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2014/02/06

Shipbuilding: The Least Interesting Supply Chain Problem… Or is it?

ShipbuildingThe least Intersting Supply Chain problem

By Howard Roddie, Senior Supply Chain Consultant (@HowardRoddie)

In terms of supply and demand, shipbuilding is not exciting, the time bucket isn’t days, weeks or months.  Often it is multiples of years.  So there’s not many decisions to be made about how we consume our one customer order.  It’s not difficult to descent into detail at the monthly S&OP meeting.  We don’t need to worry about stock on hand; make to order will suffice.  We don’t even have to think about distribution centres, customer differentiations or promotions.  Every order is a step change.  Forecast modelling is pointless.

So what could possibly be of interest to us supply chain guys?  Well, once the ships are built, they go out into the world and they could be anywhere.

Now, they start to become interesting because just about every ship is unique, built to individual specs.  Even ships built from a common blueprint will be different as each generation will benefit from advances in technology, adaptations may even be imposed by the availability of components.  These ships are needy too.  Every time they come into port (a scheduling problem right there), they need things – fuel, food, water, catalysts, parts, crew…

Traditionally in supply chain, we know our products, our customers and our outlet supply points… But here, we have customers with unique shopping lists who swap supply points regularly.  It could be Abu Dhabi one month, Walvis Bay the next, but where do we hold sock best to service this highly unpredictable customer base?  We can’t match demand to any one supply point and for many of the more specialised products we are also dealing in batches.  If we hold stock in Durban or Cape Town to supply Africa, we may not be able to supply a particular port quickly enough.  In this case, we meed to find out more about likely boat movements, and this is something even smartphone apps are now capable of.

Now, if we can collaborate with the customers (shipping lines and boat owners in this case) we will start to get a picture of subsequent movements, giving us more time to get stock from hubs to the smaller ports, and allowing us to replenish them more efficiently.  By formalising this collaboration, we can enable much better decision making about target stock levels and replenishment policies that we have ever been able to in the past.

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