Procurement 101Cruise Line Procurement: Mitigating the Risk of Single Source Suppliers
When you’re part of the team responsible for filling several large floating dining rooms with anywhere from 100-1200 people of all ages, interests, and ethnicities you better hope you have enough napkins, nevermind freshly-squeezed pineapple juice and pinot noir. If the thought of navigating this logistical nightmare makes you yearn for a plank to walk, you’re not alone – the only difference between a cruise ship and a pirate ship is a few hundred years (and slightly less mutiny, although this is arguable).
PROCUREMENT ON CRUISE CONTROL
Procurement can be a challenge in any industry or profession without the added hurdle of moving delivery points, a high expectation of service quality, and tight timeframes. Think of it as a strictly choreographed water ballet with suppliers paddling after an audience that is almost continuously in motion for 6-7 days. The planning must be militant: each vessel requires all materials needed for a voyage within an 8-hour window prior to departure. Warehouses should be situated only minutes away from major ports and airports. Inventory positions, occupancy forecasts, consumption records, JIT deliveries, proprietary software, and temperature-controlled transit & storage of perishables makes vendor selection critically important. Ultimately, the performance of a cruise ship is only as strong as its supply chain.
It’s been said that clever companies nominate one global logistics provider for all their warehousing and transportation needs. Can a cruise line realistically implement this advice for their suppliers, and would it even be beneficial? As an example: producing 50-gallon batches of clam chowder demands clams. What if the big supplier that delivers more than 90% of your ship’s total provisions doesn’t have timely access to fresh clams? The cruise line would have to accept a more limited menu. This option is unappealing to most customers who consider an excess of choice to be a guarantee. The alternative is embalmed clams in the chowder. The best cruises are able to take advantage of their routes and engage with small suppliers to obtain local produce, which in turn adds value to the authenticity of the vacation for passengers.
PACKING THE SHIP
For anyone who’s ever struggled to pack a suitcase, consider the packing of an ocean liner: transferring supplies from pier to ship begins before dawn so workers can inspect pallets of food for freshness before they’re loaded on board. Time is budgeted down the minute. According to Condé Nast Traveler, most ships have until 3:30 pm to send something back to the supplier if they need to obtain a replacement batch prior to departure. To avoid any possibility of delay, well-managed vessels stockpile a surplus of supplies to last approximately 2 days – waiting for extra provisions at the dock isn’t part of anyone’s schedule.
OCEAN LINER LOGISTICS
In truth, the ideal procurement scenario is almost always achievable, it just requires accurate data tracking. For example, Royal Caribbean utilizes head-counting cameras in the ceilings of its main dining areas that tally when and where passengers gravitate; this is information that can be used to anticipate peak serving times, and therefore dictate the necessary amount of certain products. Royal Caribbean hasn’t always been so strategic (or perhaps the word is intrusive): at one point the cruise line had the bad habit of air freighting materials, such as chocolates, when inventory was understocked or improperly planned. Result: they paid more for the air freight charges than the actual chocolates. Anticipating supply amounts can be a problem for even the most reputable cruise lines.
WALKING THE PLANK
Both ships and suppliers need to be able to move with the ebb and flow of demand. Flexibility is a key factor when attempting to mitigate supply chain risks, especially for cruise ships that aren’t anchored to one geographic area. Remember this when you’re walking the plank* – it’s always better to bounce at the end before taking the plunge. Comparably, it’s always smarter to consider multiple supplier options before committing to one.
* Note to readers – “walking the plank” refers to a form of punishment thought to have been practiced by pirates: blindfolded captives were forced to walk off a plank on the ship that jutted out over the ocean. The idea was that this would lead to death, or at the very least, entertainment.
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