Remote IT support - supply chain management systems

The cruise industry is forever broadening its horizons. The preceding statement doesn't just refer to the impressive range of on-board services and amenities offered by today's operators to their guests, but also to the current trend for more adventurous passages.

One only needs to look at Crystal Cruises. In July, the LA-headquartered company announced that, as of 2016, it would be running expeditions through the famous Northwest Passage, which runs 805km north of the Arctic Circle. The route represents a first for the cruise industry.

Opening up to new destinations - particularly those deemed to be remote - will always put an operator's supply chain management (SCM) model to the test. This is thrown into even sharper relief, given the necessity to counterpoise cost-efficiency drivers with higher standards of service.

It's a balancing act that is common practice among industry players, says Toni Neumeister, vice-president of hotel procurement and food and beverage operations at Crystal.

"Logistics is becoming more and more complex, as well as expensive because of different routes and circulations around the world. This has been made even more difficult due to certain geopolitical situations we are seeing right now," he says.

"This also relates to the demands from guests to consistently deliver services of the highest quality possible to the right specifications, whether it be cuisine or other on-board amenities."

IT and the supply chain

Optimising the supply chain essentially concerns finding the most effective means of promoting better relationships between operators and vendors. Like every industry in the digital age, the cruise sector is looking to leverage IT in order to achieve greater visibility across the entire value chain.

"The goal is to always find cost-saving opportunities without affecting a brand and its offerings," claims Jafar al-Shibibi, director of marine hotel procurement at Seabourn Cruise Line, a subsidiary of Carnival Corporation.

"Synergies are a fundamental part of an operation's savings, especially when managing two distinct brands. As an example, working with one vendor who can deal with the distinct products and needs of both brands is always advantageous when it comes to cost and service."

Planning, pricing and purchasing

As alluded to by Shibibi, accessibility of information between ships - and vendors - can lead to a more proactive approach when it comes to problem-solving in the supply chain.

Thankfully, there are various systems now on the market that have been adapted to suit the cruise industry's needs, and are commonly used by operators looking for more transparent pricing information - a kind of technological manna for today's purchasing teams.

Crystal has been signed up to ShipServ TradeNet - the world's largest independent trading platform for ship supplies - since 2011. Seabourn, Princess Cruises and Norwegian Cruise Line have also followed suit.

"We bought ShipServ to improve the technical purchasing side of our operations," explains Neumeister. "As well as sending out requests for quotes and prices, it also helps us to assist and find new vendors. Our two flagship vessels [the Crystal Symphony and the Crystal Serenity] also use Spectec's Amos maintenance and purchasing system to get a clearer view of our suppliers."

ShipServ TradeNet isn't the only option available to cruise companies. Holland America Line also uses the MXP purchasing system on board its vessels, which enables the combination of modules for itinerary planning, menu-setting and general procurement.

MXP's ability to link to other applications - such as Oracle Financials and a group's official website - is a particular boon, says Shibibi.

"Various IT platforms give us the right tools in regard to online communication with all our partners," he says. "This enables us to link a variety of systems to each other, which increases accuracy and consistency of information.

"MXP holds information from all different areas of the supply chain and much of this information is visible for the ships. For example, a provision master or executive chef on board can track the status of their orders as they are processed in the Seattle office. In the Seattle office, management can also view information about the flow of goods on the ship in real time."

How do operators gauge the overall performance of their supply chain systems? Is it simply a case of adding up cost savings accrued over time? Conventional wisdom indicates this to be the case. The fact that information is more visible and accurate creates many cost-saving opportunities within the supply chain.

Furthermore, problems can be detected or pre-empted much earlier on through the automation of processes such as vendor payments and product contracting.

"Consistency and predictability of information are certainly big advantages," explains Shibibi. "This goes for the respective operator, as well as the vendors. Having transparency and availability of up-to-date information throughout the organisation is another advantage. This data allows us to ensure we get the right product at the right price and at the right time."

Supply chain potential

In spite of such advances in the field, SCM technology is, however, yet to reach its optimum. The consensus among some in the industry is that the functionality of software tools for cruise ships - such as e-auctions - still lag behind those used in other industries.

"Cruise is a unique category of industry," claims Giorgio Zagami, corporate procurement and logistics manager at MSC Cruises. "It is about service, but it has the same economies of scale as lots of other industries that make physical goods. This means technology is a key part of managing the supply chain. We need information systems that can help not only with planning and the management of relationships with suppliers, but also support of logistics operations.

"For instance, web integration with some suppliers is an important issue now. There is technology already in place and software vendors are developing tools specifically for the industry, but they still need to be fully implemented. There are tools that already exist, such as e-auctions and systems for exchanging data over the web, and these have been rolled out in full in some industries, but not yet in the cruise sector."

Many would also argue that the SCM tools currently on hand require greater customisation in order to meet industry-specific requirements.

"It takes time to customise supply chain systems to an operator's specific needs," says Neumeister. "Customisation, on a large scale, still poses a huge challenge for the industry."

Furthermore, says Alvin Dennis, vice-president of purchasing and logistics at Norwegian Cruise Line, strong relationships with local suppliers are absolutely paramount.

"You need local knowledge of destinations and we are very reliant on our supply chain partners - vendors, carriers, transport companies," he explains. "Mainly, at NCL, our SCM processes are centrally planned, but we work with our ships and our local operations teams; it is very much a team effort. The management is centralised, but we make local purchases, while ensuring that our quality expectations are met."

This emphasis on the importance of establishing partner relations raises another salient point: IT is not the be-all and end-all when it comes to locating the best SCM solutions.

Data and information flows can still be influenced by human input. Also, mutually beneficial relationships between operators and vendors - who are still eager to understand the needs of their target markets - cannot be sustained by purchasing systems alone. Put simply, technology should never transcend the importance of personal interaction - commonly acknowledged to be the lifeblood of the cruise industry.

"Personal interaction is absolutely essential in our business," asserts Neumeister. "It's about partnership, and trying to create a win-win situation for partnerships. We expend a lot of resources visiting our vendors, giving them the chance to experience our products. We even have a very special vendor rate for our suppliers, meaning they can book a cruise with us - we have quite a few suppliers taking advantage of this. When it comes to suppliers, we learn from them and they learn from us. It's a mutually beneficial relationship."