A STUDY ON THE IMPLEMENTATION OF

E- PROCUREMENT AND ITS

PERFORMANCE EFFECT ON EXECUTIVE SHIP
MANAGEMENT PTE LTD

A PROJECT REPORT

Submitted by

M. PRIYADARSHINI
[REG NO: 3511010530]

in partial fulfillment for the award of the degree

of

MASTER OF BUSINESS ADMINISTRATION

Submitted to

SRM SCHOOL OF MANAGEMENT

Under the guidance of

Ms. Raji , Asst. Professor

SRM SCHOOL OF MANAGEMENT

SRM UNIVERSITY

KATTANKULATHUR

MAY 2012
 SRM UNIVERSITY: KATTANKULATHUR 603203

BONAFIDE CERTIFICATE

Certified that this project report “A STUDY ON THE IMPLEMENTATION

OF E-PROCUREMENT AND ITS PERFORMANCE EFFECT ON
EXECUTIVE SHIP MANAGEMENT PTE LTD” is the bonafide work of
“M.PRIYADARSHINI [3511010530] who carried out the project work under
my supervision.

PROJECT GUIDE

……………………..

Ms. Raji
 DECLARATION

I hereby declare that the project work entitled “A STUDY ON THE

IMPLEMENTATION OF E-PROCUREMENT AND ITS
PERFORMANCE EFFECT ON EXECUTIVE SHIP MANAGEMENT
PTE LTD” submitted to the SRM University, Chennai in partial fulfillment of the
requirements for the award of Master of Business Administration is a record of original
project done by me during the period of time in the SRM University, Chennai under the
guidance of Ms. Raji, Assistant Professor in School of Management, SRM university.

Place: Chennai
Date:
 ACKNOWLEDGEMENT

I would like to express my sincere gratitude to all those who were instrumental in the
preparation of this project report.

I would like to express my sincere thanks to Ms. Raji, Asst. Professor, Department of
business administration, SRM University for giving me an opportunity to do this project
and thereby learn from it.

I take this opportunity for expressing my profound sense of gratitude and indebtedness to Dr.
JEYA SHREE SURESH MBA, Ph.D.,Dean Of The DepartmentOf The Business
Administration, SRM Universitywho has provided me all the facilities to complete my
project.

My deep sense of gratitude to MR. V Santhosh (Technical Superintendent- Purchase) for

giving me the opportunity to carry out this project.

I am also thankful to all the Team Leaders and Purchasers for sharing their knowledge and
experience with me about the practices carried out in the Chennai office and enlightening me.
A special thanks to many other persons for their inspiring guidance throughout the training.

Last but not the least, I owe my special gratitude to my parents, friends and whomsoever who
are related to this project for helping me in completion of the project successfully.
 ABSTRACT

The rapid growth of competition in the market and the consequent changes in economic
conditions impose organizations and firms to implement new technologies to stay
competitive.
Those firms which have not implemented technology at the proper time are at the risk of
losing customers or suppliers. Transportation industry in general and maritime transportation
industry in particular are not exception in this regard. Customers, partners, agents,
collaborators, shippers, port operators, suppliers and service agencies are involved in the ship
transport industry supply chain, and one of the major requirements in such a supply chain in
which all concerned parties are scattered all over the world, is the high speed transferring of
data between them. In maritime transportation procurement process plays an essential role.

Ships usually purchase a large quantity of supplies for maintaining daily operations. The
procurement process in maritime industry should be organized in a way that enables efficient
transfer of goods and services into vessels. Today, a major goal of a maritime’s supply chain
management is to apply information technology to their procurement systems efficiently and
cost effectively. Moving away from traditional and paper based offline purchase processing
to online procurement enables shipping lines to gain better procurement practices in terms of
cost efficiency.

In this study based on the literature review, seven most frequently mentioned factors found.
These performance factors were: Cost, visibility of supply chain, cycle time, procurement
control, inventory management and purchasing errors which were influenced by
implementing E-procurement. An attempt has been made in this research to find the
performance effect of e-procurement implementation in ship management companies. The
qualitative research was chosen and study was conducted at ESM in this paper. The source of
data for this study was Questionnaire.
The result of the present study illustrates that the in overall implementation of electronic
procurement has enhanced performance in the ESM.
Generally, e-procurement is found effective in increasing performance and it can be utilized
as a beneficial tool, especially during economic crises in shipping companies.
 TABLE OF CONTENTS

CHAPTER TOPIC PAGE NO

1 INTRODUCTION 1

2 STATEMENT OF PROBLEM 6

3 OBJECTIVE OF THE PROBLEM 7

4 REVIEW OF LITERATURE 8

5 RESEARCH METHODOLGY AND LIMITATIONS 12

6 INDUSTRY PROFILE 14

7 COMPANY PROFILE 18

8 DATA ANALYSIS AND INTERPRETATION 33

9 FINDINGS OF THE STUDY 52

10 SUGGESTIONS AND RECOMMENDATION 53

11 LIMITATIONS OF THE STUDY 54

12 CONCLUSION 55

ANNEXURE-I 56

ANNEXURE-II 57
 LIST OF TABLE AND CHART

S.NO LIST OF PARTICULARS PAGE NO

8.1 RESPONDENTS OF AGE CLASSIFICATION 33

8.2 RESPONDENTS OF WORK EXPERIENCE 34

8.3 RESPONDENTS OF FLEET HANDLING 35

8.4 RESPONDENTS OF NO OF VESSELS HANDLED 36

8.5 RESPONDENTS OF SEGREGATION OF DUTIES 37

8.6 RESPONDENTS OF VENDOR SELECTION 38

8.7 RESPONDENTS OF SATISFACTION OF CURRENT 39

METHOD
8.8 RESPONDENTS OF NEED FOR FURTHER 40
IMPROVEMENTS
8.9 RESPONDENTS OF SUPPORT FOR THE TYPE OF 41
PROCUREMENT SYSTEM
8.10 RESPONDENTS OF ADVANTAGES OF E- 42
PROCUREMENT
8.11 RESPONDENTS OF IMPACT ON 43
ADMINISTRATIVE COSTS
8.12 RESPONDENTS OF IMPACT ON PURCHASING 44
AND SUPPLY ERRORS
8.13 RESPONDENTS OF IMPORTANCE OF BUSINESS 45
BENEFITS
8.14 RESPONDENTS OF IMPORTANCE OF VENDOR 46
RESPONSIVENESS
8.15 RESPONDENTS OF IMPORTANCE OF VENDOR 47
RELIABILITY
 LIST OF TABLE AND CHART

S.NO LIST OF PARTICULARS PAGE NO

8.16 RESPONDENTS OF STATUS OF SUPPLIERS 48

8.17 RESPONDENTS OF COMMUNICATION WITH 49

VENDORS
8.18 RESPONDENTS OF PO EXECUTION 50

8.19 RESPONDENTS OF INFORMATION EXCHANGE 51

WITH VENDORS
 LIST OF FIGURES

S.NO LIST OF PARTICULARS PAGE NO

7.1 ORGANIZATIONAL CHART OF ESM 20

7.2 CERTIFICATION OF QUALITY 25

7.3 ESM PROCUREMENT CYCLE 27

7.4 MAIN TOOL BAR OF AMOS 30

7.5 WORK ORDER WINDOW 31

 CHAPTER 1
INTRODUCTION

1.1 OVERVIEW:
The introduction chapter presents background and different aspects of e-procurement. It starts
with brief description of e-procurement within industries and shipping industries and at the
end it moves toward the statement of the problem of this research.

