project. The process innovation purpose was to establish advanced management structure and strengthening its organizational capabilities. The project applied to business process and organization structure as well as the corporate cultures based on adopting the advanced IT infrastructure. ABC Company decided to re-engineer their business process using best practice models for their ERP systems so as to gain global competitiveness. This system was going to be a long term solution, it will not directly show on balance sheet but it will be platform for launching new business projects. ABC Company also decided to shift to customer based business by ensuring good service and increased customer satisfaction.
2.1.1 Process Innovation Project
The process innovation project team was assembled in next year January and then they spent 5 months for mapping the new systems and the process. The project will be implemented gradually on a step by step basis. The process innovation project was to be implemented during a period of 3 years.
The main aim of process innovation was to be customer centered and a profitability oriented management company. The information system used to re-in force the organizational capabilities and will prepare the management to be more customers focused.
The information system development contracts were given to companies which were best in the business. ERP was given to ORACLE while others were given to Siebel and Hyperion. During the process of project Oracle acquired Siebel and Hyperion which resulted in seamless integration and customer support.
2.1.2 Information System Change in the SSC
Enterprise Resource planning (ERP): Enterprise system integrates the key business processes into single system. In this system the flow of information is seamless throughout the organization.
ABC Company Recourse Planning
ABC Company integrated business process such as finance and accounting, capital asset planning, human resource, procurement process. SSC used these for smooth flow of information in their internal system. The company’s senior management was involved in the projects implementation. The Managing director and CIO of ABC Company Shipping said that “To improve our global competitiveness, we needed an IT solution that supported extensive process reengineering”. So, SSC decided to invest about 57.7 million USD on this project. They standardized the management and data collections methods, restructured the flow of data between their business systems and prepared a dictionary so as to make it easier for the staff to follow new system. As the system was implemented on a step by step basis, gradually the staff could see the benefits of the system and they were not resilient to changes, but they were will to share information in between different divisions. Company also adopted other best practice guidelines such as training and educating the staff, use of software support and maintenance.
2.1.3 Benefits of Information System Implementing in SSC
Lower Cost: The e-sourcing system assisted them to procure products from a list of suppliers and they were benefited from competitive pricing which resulted in procurement costs. Cost saving per customer was increased due to increased efficiency.
Improved Communication: As the data was consolidated into a single system, hence staff gained an integrated view of operations.
Improved Management Control: New ERP systems and re-engineering process helped in improved business management. This gave the managers a complete view of the company’s operations and also equipped the staff with detailed information they required to plan, execute and evaluate complex initiatives. The managers were also able to make decisions and ensure problems were addressed immediately. Performance evaluation was easier and could be easily done on a global basis and medium and long term strategy planning could be done due to data availability.
New Capability: HR platform helped in improving the efficiency of the department. The new system helped the managers to view complete history of the staff and also discard applications. This resulted in increased efficiency of HR staff which could focus more on attracting and retaining skilled employees and also train them.
Improved Customer Service: Due to its service network it could respond faster to customers demands. Detailed sales and marketing plans could be developed.
Competitive Advantage: Currently ABC Company got the recognition of a reliable logistics partner.
2.2 Next year Plan of the ABC Company
The project improved the overall performance of the company process. In next year company aims to invest more in their IT systems which aims to complement their management systems as well as front office work. As the internal system implementation was completed the company now is ready to develop shipping/logistics related business which will become the company’s next driving forces. Banking on their internal system they are stepping closer to become a Global logistics company. ABC Company are also planning to expand its 3PL (3rd party logistics) business by extending its global network. In line with their Process Innovation project they have also launched another project ‘Knowledge management.
3. How to develop and Maintain Competitive Advantage in the Shipping Industry
Understanding of company success or failure is crucial for creating a successful corporate strategy and is the most important task for managers. For the creation of an efficient strategy, the employment of prescriptive tools, methodologies and models is insufficient and must be accompanied with in-depth conceptual knowledge. Managers should be aware that each business strategy is unique and that a strategy is neither ‘wrong’ nor ‘right’ in any absolute sense. Strategy is about building the competencies needed to dominate future markets.
The shipping business environment is getting more instable, competition is increasing profit margins are decreasing, expected service quality is increasing and demand is becoming more uncertain.
