Supply Chain Management at Cruise International, Inc

Supply Chain Management at Cr uise Int ., Inc Supply Chain Management at Cruise International, Inc OSEI-BONSU STEPHEN UNIVERSITY OF NICOSIA, 2015 OSEI-BONSU STEPHEN Supply Chain Management at Cr uise Int ., Inc Today’s customers insists more on high quality, different varieties, lowest price, quick delivery, excellent customer services among others. To succeed in these challenging markets, companies must possess the means to meet customers’ expectation rapidly and more importantly in an effective and efficient manner. This business circumstances is not industry specific and applicable to several industries including the businesses in the Cruise industry. According to Risposte Tourismo, an Italian tourism think tank. There is a rise in overall passenger numbers in the cruise industry from some 500,000 in the early 1970s to about five million in 1990 and about 19 million in 2010, (Jorn Madslien, 2012). The global cruise industry has grown year-on-year and is expected to increase to approximately 39.6 billion by the end of 2016 with average revenue of US$ 1,779 per passenger; according to data available on statista. The Cruise Company that seeks to be successful with their customers and maintain its business must have a competitive advantage which includes looking at its supply chain management. The provision of amusement and relaxation to passengers onboard a Cruise ship is the main services that passengers buy into to give themselves a treat in life. And for that matter, they expect the Cruise Company to meet their expectation or exceed them either on the ship or out of the ship Therefore like all companies in the service industry, passenger satisfaction is crucial to their survivor. And in today’s world, the Cruise Company can do this through an enhance supply chain. Caplice and Sheffi defines supply chain as an integrated collection of organizations that manage information, product, and cash flows from a point of origin to a point of consumption with the goals of maximizing consumption satisfaction while minimizing the total costs of the organizations involved . Supply Chain generally engages suppliers, service providers, manufacturers, distributors, retailers, and consumers. In the last few decades, competition among Cruise companies has concentrated mainly in the vertical (in terms of quality) and horizontal differentiation (in terms of variety and offerings) (Papatheodorou, 2006). In this context there are four main dimensions for competition, i.e. the ship, the time of the Cruise, the itinerary and the booking process (Papatheodorou, 2006). Essential concepts of SCM Supply Chain Management could be portrayed as a capacity that guarantees that products and services are conveyed to the right place, in the right amount, with the right quality, at the right cost and at the right time. This led the Supply Chain Research Group at the University of Tennessee (Mentzer, 2000) to define a supply chain as a set of three or more companies directly linked by one or more of the upstream and downstream flows of products, services, finances, and information from a source to a customer. The objective or mission of supply chain management can be characterized as expanding deals to the Cruise line international client while all the while decreasing both inventory and working cost. A manufacturing plant that is part of the supply chain will make for the Cruise Company the product it needs to serve its clients. Inventory is OSEI-BONSU STEPHEN Supply Chain Management at Cr uise Int ., Inc spread all through the supply chain and incorporates everything from raw material to finished products that are held by the producers, merchants, and retailers in the cruise line supply chain. The creation and storage of inventory is a cost and to accomplish unusual amounts of efficiency, the expense of inventory ought to be kept as low as would be prudent. Application of SCM Supply chain management is adapted in Cruise Line international to support the business strategy of the company. Companies rely on effective supply chains management to focus on key strategic activities (Scott, 1993). Cruise Line International would use the application of supply chain management in areas such as food supply, fuel supply, Coach Services, warehousing near harbors, Port Services, Consumables supply, entertainment among others which can best be provided by other businesses to help it provide the best client experience on their cruise. Hotel accommodation is another service which is needed by clients of Cruise Line international, and to make Cruise Line International focus on its core business, such a service can be provided by another business which would form part of the supply chain. Financial Services, ticket sales and Insurance Services can also be provided by cruise line International to its clients through travel and tourist Agencies. Services such as cruise maintenance which might include technical repairs, maintaining a clean Cruise, Ship’s Electronic Equipment, Machinery Equipment, Lubricants, Internet and Information Technologies can be contracted to another business which specializes in these services to make sure the Cruise Ships get the best service which would make clients stay on the cruise pleasant. Such on-demand services when contracted can go a long way to reduce cost of operation and also help management to focus on core business and essential services. Staffing and personnel training are essential parts for success in the service industry. Employee satisfaction and loyalty are seen as critical to the capability of service organizations to respond effectively to customer needs (Silvestro, 2002). Great employees will help create great and memorable customer experience. Training is shown to positively impact on employee’s productivity, which results in higher levels of employee satisfaction (Choo & Bowley, 2007). Employee training provides opportunities for the employees to broaden their knowledge and skills to engage in more efficient teamwork and achieve individual growth and development. Numerous studies observe that workers who receive training report higher levels of job satisfaction than those who do not, and the development of competencies through various training programmes has a positive impact on employee satisfaction (Marie, 1995; Saks, 1996). Training employees has also been found to result in facilitating the updating of skills, increasing professionalism and increasing employee commitment and satisfaction to the organization (Bateman & Strasser, 1984; Bushardt & Fretwell, 1994). In this regard, it might be easier for Cruise Line International which has multiple working site including onboard the ship and OSEI-BONSU STEPHEN Supply Chain Management at Cr uise Int ., Inc multiple harbors to contract Human resource management professionals with the capability to handle all the various Human resource responsibilities for the Cruise Company. The application of SCM in the cruise industry would require improve trust and collaboration between all the supply chain partners. There must be greater logistics flexibility (Bask, 2001), a close collaborative system wherein the businesses work closely on strategy, planning and share relevant information at all levels. The collapse of any of the suppliers and inability to supply its service or product on time would create serious problems for the operations of the receiving business which would create a chain reaction of major service disruptions to the Cruise line international