The rapid growth of competition in the market and the consequent changes in economic
conditions impose organizations and firms to implement new technologies to stay
competitive.Those firms which have not implemented technology at the proper time are at the
risk of losing customers or suppliers. Transportation industry in general and maritime
transportation industry in particular are not exception in this regard. Operation in a very
competitive market is the character of maritime transportation industry and the main driving
factor toward implementing of technology in maritime transportation industry is continuous
pressure for reducing overheads, costs and increasing efficiency and security.
Customers, partners, agents, collaborators, shippers, port operators, suppliers and service
agencies are involved in the ship transport industry supply chain, and one of the major
requirements in such a supply chain in which all concerned parties are scattered all over the
world, is the high speed transferring of data between them. In order to achieve competitive
advantage over the rivals, the e-commerce and e-business with their attributes are focal points
for ship owners and other stakeholders. Internet has had a great impact on the organizations
and firms in the recent years and as a technological innovation, it facilitated the
communications between different parties in business-to-business transactions, commonly
called E-commerce.
The incredible growth of Internet has changed the business conducting methods. It has
offered a wide range of opportunities to perform and conduct business. One of the main
categories of business which has been influenced by internet is procurement. According to
procurement is defined as “all of the activities involved in obtaining material and services and
managing their inflow into an organization toward the end user. It includes obtaining
manufacturing supplies for an assembly line as well as obtaining paper and pencils for a
bank.” At least one third of organization’s income is being spent on purchasing goods and
services, which shows that procurement has a significant business value and vital role in an
organization. Organizations normally pay no attention to this valuable role.
Traditionally, the procurement process has consisted of excessive paperwork and a time-
consuming process. The use of IT has changed the procurement process. E-procurement or
electronic procurement means purchasing goods and services by using the internet as the
communication media between different parties in the procurement process.
In maritime transportation procurement process plays an essential role. Ships usually
purchase a large quantity of supplies for maintaining daily operations. The procurement
process in maritime industry should be organized in a way that enables efficient transfer of
goods and services into vessels.
Today, a major goal of a maritime’s supply chain management is to apply information
technology to their procurement systems efficiently and cost effectively. Moving away from
traditional and paper based offline purchase processing to online procurement enables
shipping lines to gain better procurement practices in terms of cost efficiency.
1.2 INTERNET AND E- COMMERCE:
On June 2009, about 1.67 billion people worldwide had access to internet (Mini Watts
Marketing Group). The figure shows the extent usage of Internet and its related applications
by individuals and organizations.
The inconceivable rise of Internet and information technology has changed the way of
conducting business. Today most of organization and firms adopt Internet and information
technology into their business processes. Internet and information technology provide new
methods for firms to perform their business and improve their efficiency.
According to Jelassi and Endres (2004) cited in (Chun Wang-Zheng Wang 2006) e-
commerce deals with the online transactions such as selling products and services.
Turban et al (2004) described e-commerce as the buying, selling, transferring or exchanging
products, services and information through computer networks such as Internet (Chun
WangZheng Wang 2006). The main communication medium in e-commerce is Internet,
which is being widely used by different suppliers, Buyers, firms and organizations.
Backer (2001) cited at (Afshinafsharipouretal 2005) defines e-business as the support of the
several distinct phases of business transactions through information technology. Nowadays,
ebusiness and e-commerce plays a vital role in most of the firms and organizations, which
operates in various parts of industries.
(D.Ramasubramanian 2005), project manager at Wipro Technologies (2005), stated that now
using internet and e-commerce in the field of marine business, Sales activities is more and
more routine. Today, cargo booking sites, scheduling portals and auction sites have become
important e-selling channels for ship management companies and this has decreased the cost
of marketing and distribution. He also stated that e-B/L (Electronic Bill of Lading) is very
important constituent of the whole shipping documentation processes that contains the proof
of copies, which can be examined before issuing the original Bill of Lading. It reduces re-
processing time as well as using paper format and eliminates fax affairs.
All of the mentioned issues pull down the expenses and processing time between the carriers
and shippers when changes occur. The networks between shipping companies and their
representatives allow both sides to monitor the bookings at online and offline marketing
efforts in a single database. Bookings can be done directly into the systems, sent to
centralized databases and then collected. It will provide shipping companies and their
regional sales forces possibilities to operate efficiently (ibid).
1.3 PROCUREMENT AND E-PROCUREMENT :
Procurement is defined as “all of the activities involved in obtaining material and services
and managing their inflow into an organization toward the end user. It includes obtaining
manufacturing supplies for an assembly line as well as obtaining paper and pencils for a
bank.” Procurement always consists of paperwork and bureaucracy in both private and public
sectors.
Procurement is the process of acquisition of appropriate material, goods or services and it
contains a complete cycle of obtaining these items from ordering, processing, approval and
receipt to payment approval.
Most of organizations and firms spend about one third of their income for purchase services
andgoods, Even some researchers as kalakota and robinson (1999) cited at (Sara Faraji Jalal
2007) stated that 50 to 60 percent of total revenue is being spent on purchasing goods and
services. The way of thinking about competitive advantage has been affected by economic
environment, uninterrupted pressure for reducing cost and overheads enforce companies to
change the way of conducting business(Jason R. Eaton 2003).
Nowadays, Most of the companies spend a large portion of their income on procurement thus
efficient transfer of goods, services and information is being focused by firms as an essential
issue. Today companies tend to implement information technology to improve productivity
and operational efficiency and decrease costs. The computer-enabled procurement system or
eprocurement is a subset of e-business process of a firm .
E-procurement is defined as the automated requisition, approval, purchase order management
and accounting process by using internet and any other computer networks the ommunication
channel. E-procurement is purchasing of goods and services through internet or other
information network.
Organizations that automate their procurement system and control inventories could gain
efficiency, reduce purchasing cost and improve delivery schedule. It also mentioned that
there are three major types of E-procurement; ERP or enterprise resource planning which is
used to create and approve purchasing using web technologies; e-sourcing which identifies
suppliers by using information technology and web technology and finally e-tendering which
sends information and pricing request to suppliers using internet technology.
E-procurement is the result of utilizing e-commerce technology in the organization
purchasing activities. E-procurement implementation creates greater saving than online
retailing and ERP systems. By decreasing cycle time and amount of paperwork in
procurement transactions, necessary time for marketing on new products, production lead
time and quality can be improved by suppliers. Full implementation of electronic
procurement strategy can lead to a greater level of saving achievements by global firms.

1.4 SCOPE OF THE STUDY:

This project has broad scope to learn about the entire E-Procurement functions happening in a
shipping industry. Executive Ship Management is one of the leading ship management
service providers in the world. Regarding to the Chennai office, most of the purchase
functions are carried out here which creates a specialized and customized ship management
service which is the present day requirements of the 21st century ship owner. Hence the
Procurement function has more importance.

The Procurement department is responsible for the following functions. The functions are
• Procurement of stores/ spares through indigenous and foreign sources
• Checking of requisitions
• Selection of suppliers for issue of enquiries.
• Issuing enquiries/tenders and obtaining quotations.
• Analysing quotations
• Issue of Purchase Orders.
• Approving for payment
 CHAPTER 2
STATEMENT OF PROBLEM

This project addresses particular potential problems involved in the E- procurement cycle
followed at Executive Ship Management. The concern here is the company should be able to
integrate their supply chain strategies efficiently and to synergize their culture in terms of
management. Organizations that automate their procurement system and control inventories
could gain efficiency, reduce purchasing cost and improve delivery schedule. E-procurement
is the result of utilizing e-commerce technology in the organization purchasing activities. E-
procurement implementation creates greater saving than online retailing and ERP systems.
By decreasing cycle time and amount of paperwork in procurement transactions, necessary
time for marketing on new products, production lead time and quality can be improved by
suppliers. Full implementation of electronic procurement strategy can lead to a greater level
of saving achievements by global firms
 CHAPTER 3
OBJECTIVE OF THE STUDY

The main objective of the project is to understand the E-Procurement process carried out
Executive Ship Management Pte Ltd. Before knowing about the Procurement functions we
have to know about the organization as the whole. So it becomes essential to learn about the
process they are following which helps us to understand about the entire functions of the
Purchase department as a whole.
The main objective of this project:
• To understand the working of the organization.
• To understand the E- Procurement functions implemented at ESM Pte Ltd.
• Implementing the research methods and gathering the necessary data.
• To Improve the e- procurement process carried out at ESM.