The main strategic options used by shipping lines to get competitive advantage in the SSC are the following: diversification, differentiation, concentration, alliances, specialization and cost leadership.
Diversification: Freight market is volatile and that may result in significant increase and decrease of income overnight. Companies may derive big profits from this volatility, but it may also wipe out the entire business overnight. Because of volatility and cyclicality, risk management is one of the most important activities in shipping business. Shipping lines use diversification has a means to protect their businesses against cyclicality and volatility and to maintain or achieve an over average performance.
Differentiation: Differentiation in the shipping industry is doing things differently from the competition: adding value to customers and request above the average price. Shipping is basically moving freight from point A to point B and cannot provide any room for building advantage. To differentiate from the competition, shipping line should go beyond just moving freight to innovate and develop more value added services.
Concentration: In shipping industry, concentration is mainly a way of competing for smaller players. It is mainly expressed in terms of geographic coverage. Smaller players, because of their limited resources, are focusing on niche market.
As a way of concentration, lines may decide call on fewer ports, by providing high volume on fewer routes with bigger ships. Most Asian lines operate in global market from home with alliances.
Alliance: Shipping business is global in nature and, except Maersk, no firm have all the resources and activities needed to satisfy all the needs of its customers. Alliance allows members to operate different routes around the world, it gives smaller and medium size players the chance to create more capacity. Alliance improves economy of scale, leads to efficient operations, increases the bargaining power of the actors, generates faster leaning, faster implantation and low investment , increases customer base, improves asset utilization, provides frequent sailing and faster transit time and firms can pass these benefits to customers through a superior value proposition.
Cost Leadership: Cost leadership is a strategy that aims to become the low-cost provider in the industry by making a cost reduction on all value chain activities. By the times of conferences, firm were co-operating by reaching agreement of divers aspect of the shipping business, including the pricing. Without any control on the pricing process, the winners were those able de develop a cost leadership.
The new strategies taken by ABC Company to rebuild its business process by the use of information systems was strategically very important. ABC Company is a global organization with different functions, organizational levels and many business processes; hence ERP system was the correct choice of information system. This report became the base to implement advance business process which complement SSC information systems and also increase the efficiency of the company. It helped the company to be more customers focused which is a key strategy in current times. ABC Company could venture into new aspects of business such as logistics. The selection of Oracle and Siebel was also correct because they were the best in the business. ABC Company made correct decision by integrating all systems together. The acquisition of Siebel and Hyperion by Oracle ensured that the systems have seamless integration and continuous support. The information systems which ABC Company used were in line with SSC business strategies which resulted in success of the company.
- SSC Company should identify what are the main problems, weakness, and threats having with company and should direct and develop better strategic plan to overcome the problems.
- ABC Company organization should develop target oriented values/objectives to achieve success of the organization.
- Development of strategic business plan with SMART objectives will increase ABC Company Company overall benefits.
- Building a strong, lasting organization requires careful planning and strategy, in which SSC plan plays a vital role.
- Dynamic organizations like SSC acknowledge the continuously changing professional trends and also comprehend the notion of human resource planning necessary to assemble a creditable workforce.
- Agarwal, R., Özlem, E. (2008), Ship Scheduling and Network Design for Cargo Routing in Liner Shipping, Transportation Science; May 2008; 42, 2; 175 – 196
- Anslinger, P., Jenk, J. (2004), Creating successful alliances, The Journal of Business Strategy; 2004; 25, 2; 18-22
- Carbone, V., Stone, M.A. (2005), Growth and relational strategies used by the European logistics service providers: Rationale and outcomes, Transportation Research Part E 41, 495–510
- Fremont A. (2007), Global Maritime Networks: The case of Maersk, Journal of Transport Geography, 15, 431 – 442
- Gadhia, H.K., Kotzab, H., Prockl, G. (2011), Levels of internationalization in the container shipping industry: an assessment of the port networks of the large container shipping companies, Journal of Transport Geography 19 1431–1442
- Management: The flagship, Journal of international shipping and port research, 28:1, 23-32, Lorange P., Datson E. (2014), Business Cycles: looking beyond the downside for competitive advantage, Journal of business strategy, volume 35, 9-19
Leave a Reply