company and their customers. Partnership with Suppliers Partnership by Cruise Line international with its suppliers must be based on the services and products which are needed by the company to best serve its clients. The company needs to keep its core business and outsource its noncore functions to supply chain partners. Cruise must first identify a partner who can provide the service at a good price and deliver at the right time. The company must then decide on the quantity of the product it need at a specific time in a specific location. Each of the partners needs to be flexible and easy to do business with. Partners should not let short-term goals to impede the achievement of long-term strategies. Cruise line international must make sure that, their supply chain strategy in aligned with their reward structure. Mentzer & Bienstock, (1998a) stated that, “What gets measured gets rewarded, and what gets rewarded gets done.” Therefore, the measurement and reward structure must be standardized to encourage suppliers to deliver. For the success of the supply chain partnership, there should be a supplier guiding policy and contract which will guide all parties in the delivery of their services. Suppliers' policies and practices must agree with every single applicable law and regulations, including those concerning child or forced labor; freedom of association, aggregate haggling; separation; wages and benefits; working hours and extra time; wellbeing and security and ecological practices. Monitoring and controlling this system of partnership and suppliers requires a mix of important and regional association: while observing and controlling of supplier execution and everyday contact with logistics accomplices are best overseen internally. Importance of CLI-Suppliers partnership Supply chain partnership gives Cruise line International various prospects to enhance their business operation, for example, more extensive delivery of services at lower cost without immediate physical presence in the places where the businesses’ customers are located. Information sharing, Joint problem solving, Precise resource allocation, Sharing of both financial OSEI-BONSU STEPHEN Supply Chain Management at Cr uise Int ., Inc and non-financial risks, compensation sharing, asset pooling, decrease in coordination and operating costs, capacity to focus on core competencies, and quick reaction to market needs are the reasons that make supply chain partnership important. The most important thing that happens in supply chain partnership is the utilization of the power of synergy. This makes all the companies involved in the supply chain to have greater output and business success than they could have done it if they were to do it all by themselves. Benefits of CII-Supplier partnership Strategic supplier partnership in SCM has been reported to yield organization-specific benefits in term of financial performance (Tsai, 2007). Vereecke and Muylee (2006) highlighted that strategic partnerships between suppliers and manufacturers have a significant impact on supply chain performance and various aspects of competitive advantage. The thought of a supplier as partners may sound like a dream advanced by academics who have never encountered the severe states of real business. Be that as it may, there are benefits of collaborative rather than adversarial working relationships within and outside the borders of the organization. This include evaluating inventories, systems, processes, training, work methodologies, equipment utilization, and a host of other opportunities to reduce the cost of operations, enhancing management and quality of operations and explore opportunities for the partnerships. Cruise line international would also benefit in areas such as access to new markets and customers, enabling its success and growth more rapidly. Other benefits include accessibility to resources and Tools; such as modern technologies which might not be prudent for Cruise Line International to acquire such resources by itself. The company will benefit from training that would enable it become a smarter, more effective and productive business through the systems and expertise of other business in the supply chain. There will be the advantageous payment terms, allowing Cruise line to place larger orders and fuel growth, without investing extra cash. Potential conflicts of interest or ethical issues facing the purchasing function. In a supply chain, there is the likelihood for a conflict of interest to arise. A player in the Cruise Company’s supply chain might also be part of another Company’s supply chain which can cause effectiveness problems throughout the supply chain ( Hakkansson and Persson, 2004). Situation where conflict of interest could arise include but not limited to:  External contracts in areas similar to those of Cruise Line international  Affiliations with non-profit organizations that receive funding or other means of support from Cruise line international  The acceptance and or extending of any business courtesies OSEI-BONSU STEPHEN Supply Chain Management at Cr uise Int ., Inc   Being actively involved in private, professional, political, academic or other interest that may conflict with Cruise line international interests Private business interests in the form of partnerships, shareholdings, board membership or investment in entities that might do business or compete with Cruise Line international It is unethical for Supply chain partners to utilize their positions to impel someone else to give undue advantages to themselves or others. Potential conflicts emerge from family, business, individual or budgetary connections. Despite the fact that a conflict may not in fact exist, supply chain management experts must maintain a strategic distance from the presence of such a conflict. To avoid these, partners must ensure that any personal, business and other activities do not conflict with the lawful interests of Cruise line international. Specific area which can bring conflict of interest include, other employer policies, gifts, gratuities or entertainment, business meals, Relationships, Product samples, Political matters, Advertising, Market power and specifications and standards. Members of the supply chain must avoid behaviors or actions that may negatively influence, or appear to influence, supply decisions before the beginning of supply chain services. Annually, it must be required from all partners in the Supply Chain Management to complete and sign a Conflict of Interest and/or Commitment Disclosure Form. Members should notify the appropriate person for guidance or resolution when a potential conflict of interest arises. When necessary such members must be reassigned to other responsibilities which are appropriate would not pose a threat of another conflict of interest. CONCLUSION Cruise Line international seeks to satisfy its clientele which comprises different age groups and different consumer characteristics with a variety of on-the-ship and on-land services. The company’s supply chain partnership will increase benefits for all partners by reducing total cost of operation and improving the quality of services. There is a potential for conflict of interest in supply chain management, but a policy and continuous monitoring will help to minimize its effect. Supply chain management is a significant aspect of Cruise operations and is needed in the preembarkation, onboard and the post disembarkation parts of the business. 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