The Procurement Function is considered as the crux of this project. A complete set of
analysis of the E-Procurement activities taking place at Executive Ship Management Pte Ltd
is taken as the area of study.
 CHAPTER 4
REVIEW OF LITERATURE

Theories about E-procurement will be presented in literature chapter based on the research
problem which has been presented in chapter one, It will begin by with presenting of
procurement and E-procurement and the followed by E-procurement in maritime industry.

4.1. PROCUREMENT:
(Judith Gebauer&ArieSegav 2001) defined procurement as “All of the activities involved in
obtaining material and services and managing their inflow into an organization toward the
end user. It includes obtaining manufacturing supplies for an assembly line as well as
obtaining paperand pencils for a bank”.
Most of organizations and firms spend about one third of their income for purchase services
and goods (Judith Gebauer&ArieSegav 2001). Even some researchers as kalakota and
robinson (1999) cited at (David Caffey 2009)stated that 50 to 60 percent of total revenue is
being spent on purchasing goods and services.
(David Caffey 2009) believes that in addition to purchasing goods and services from
suppliers, procurement includes inbound logistics, warehousing and inventory management.
Procurement includes actions related to acquisition of services and goods and managing its
flow toward the consumer (Judith Gebauer&ArieSegav 2001). Procurement ranges from
purchasing stationery for a bank to acquiring MRO products for an assembly line (ibid).
(Judith Gebauer&ArieSegav 2001) Three steps of purchasing materials and services are
information, negotiation, and settlement:
• Information: it consists of demand recognition, source evaluation and collecting data
about vendors, products and market situation.
• Negotiation: it means communicating with suppliers and asking for quotation and
availability for required materials, services and final contract
• Settlement: settlement means completion of contract; it is achieved when services
and capital have been exchanged.
Due to the fact that most of organizations spend more than 30% of their revenue for
purchasing materials and services, procurement has great business value; nevertheless this
process is mostly very inefficient because of bureaucracy and complicated workflow which
is time consuming and expensive (ibid).
Due to the fact that purchasing goods and services is at least one third of total expenses in
mostorganizations, procurement has an important business value which is mostly being
overlooked.The costly, time consuming and complicated paper based procurement processes
are very inefficient (Judith Gebauer&ArieSegav 2001)
4.2 E-PROCUREMENT:
(David Caffey 2009) defines e-procurement as incorporating all purchasing activities such as
purchaser request, authorization, ordering, delivery and payment by utilizing electronic
means such as internet, web technology and e-commerce. Electronic procurement system
(EPS) is a system which automates all activities in procurement process such as storing
requests, approval management, authorization and interfacing with company financial
system.(M.Josegarrido-saminiego et al 2010) states that internet and information technology
has been applied to business strategy of most organizations. One of the areas which have
been widely influenced by information technology is procurement. E-procurement is the
outcome of applying e-commerce to organization purchasing activities.
(LindijaPulevska-Ivanovska 2004) : The action of conducting procurement operation
electronically and paper-free is called e-procurement which consists of whole operation of
procurement such as requisition, approval, shipping, etc. and not just buying process.
E-procurement encompasses “requisitioning, purchasing, transportation and in-bound
receiving process”. It starts with requisition for an item and ends with invoice payment (ibid)
E-procurement is defined as purchasing through internet and other information networks.
E- Procurement sites can be employed to purchase goods andservices, e-procurement
software automates purchasing processes, controls inventory, reduces purchasing costs and
increases efficiency.
There are three types of e-procurements:
• ERP which includes requesting and approval of purchasing process by utilizing
internet technology
• E-tendering which is the request of information and price from suppliers and
receiving feedback electronically
• E-sourcing which is the discovering and accessing new suppliers through internet
and web technology (ibid).
Dolmetsch et al 2000; cited in (Thomas puschmann and Rainer alt 2005) defines e-
procurement as the indirect goods supply chain management by using e-Markets and
information technology. (Jason R. Eaton 2003) stated that e-procurement as one of the
specific areas which deals with external transactions enables improvement on activities such
as purchasing raw material and services by using internet and web technology.
4.3 E-PROCUREMENT BENEFITS
(David Caffey 2009) believes that the significance of procurement process as a strategic
matter highlighted by introducing e-commerce and e-procurement which influences customer
and companies by its significant cost saving.
Aberdeen et al 2001 cited at (Thomas puschmann and Rainer alt 2005) believes that by
implementing e-procurement, operational process will be decentralized whereas strategic
procurement process will be centralized which results in higher supply chain transparency.
e-procurement benefits falls into two categories:
Direct :cost reduction which is achieved by firstly increasing efficiency in procurement
process. Process efficiency is defined as less employee time spending on searching,
authorizing, approval and ordering; secondly enables to reduce number of staff which
process each order by automatic validation of pre-approved budget for each person and
each department and thirdly by decreasing printing cost and paper cost of order forms and
invoices.
Indirect: decreasing cycle time between order and delivery and enabling greater flexibility for
supplier selection according to the best value.
The benefits of e-procurement as follows:
• Reduction in cost and procurement cycle time
• More effective budget control by limiting the expenditures and enhanced reporting
• Minimizing ordering and administrative errors
• Enabling originator to concentrate on strategic aspect of purchasing
• Decreasing the product price
• Enhanced information management
• Better payment process ( if it is integrated with e-procurement)
One of the important advantages of e-procurement is to reduce workload of purchasing
company by decentralizing the operational procurement process.
4.4 E-PROCUREMENT IN MARITIME INDUSTRY AND SHIP
MANAGEMENT COMPANIES:
(D.Ramasubramanian 2005) in his paper stated that from 2003 major marine operators are
spending on e-procurement as a business tool not just a faddish curiosity. Offshore oilrig
procurement process can be automated by using internet and web services to incorporate
oilrig owners, buyers, oilrig officers and vendors.
Oilrig owners gain great saving by implementing paper-less and automated procurement
process with their partners. The internet and web-based platform is reliable, easy to use and
cost effective which with these attributes can support business process, such as procurement.
(Mark Haslett 2005) procurement manager of Wallem ship management stated that they have
recognized the real profits of employing e-commerce into purchasing activities. He also
mentioned that procurement activities can perform faster and more controllable with applying
e-procurement system. It also facilitates access to information for all users and mangers in the
supply chain. By implementing e-procurement Wallem has an automated, secure and
extremely efficient supply chain which is a real competitive advantage.(Hansen 2005)
purchasing manager of Redri AS Stated that e-procurement has reduced paper work and
cycle time and also it allows fast reply to RFQ’s and order confirmation.
Sending RFQ’ is easier with e-procurement and transactions are more visible. It decreases
number of employees in purchasing department by reducing the time for request verification
and approval.
(Piet Jan ten Thije 2006), the general manager of e-commerce strategy with P&O Nedlloyd
believes that e-procurement in marine industry is not used to reduce the product price, it is
utilized to decrease the process cost. It offers good opportunity to reduce transaction costs
and increases control on purchasing process. (DonladStaffin 2006)DonladStaffin executive
vice president of e-procurement company iShipExchange believes that e-procurement has
focused on process cost reduction, process timereduction, controlling purchasing process and
linking the system to accounting department. The purchasing department in a shipping
company has a wide range of activities ranging frombuying spare parts, stores, fuels and
chemicals, provisions to exchanging containers. By implementing e-procurement the total
purchasing activities from purchase request, quotation to invoicing and delivery has been
improved causing ship management companies to achieve better purchasing practices in term
of cost efficiency.
 CHAPTER 5
RESEARCH METHODOLGY AND LIMITATIONS

Research is done to define a problem. Choosing a proper investigation itself depicts that the
problem is half-solved. This was the reason that utmost care was taken while defining the
parameters of the problem. A questionnaire was designed for the major emphasis of gathering
new ideas or insights so as to determine and bind out solution to the problems.

5.1 RESEARCH DESIGN:

A Research design is the arrangement of conditions for collection and analysis of data in the
manner that aims to combine relevance to research purpose with economy in procedure. Thus
it seeks to investigate the persons what influences them to act.
The research undertaken in this study is descriptive in nature.
Descriptive or Survey Research Design: It attempts to describe and explain conditions of
the present by using many subjects and questionnaires to fully describe a phenomenon.
Survey research design/ survey methodology is the one of the most popular for dissertation
research.
5.2 RESEARCH METHOD:
The research method used is survey method. This was chosen because it facilitates a
systematic gathering of data from the respondents. This method also helps in understanding
some behavioral aspects of the population being surveyed. The instrument used for the
research is a structured questionnaire. The survey was taken in the form of a interview
schedule.
5.3 QUESTIONNAIRE DESIGN:
The questionnaire used for primary data collection was structured and undersigned in nature.
The questionnaire consists of open ended and closed ended questions. Proper care was taken
to restrict the number odd questions but at the same time they were designed to cover the
scope and range of the project.
The respondents were interviewed and the level of understanding was found. The necessary
alterations were made.
5.4 SOURCES OF DATA:
Primary data:
The main method of data collection is primary in nature. The Primary data are collected
through various methods such as observation, communication, questionnaires etc with
Technical Superintendent, Team Leader and the Purchasers.
Secondary data:
The data is collected from the ESM records, ESM website and from the internet.

5.5 SAMPLING PLAN:

Most of the information was collected by distributing the questionnaires to the employees
who relatively belonged to the purchase department. These questionnaires were also prepared
in order to get relevant information regarding their perception towards the company and their
job to know their role in the procurement functions. The sample size is 50.
5.6 DATA ANALYSIS TOOL:
The tool used for data analysis is Microsoft Excel.
 CHAPTER 6
INDUSTRY PROFILE

6.1 OVERVIEW:
The growth in international trade, removal of trade barriers being the principal reason, has
made the developing countries to concentrate more on the improvement of their
infrastructure, like roads, airports, seaports, which play a vital role in the development of the
economy. Product storage, along with the capacity to move large shipments, have placed the
shipping industry in a very advantageous position. Containerization, multi-modal transport
services, advancement of marine engineering technology, specialized systems, and
Computerization have contributed towards making sea transport as a prime mode for
movement of internationally traded goods. However, the development of shipping industry in
a country also depends on its population density, economic advancement and many other
inter-related conditions, like port and refueling capacities.

The Indian shipping industry consists of about 616 ships, with a total capacity of 6.62 million
tons Gross Registered Tonnage (GRT). Of these, about 258 ships are engaged in overseas
trade and the rest ply inland routes. After a period of decline, both tonnage and fleet size have
grown recently, with the addition of ships — tugs, survey vessels, towing vessels as well as
pilot vessels — belonging to ports and maritime boards. These were added between April
2002 and March 2003. There are about 55 shipping companies in the sector, of which 19 deal
exclusively in coastal trade, and 29 are engaged in overseas trade. The rest operate in both
types of trade.A few major players dominate the sector. Of these, the state-owned Shipping
Corporation of India (SCI), and the private sector Great Eastern Shipping have mixed fleets.
Essar Shipping focuses on the energy trade and mainly operates tankers. Chowgule Shipping
and Varun Shipping are two other large companies in the sector. Varun Shipping operates
mainly in wet, dry bulk, gas and chemical transport sectors and Chowgule moves bulk
cargoes like iron ore, grain, coal, fertilizers etc.
The Indian peninsula is blessed with the coastline that extends up to 7,500 km on the three
sides. This provides ample opportunity to the Indian shipping industry and shipping
companies to contribute towards trading opportunities. Right from the ancient times, the
Indian coastline has been the destination for foreign traders hailing from different countries
of the world.
There are numerous ports that have been established in different states sharing the Indian
coastline. There are more than 900 ships of different kinds that are operated by the Indian
shipping industry. Many of them are utilized for the purpose of international trade.
India has a thriving economy and it is well-supported by it cargo shipping industry. The
Indian goods in different categories have earned great recognition in the global marketplace.
This has consequently helped the Indian shipping industry to grow as well. It is indeed
impressive to know that 90 percent of the trade from country is done with the help of ships.
Wet cargo is one of the most demanded trade entity from the Indian coastline. Due to
availability of crude oil in abundance, the wet cargo ships from India enjoy the opportunities
to participate in growing export from the country. Dry cargos as well as finished goods too
are advancing towards high levels of success.There are some challenges that the Indian
shipping industry needs to overcome to make its way towards the targeted goals. For
instance, the shipping companies need to collaborate with their foreign counterparts to ensure
all round development. Going further, the shipping companies in the country need to explore
the trade of goods like liquefied natural gas to earn more profit.
As per the reports, the number of vessels at the Indian coastline grew up to 912, with
shipping tonnage crossing the mark of 9.3 million tons. This helps the country to have a count
among top 20 nations with largest fleet size. Also, the country tops the list of developing
nations as far as shipping cargo industry is concerned. All these statistics indicate that the
Indian shipping industry is on the right track to achieve a good status globally.
THIRD party service providers, commonly called application service providers (ASPs), are
yet to make a mark in the IT industry. But in the shipping industry third party service
providers, called `ship management agencies, have for two decades now established
themselves as `providers of cost-effective vessel management to ship owners.
In the IT industry, an ASP offers the user a software product/solution for a fee. The user
worries neither about the back-end processing nor about the technology. The ASP takes care
of all this. However, the third party agency concept works differently in the shipping
industry. The owner, or a vessel charterer, sources only the cargo, while the ship is handed
over to the agency for a contract fee to manage and run it. The fee varies depending on the
age and type of the vessel (tanker, bulk, car carrier or container) and its size (Panamax or
Suezmax).According to industry sources, an agency can get around $10,000 per month for a
medium size vessel.
Ship management is the business of manning, equipping, provisioning and maintaining a
ship. It covers also the technical, commercial, and crew management. Technical management
includes maintenance, dry-docking and technical upgradation; commercial management
vessel deployment and sale and purchase, and crew management, recruitment and selection of
technical, deck officers and ratings.
Hiring ship management agencies has not caught on among Indian ship owners. But for more
than two decades, ship owners abroad have been using these agencies to manage ships cost
effectively. Some vessel owners abroad have even handed over their fleet to these agencies,
and concentrate only on procuring cargo and improving the companysbottomline, This could
give ship owners savings of 10-25 per cent than if they themselves run and maintain the
vessels.
Ship management companies are vessel management companies which manage, maintain and
deal with ship’s routine operations, maintenance and regulatory issues of the vessels. The
ship management refers to crew recruitment, commercial and technical management with
related task of operation, service and maintenance along with purchase and supply of required
equipment, spares, stores and logistic. The above task is performed by vessel owners or
performed by an approved ship management company (operator), selected, deployed and
authorized by the owner.
Nowadays, managing ships is very complex business; vessel management should be done
properly to ensure cost control so that the procedure being observed and economic estimation
being covered. Vessels should be well equipped and correctly maintained to conduct their
operation while maintaining the minimum downtime. It is essential that ship’s operators meet
the mission requirement at all times and ensure that effective communication link can be
established among operators, vessels and their owners
Where does India feature in this large global ship management industry? India is a large
supplier of skilled manpower to the ship management industry. Sources estimate that some
200 ship-management firms of different sizes could be operating out of India; the majority of
these are of foreign origin.
Some of the world’s best and largest ship management companies, such as Univan, Wallem,
Barbers, V Ships and Fleet Ship Management, have been in the country for long, and have
been recruiting seafarers.
Through detailed research and analysis the report examines the crucial factors shaping the
ship management market.
Ship Management report provides an independent and detailed assessment of the ship
management market, analysing the main areas of management, how it aligns with the overall
risk management evaluation and the options for outsourcing. Focussing on the implications of
ship management and the market for third-party ship managers, the report assesses the nature
of ship ownership, commercial management, technical management, administration and
training.
Commercial management
This section examines the shipping market and its economic cycles, the impact on ship
chartering and differences across industrial sectors. It also monitors and measures the
fundamentals of the freight market and rates. The report also analyses key ship running costs
and the influence of the forward market, the new building market and the demolition market.
Technical management
This focuses on the availability and costs of manpower and key management issues relating
to the crew alongside an evaluation of the ship repair and maintenance regime - including
classification requirements, equipment recommendations and policy choices and fuel-related
issues. Technical management also has a remit covering areas such as procurement policy
and the stores and supplies budget, insurance, regulatory requirements and response planning.
Administration
An analysis of the key activities associated with shipping companies covering the
unavoidable and the optional as well as the core administrative needs within a ship
management company.
Since India is located strategically on the international trade route, the country can offer ship
repair and maintenance services to ships plying from west to east in the trade route. This
represents increasing market potential for the ship-repair business, as ship owners may prefer
to repair their ships without deviating from their trade routes. The Ship-repair industry in
India will also get business from the Indian shipping industry, which has about 50% of ships
owned, older than 20 years. As the older ships require more frequent and extensive ship-
repair and maintenance, Indian ship yards could gear themselves to service them.
 CHAPTER 7

COMPANY PROFILE
7.1 OVERVIEW:
Executive Ship Management with its head office in Singapore represents a new era of ship
management with style, finesse and expertise which stands over and above the rest in the
international ship management arena. They provide a very specialized and customized ship
management service which is the present day requirements of the 21st century ship owner.
They are a combination of traditional values of trust, sincerity, integrity, hard work and fair
business practices together with a modern technology oriented management system.
A one-stop management service offering all aspects of cost-effective ship management with a
quality of the highest order.
It is their management policy and philosophy to be competent and accountable to our clients
in all areas of business. They believe in teamwork both within and with the clients to ensure
the best possible solutions to any problem.
A first class bachelor degree holder of Mechanical engineering and Degree in Marine
engineering from India's most premier Directorate of Marine Engineering, B.S.Teeka started
his sailing career in 1979 with the Shipping Corporation of India as a junior engineer.
Subsequently he joined a Hong Kong management company as a fourth engineer and began
an odyssey which landed him in the position next to none other than the founder of the
company within 14 years of joining.
A well-known name in the professional ship management circle in the international world,
Mr. Teeka decided to venture alone into the world of ship management with the opening of
Executive ship management in Singapore. Within three years the company has bloomed into
one of the most professionally run ship management companies in the far east.
ESM under the able leadership of Mr. Teeka has been one of the very few companies in the
world, which was granted ISM certificates from DNV, Norway and NK, Japan from the day
the operation of the company started.
The idea was not to impress the clients but to put the house in order from the day one as an
efficient and organized ship management company.
A proactive and prompt management style together with the high tech computerization
essentially differentiates ESM from its competitors in the international arena.
Following the vision of Mr. Teeka, ESM has embarked on giving a new face to the ship
management profession through the infusion of the latest computer and information
technology. As ship manager are closer to the principal than ever before due to the
technology and never before could any principal monitor their vessels under a manager the
way it is possible through them.
7.2 COMPANY VALUES AND PRACTICES:
Executive Ship Management believes and adheres to:
• The highest form of professionalism
• Universal values of trust, honesty, and sincerity above the entire fair Business
practices. Sophisticated and superior technology
• Teamwork both within the organization and with their clients
And they provide:
• A customer oriented tailor made management service
• Proactive management due to quick professional decision by a group of experts
• A hassle-free operation for the owners due to close monitoring by the supervising
team
• An environment friendly management with top emphasis on safety and protection
• Comprehensive and regular reporting
7.3 COMPANY STRUCTURE:

FIG7.1 ORGANIZATIONAL CHART OF ESM

7.4 SERVICES:
Successful ship management depends mostly on competence, systems, crew, staff &
personnel and the right blend of experience. Executive Ship Management is exactly the same
by evolving a system, which produces the desirable results for their clients by all means.
Their achievement is a cost effective and efficient ship management service of international
standard. It is the management commitment to keep all vessels under us operational ready in
terms of technical, crew and any certifications related to technical and crew matters.
In case of chemical tankers or tankers the company undertakes that the vessel is ready for any
oil major inspection at any given point. In fact, all the chemical tankers have been rated by
the oil majors like Exxon Mobil, CDI, Shell, and BP etc as high as average 98% pass rate.
They are ISM certified by DNV, Norway and NK, Japan. In fact, they hold an unique record
of starting the company with the ISM certificates from the word go. A transparent accounting
system allowing the principal to view every area of ship accounting, purchasing of stores and
supply from the company's own database with the help of ERM Anywhere. The wide range
of services include
Technical management
• Technical support
• Operation
• Maintenance and Repair
• ISM compliance/ Safety and Quality Assurance
• Store and Purchase
• Regular maintenance/ Performance report
• Specialization and expertise like handling chemical tankers, gas carrier, open hatch
bulk carrier, panamax bulk carrier, container, car carrier etc.
• Dry-docking
Crew management
• Selection
• Training
• Certification
• Evaluation & assessment report
• Administration
• Drug and Alcohol policy
Commercial management
• Agency
• Chartering
AdditionalServices
• Insurance
• New Building supervision
• Change of Flag
• Survey and inspection for sale and purchase
 • Cargo supervision for specialized vessels and cargo
• Tank cleaning expertise for chemical tanker
7.4.1 TECHNICAL MANAGEMENT:
Executive ship management is reputed for its high level of technical expertise. The technical
team comprises Indian and Japanese engineers of the highest calibre and with decades of
experience in their respective field. All technical matters as in line with the company policy
are handled proactively and preventive measures taken accordingly. This is the simple reason
that the vessels under their management go for dry-dock without keeping any surprise for the
owners.
Under the strict vigilance and monitoring of their highly qualified and experienced
superintendents, they ensure that each and every vessel under the management is maintained
at her top condition at all times.
All vessels under the management deploy the Computerized Maintenance System; linked
with ship/shore communication for updating databases and is integrated with the office-based
software, ERM Anywhere for efficient communication.

This enables information to be shared between vessels and shore offices, providing reports
and statistics essential to onboard management and safety, thereby assisting the
superintendents to monitor and evaluate the status of the vessels' performance at any given
point.
This also enables their principals to view the day-to-day performance of their vessel through
the net while sitting anywhere in the world. The Technical Superintendents also inspect
vessels at a regular period of two to three months to monitor the performance first hand.
The company strictly adheres to the budget agreed mutually with the Owners and any saving
in the budget is readily returned to the Principal.
This is possible due to the strict proactive policy of maintenance, supervision and execution
of procedures. The superintendents are authorized and encouraged to take responsible
decisions pertaining to their vessels such that no maintenance is hampered for lack of
proactive decision.
Each superintendent at shore is assisted by a technical assistant and purchaser to source all
requirements of the ship at the most cost-effective manner.
Due to the company's outstanding record of professionalism and business practices, they
enjoy a highly competitive rate from various vendors and suppliers and the benefits have
been passed on to their Principals.
They offer expert services in specialized vessels like chemical tankers, crude and product
tankers, open hatch bulk carriers, gas carriers and panamax bulk carriers. All their chemical
tankers have passed all the oil major inspections with an average of 98 per cent and regularly
trade in areas like US, Japan, Europe.

The company's computerized accounting system is simple and straightforward and

particularly geared towards providing swift information to the principal. It is also particularly
equipped to provide an owner his accounting in the format he or she understands best.
7.4.2 CREW MANAGEMENT:

ESM puts utmost emphasis on the quality and

efficiency of the each crew
put on board. Six recruiting cum training offices in
India; Mumbai, New Delhi, Chandigarh, Chennai,
Kochi and Kolkata, ensure the same standard
throughout the company.

Selection

• ESM follows a stringent and consistent policy of recruiting the most eligible
candidates through a system formulated with many years of experience of the team
working in the field
• The selection procedures strictly adhere to the STCW95 conventions and ISM codes.
• All crew are Indian nationals and speak English. The company strictly follows the one
nationality policy on board to avoid any miscommunication and consequent breach of
safety rule on board.
• With a high level of education and extensive training both ashore and on-board,
Indian crew and officers have made a place for themselves as one of the best
merchant navy hands in the international shipping market.
Training

Training is a part and parcel of good crew management. ESM ensures that each crewmember
recruited has a high standard of training and qualification prior joining a ship. Samundra
Institute of Maritime Studies (SIMS), located at Mumbai, India is the in-house post-sea
training facility of the company offering exclusive world-class training to the ESM crew.

The pre-sea training facility of the institute is located at Lonavala, Maharashtra and we are
proud to train all qualified deck and engine cadets passing out of SIMS, Lonavala on board
ESM managed ships.

Administration

• Apart from the recruitment and training, company also takes care of all administrative
aspects of crew requirements including travel plan for joining vessel, visa,
repatriation, payment and accounting of wages, overtime and bonus.
• Medical tests and fitness certification

• Working gear for the crew as per safety and environmental protection policy of the
company
• Administration ensures that any certification under the flag state requirements are
promptly followed and adhered to.
• Each vessel under the management is connected with all crewing offices in India
through all electronic media including email and satellite communication apart from
the traditional modes like telex, fax etc. so that any crew matter can be directly dealt
with by the crew manager(s) concerned.
7.5 QUALITY:

They have established Integrated Management System (IMS) incorporating the Quality (ISO
9001:2000), Environment Management (ISO 14001), Occupational Health and Safety
(OHSAS 18001) standards and ISM Code requirements. In factthe vessels regularly calling
US ports have been recommended for their high standard of safety and pollution prevention
measures.

FIG 7.2 CERTIFICATION OF QUALITY

The Integrated Management System has been approved by DNV and Class NK. The
documentation of the IMS has been structured into four tiers as follows:

1. The Quality Management Manual

2. Procedures including job descriptions
3. Work instructions
4. Forms and records.
The shore based documents consists of:
1. Quality Management Manual
2. Technical Department Procedures
3. Accounts Division Procedures
4. Fleet Personnel Office Manual
5. Emergency and Contingency Planning Manual
 6. Approved workshops and suppliers
The Shipboard documentation consists of:
1. Quality Management Manual
2. Vessel Operation Manual and Vessel type specific Manual (as per type of ship)
3. Forms Manual
4. SOPEP/SMPEP
5. Emergency and Contingency Planning Manual and Ship Security Plan
6. Health, Safety and Environment Manual
7. Engine Room Procedures and Bridge Management Manual
These Manuals form the very core of the Integrated Management System. They document the
policies and procedures to be followed both on board ships as well as ashore in meticulous
detail and to ensure that the aim of ZERO quality losses and “ON TIME ALL THE TIME” is
being achieved at all times.

Training forms an integral part of our safety culture and to this end our in-house training
institute SIMS imparts pre-joining training and familiarization to all our seafarers.
Finally audits are periodically done every six months in the office and at least yearly on our
ships. This assists us to weed out system defects and to continually improve the IMS system
to make it more effectively and user- friendly.

PROCUREMENT PROCESS IN ESM

7.6 E-PROCUREMENT IN ESM

ESM (Executive Ship Management) has started applying electronic tools on its
procurement processes since 1999. During the past 11 years, there have been a lot of change
in the software structure but the method of procurement and procurement cycle has not been
changed.
 SERVICE
SUPPLIER

SHIP
SHIP OPERATOR

STORE/SPARE
SUPPLIER

FIG 7.3 ESM PROCUREMENT CYCLE

As can be seen in figure the request for an item or service from ships will be sent to ESM
through e-procurement software, after superintendent approval based on type of information
and vessel position, a request will be send to suppliers. If the supplier software is integrated
with ship management company software, system will automatically send the order;
otherwise an order will be generated by the software normally on a common format such as
text and after attaching, the email will be sent to the supplier. Whenever the ship receives the
item or service, the request status will be updated and the payment to supplier will be carried
out .
7.7 PROCUREMENT PROCESS:
Procurement Process includes as usual 8 main stages as follows:

1. Analyzing the need for stores/ spares or requisition from vessel

2. Request For Quote (RFQ)
3. Making Purchase Decision/ Getting approval
4. Placing Orders
5. Receipting Goods and Services Received
6. Accounting Goods and Services
7. Receiving Invoices and Making Payment
8. Debit note in case of material defect
7.8 PROCUREMENT MANAGEMENT PROCESS:
Purchasing Management Process consists usually of 3 stages:
• Purchasing Planning
• Purchasing Tracking
• Purchasing Reporting

7.8.1 Purchasing planning:

Purchasing Planning may include steps as follows:
• creating purchasing projects and tasks
• providing related information (files, links, notes etc.)
• assigning purchasing tasks to employees
• setting task priorities, start/finish dates etc.
• assigning supervisors
• setting reminders
• control and evaluation
7.8.2 Purchasing Tracking:
Purchasing Tracking consists of:
• checking task's status and/or history of changes
• receiving status notifications
• sorting, grouping or filtering tasks by current status
• highlighting overdue tasks
7.8.3 Purchasing Reporting:

Purchasing Reporting includes:

• comparing actual and estimated values

• calculating purchasing task and project statistics
• sorting, grouping or filtering tasks by attributes
• creating charts to visualize key statistics and KPIs
7.9 AMOS SOFTWARE:

AMOS is a fully integrated software package used in the context of aviation maintenance,
repair, and operations (MRO). AMOS helps Ships to manage the maintenance, engineering,
and logistics requirements of modern fleets. AMOS is distributed and developed by Swiss
AviationSoftware Ltd.

AMOS consists of ten highly interlinked core modules that are prerequisites for the system’s
data quality and reliability. Written in pure Java, AMOS is hardware independent, fully web-
enabled, and does not need any external software components, except for the database.

Over the past few years, AMOS has been the most widely used MRO software in Europe and
is nowadays one of the three top-selling MRO packages worldwide.

7.9.1 WORKING WITH AMOS:

Receive Requisitions

Import data from various local installations to the main office. See Chapter 10.

Make Queries

Whenyoudon’thaveapreferredvendor,oryouaregoingtopurchaseitemsforthefirst time, you can

make a query to potential vendors. See Chapter 6.

Compare Quotations

You receive quotations in response to queries you send out. You record them,
andhaveAMOScalculatethetotalpriceofeachquotation.Youcancomparequotations,and have
AMOS recommend a vendor.

Create Purchase Orders

When you have decided to create a purchase order, you can create a new one, orconvert a
requisition or a query into a purchase order.
Approve Purchase Orders

Iftheorganisationrequiresthatapurchaseorderbeapprovedbysomeoneotherthanthe purchaser,
there is a separate function for this

Track Purchasing

Answer questions such as: Has the purchaser started to work with my lastrequisition? Was
the order approved? Was it confirmed? When is it expected toarrive? What purchase orders
are still active?

Receive Goods

Basedonpurchaseorders,markgoodsreceived,automaticallyupdatingstock.

Track Costs and Budgets

What have I spent so far this month? This fiscal year? How much of the budgetedamount
remains for this period? Save and analyse costs due to unexpectedmaintenance over time to
evaluate and improve preventive maintenance program.

FIG 7.4 MAIN TOOL BAR OF AMOS

 FIG 7.5 WORK ORDER WINDOW

7.10PROCUREMENT STRATEGY:
To achieve the desired results in any activity especially, the procurement and that too, where
huge quantity of material is required, a specific strategy is very much required which should
reflect the organizational goal.
So, a Procurement strategy was formulated after discussion with the top management, so as to
achieve the maximum sales margin from the project , as the value of material to be procured
was very high and to get max benefit it was suggested to go for individual procurement and
pricing strategies for each type of equipment.
7.10.1 PRICING STRATEGY:
To get the best prices from the suppliers, so as to increase the sales margin, a pricing strategy
is very much required at our end. Since the no of suppliers for the total required material was
too much, it was suggested to go for a individual level pricing strategy, for each type of
material, rather than going for a project specific pricing strategy.
For pricing strategy for individual equipment, following factors were suggested to
Be considered
 a. Long term partnership,
b. Back-to back arrangement,
c. Effective negotiation,
d. Benchmarking,
e. Market survey
The cost considered at the time of tender was considered as the target cost and efforts were
made to match the final price with that or even less than that based on above mentioned
factors strategy.
7.10.2 LOGISTICS STRATEGY:
It is a tedious process to handle a big vessel because of its complex built, infrastructure and
the machineries in it. More than a million part is involved in the parts of a single vessel which
includes both stores and spares. More than 100 suppliers are tied up with the company and
the procurement is processed according to the geographical location of the vessel’s voyage.
The options available for the logistic issue are
1. To handle the transportation within the company’s scope,
2. To give the transportation of material in the supplier’s scope.
 CHAPTER 8
DATA ANALYSIS AND INTERPRETATION

Table no 8.1 Respondents of age classification

Age group (yrs) Frequency Percentage Cummulative

Percentage
20-30 15 15 15
30-50 25 25 40
50 & above 10 10 50
Total 50 50

Chart no 8.1 Respondents of age classification

30

25

20

15

10

0
20‐30 30‐50 50 & above

Interpretation:
From the above figures it is interpreted that most of the respondents are of the 30-50 yrs, 30%
are in the age of 20-30 and 20% are above 50 yrs.

Table no 8.2 Respondents ofwork experience

Experience (Yrs) Frequency Percentage Cumulative
Percentage
Less than 2 10 10 10
2-5 28 28 38
More than 5 12 12 50
Total 50 50

Chart no 8.2 Respondents ofwork experience

30

25

20

15

10

0
less than 2  2 to 5 more than 5

Interpretation:
From the above figures it is interpreted that 20% of the respondents have less than 2yrs of
experience, 56% of them have 2-5 yrs of experience and the remaining have more than 5yrs
of experience with the company.

Table no 8.3 Respondents of Fleet handling

Fleet Frequency Percentage Cumulative
Percentage
A 17 17 17
B 10 10 27
C 23 23 50
Total 50 50

Chart no 8.3 Respondents of Fleet handling

25

20

15

10

0
A B C

Interpretation:
From the above figures it is interpreted that Fleet C is been handled by 46% of the
respondents, while Fleet B is handled by 20% of them and Fleet A is been handled by 34% of
the respondents.

Table no 8.4 Respondents of No of vessels handled

No of Vessels Frequency Percentage Cumulative
Percentage
1-3 3 3 3
3-5 7 7 10
More than 5 40 40 50
Total 50 50

Chartno 8.4 Respondents of No of vessels handled

45
40
35
30
25
20
15
10
5
0
1 to 3 3 to 5 more than 5

Interpretation:
From the above figures it is interpreted that 80% of the respondents handle more than 5
vessels, 3-5 vessels are been handled by 14% and a very low of 6% of them handle 1-3
vessels.

Table no 8.5 Respondents of Segregation of duties

Status Frequency Percentage Cumulative
Percentage
Yes 41 41 41
No 9 9 50
Total 50 50

Chart no 8.5 Respondents of Segregation of duties

45
40
35
30
25
20
15
10
5
0
Yes No

Interpretation:
From the above figures it is interpreted that 82% of the respondents say that there is
segregation in the duties while 18% feel that there is no enough segregation of duties.

Table no 8.6 Respondents of vendor selection

Criteria Frequency Percentage Cumulative

Percentage
Accountability 4 4 4
Cost 30 30 34
Punctuality 7 7 41
Working relationship 3 3 44
Speed 6 6 50
Total 50 50

Chart no 8.6 Respondents of vendor selection

35

30

25

20

15

10

0
Acountability Cost Punctuality Working  speed
relationship

Interpretation:
From the above figures it is interpreted that 60% of them select vendor based on cost, 8% on
accountability, 14% on punctuality, 6% on working relation and 12% on Speed.

Table no 8.7 Respondents of Satisfaction of current method

Status Frequency Percentage Cumulative

Percentage
Yes 34 34 34
No 16 16 50
Total 50 50

Chart 8.7 Respondents ofSatisfaction of current method

40

35

30

25

20

15

10

0
Yes No

Interpretation:
From the above figures it is interpreted that 68% of the respondents are satisfied with the
existing method and the remaining 32 % are not satisfied.

Table no 8.8 Respondents of need for further improvements

Status Frequency Percentage Cumulative

Percentage
Yes 5 5 5
No 45 45 50
Total 50 50

Chart no 8.8 Respondents of need for further improvements

50
45
40
35
30
25
20
15
10
5
0
Yes No

Interpretation:
From the above figures it is interpreted that 90% of the respondents do not require further
improvements in the existing system while 5% need some improvements.

Table no 8.9 Respondents of support for the type of Procurement system

Criteria Frequency Percentage Cumulative

Percentage
Traditional 5 5 5
E-Procurement 45 45 50
Total 50 50

Chart no 8.9 Respondents of support for the type of Procurement system

50
45
40
35
30
25
20
15
10
5
0
Traditional E‐Procurement

Interpretation:
From the above figures it is interpreted that 90% respondents chose the E-Procurement
system while 5% chose the traditional system of procurement.

Table no 8.10 Respondents of advantages of E-procurement

Criteria Frequency Percentage Cumulative

Percentage
Budget Control 27 27 27
Timely payments 16 16 43
Transparency 7 7 50
Total 50 50

Chart no 8.10 Respondents of advantages of E-procurement

30

25

20

15

10

0
Budget control Timely payment Transparency

Interpretation:
From the above figures it is interpreted that 54% respondents find the budget is controlled,
32% feels that there is timely payment of bills and the remaining 14% feels that there is
transparency in the supply chain system.

Table no 8.11 Respondents of impact on administrative costs

Criteria Frequency Percentage Cumulative

 Percentage
Cycle time 27 27 27
Paper &Printing Cost 13 13 40
Communication 10 10 50
Total 50 50

Chart no 8.11 Respondents of impact on administrative costs

30

25

20

15

10

0
cycle time paper &printing communication

Interpretation:

From the above figures it is interpreted that 54% respondents feel that the impact of E-
Procurement system has caused reduction in the cycle time, 26% feels that the printing and
the paper cost has been reduced and the remaining 20% feels that the communication cost has
come down.

Table no 8.12 Respondents of impactonpurchasing and supply errors

Criteria Frequency Percentage Cumulative
Percentage
Cycle time 35 35 35
Paper &Printing Cost 5 5 45
Communication 10 10 50
Total 50 50

Chart no 8.12 Respondents of impact on purchasing and supply errors

40

35

30

25

20

15

10

0
Electronic records Control No Effect

Interpretation:

From the above figures it is interpreted that 70 % of the respondents feel that the errors have

reduced due to electronic records, 10% of the respondents feel that the errors have reduced

because of more control while 20 % feel that there is no such effect on the errors.

Table no 8.13 Respondents of importance of business benefits

Criteria Frequency Percentage Cumulative
Percentage
Important 48 48 48
Less important 2 2 48
Unimportant 0 0 50
Total 50 50

Chart no 8.13 Respondents of importance of business benefits

60

50

40

30

20

10

0
Important Less Important Unimportant

Interpretation:

From the above figures it is interpreted that 96% of the respondents chose the vendors based

on the criteria of business benefits and the remaining 4% feel that the criteria is less

important.

Table no 8.14 Respondents of importance of vendor responsiveness

Criteria Frequency Percentage Cumulative
Percentage
Important 48 48 48
Less important 2 2 48
Unimportant 0 0 50
Total 50 50

Chart no 8.14 Respondents of importance of vendor responsiveness

60

50

40

30

20

10

0
Important Less Important Unimportant

Interpretation:

From the above figures it is interpreted that 96% of the respondents chose the vendors based

on the criteria of vendor responsiveness and the remaining 4% feel that the criteria is less

important.

Table no 8.15 Respondents of importance of vendor reliability

Criteria Frequency Percentage Cumulative
Percentage
Important 48 48 48
Less important 2 2 48
Unimportant 0 0 50
Total 50 50

Chart no 8.15 Respondents of importance of vendor reliability

60

50

40

30

20

10

0
Important Less Important Unimportant

Interpretation:

From the above figures it is interpreted that 96% of the respondents chose the vendors based

on the criteria of vendor reliability and the remaining 4% feel that the criteria is less

important.

Table no 8.16 Respondents of status of suppliers

Criteria Frequency Percentage Cumulative
Percentage
Stayed same 0 0 0
Reduced 0 0 0
Increased 100 100 50
Total 50 50

Chart no 8.16 Respondents of supplier status

60

50

40

30

20

10

0
stayed same reduced increased

Interpretation:

From the above figures it is interpreted that 100% of the respondents feel that the vendor’s

have increased in the last 5 years.

Table no 8.17 Respondents of Communication with vendors

Criteria Frequency Percentage Cumulative
Percentage
E-mail 30 30 30
Telephone 20 20 50
Face-to-Face 0 0 50
Others 0 0 50
50 50

Chart no 8.17 Respondents of Communication with vendor

35

30

25

20

15

10

0
E‐mail Telephone Face‐Face Others

Interpretation:

From the above figures it is interpreted that 60% respondents say that they communicate

frequently with the vendors through E-mail, 40% say it is done through telephone.

Table no 8.18 Respondents of PO execution

Status Frequency Percentage Cumulative

Percentage
Yes 23 23 23
No 27 27 50
Total 50 50

Chart no 8.18 Respondents of PO execution

28
27
26
25
24
23
22
21
Yes No

Interpretation:
From the above figures it is interpreted that 54% of the respondents say that purchase orders
valid, properly executed as to price, quantity and vendor and 46% respondents say that the
purchase order is not properly executed.

Table no 8.19 Respondents of information exchange with vendors

Status Frequency Percentage Cumulative

Percentage
Frequently 40 40 40
Informally 0 0 40
Timely manner 10 10 50
Total 50 50
Chart no 8.19 Respondents of information exchange with vendor

45
40
35
30
25
20
15
10
5
0
Frequently Informally Timely manner

Interpretation:

From the above figures it is interpreted that information is frequently exchanged with the

vendor according to 80% of the respondents and 20% feel that it is done in a timely manner.

CHAPTER 9
FINDINGS OF THE STUDY

Data collected from the organization under study confirms the effectiveness of e-procurement
on cost reduction. According to the data collected through questionnaires, using electronic
procurement systems reduce costs in the process of procurement directly and indirectly in
ESM.

E-procurement direct cost reduction has been achieved into two areas, first of all reducing
costsof communications such as mail, telex etc. in comparison with the traditional
procurement and secondly reducing the cost of papers and printing. If we accept time is
valuable in shipping industry due to high cost of vessel’s delay, the e-procurement
application indirectly reduces costs by accelerating the procurement process in ship
management companies. Another indirect cost reduction is also concerned with time
reduction, with employing e-procurement, vessel’s procurement orders are being received
faster which creates more opportunities to choose the most cost-effective goods, services and
supplies in the best place.

CHAPTER 10
SUGGESTIONS AND RECOMMENDATIONS

• Concerning the efficiency improvement, it is recommended to control the number of

procurement requests issuing by vessels, this will minimize the workload on the
system. It can be done either by software limitation or applying special
organization rules on order issuing.

• Reengineering of procurement process in ESM should be carried out to minimize the

 complexity and bureaucracy and increase the system efficiency.

• Concerning inventory management, ESM should solve the problem of connectivity

between maintenance and procurement software, in this way ship stuffs will only fill
the information in one of these two softwares not both and this will reduce the
workload on board of vessels.

CHAPTER 11
LIMITATIONS OF THE STUDY

• The study is based upon small population size of 50 samples.

• Since time duration is short it was not possible to conduct elaborate study.
• Inconvenience in meeting the vendors for data collections.
• The study has been done mainly for academic purpose and duration of the project is a
major constraint.
• The Project data can be valid up to six months, Hence there are chances of changes in the

findings and result obtained.

CHAPTER 12
CONCLUSION

The purpose of the research was to provide better understanding of the impact of
e-procurement in performance of ship management companies. The research result indicates
that in overall implementation of electronic procurement has enhanced performance in
the Executive Ship Management Pte Ltd. From the questionnaires we have confirmed that the
performance has increased dramatically. Through the questionnaires it also reflects that lack
of performance improvement was not related to the electronic procurement system and it was
mostly due to the managerial and systematic problems.

Generally e-procurement is found effective in increasing performance and it can be utilized

as a beneficialtool, especially during economic crises in shipping companies.

ANNEXURE I
BIBLIOGRAPHY

• K. Ashwathappa, K. ShridhararBhat –“ Production and Operations Management”

• YÜRÜYEN, U. M. (2002). "E-commerce Applications in Liner Shipping,."
• Judith Gebauer-Carrie Beam andArieSegev (1998). "IMPACT OF THE INTERNET ON
PROCUREMENT
• J.R.Kuehmayer (2002). "E-business in the maritime industry's supply chain invironment."
• Gupta. S.P “ Statistical Methods” Sultan Chand and Sons Publishers, New Delhi, Thirty
Fourth Edition, 2005.
D.Ramasubramanian (2005). E-procurement making waves offshor. Offshore Magazine.

• www.executiveship.com
• https://pure.ltu.se/ws/files/32801290/LTU-EX-2011-32635061.pdf

ANNEXURE II
QUESTIONNAIRE

A STUDY ON THE IMPLEMENTATION OF

E- PROCUREMENT AND ITS
PERFORMANCE EFFECT ON EXECUTIVE SHIP MANAGEMENT PTE LTD
1. Name :
2. Designation :
3. Department :
4. Sex :
[ ] Male [ ] Female
5. Age :
[ ] 20-30 yrs [ ] 30-50 yrs [ ] 50 & above
6. How long have you been working with this company?
[ ] More than 5yrs [ ] 2-5 yrs [ ] less than 2yrs
7. Which Fleet do you handle?
[ ] Fleet A [ ] Fleet B [ ] Fleet C
8. How many vessels do you handle?
[ ] 1-3 [ ] 3-5 [ ] More than 5
9. Is there adequate segregation of duties to each employee to be responsible for purchasing
and voucher approval?
[ ] Yes [ ] No
10. What is the criteria you follow to select your vendor?
[ ] Accountability [ ] Cost [ ] Punctuality [ ] Working relationship
[ ] Speed
11. Are you satisfied with the procurement method that is currently used?
[ ] Yes [ ] No
12. Do you anticipate any further improvements in the existing system?
[ ] Yes [ ] No
13.Which of the system do you support for the work environment?
[ ] Traditional Procurement System [ ] E- Procurement System
14.What do you think is the main advantage of E- Procurement system?
[ ] Budget Control [ ] Timely Payments of bill [ ] Transparency in supply chain
15.The implementation of e-procurement impact administrative costs by the reduction in
which of the following?
[ ] Cycle time reduction [ ] paper and printing costs [ ] communication costs

16.How does e-procurement impact purchasing and supply errors?

[ ] Electronic records [ ] Control by more people [ ] No Effect

17.During the procurement decision how important is the criteria of clear business benefits?
 [ ] Important [ ] Less important [ ] Unimportant
18. During the procurement decision how important is the criteria of vendor responsiveness?
[ ] Important [ ] Less important [ ] Unimportant
19. During the procurement decision how important is the criteria of vendor reliability?
[ ] Important [ ] Less important [ ] Unimportant
20. Has the number of suppliers to the organization changed in the last five years?
[ ] Stayed same [ ] Reduced [ ] Increased
21. Communication with vendor is frequently done through
[ ] E-mail [ ] Telephone [ ] Face-to-Face meetings [ ] Others
22. Are all the purchase orders valid, properly executed as to price, quantity and vendor?
[ ] Yes [ ] No
23. How does the exchange of information take place with the vendor?
[ ] Frequently [ ] Informally [ ] Timely manner