Talking data and analytics is one thing, but implementing a successful programme is another. We talk to procurement analyst Ivo Arts about his experience doing just that, about the challenges and benefits of data, and why shipping is ready for change
The need for data and analytics programmes has been well documented across the shipping media, but their implementation less so. Justifying a transition from old methods to new is a major challenge for shipping companies. Resistance to new ways of working is common because legacy problems ranging from culture to software, data and systems still pervade.
To a very real extent, working through that transition is unchartered territory. From the outset, the goal is to improve efficiency, generate value and reduce costs; how that is achieved is not clear until the data is analysed, and insight drawn from it. It is an iterative process that improves and compounds with time, but that will look different from one organisation to the next.
It is also an approach that relies less on human intuition and more on fact and truth uncovered by machines. To that end, a new generation of professionals populates procurement departments. These analysts are charged with uncovering insight from data that can be actioned and implemented across the supply chain.
Having been part of the team at Vroon that introduced a data-driven and analytical approach, procurement analyst Ivo Arts is well versed in the benefits and challenges such an approach brings to the shipping industry. He has a very clear understanding of how data is best used in the maritime procurement setting because he has built and revised an approach that facilitated major savings for the company. We sat down with Ivo to talk about his experience at Vroon and why he thinks it is inevitable that maritime procurement will become data-based.
There were three of us in the department. There was a Group Head of Procurement, a Category Manager and me as an Analyst. In general, we were responsible for carrying out the ideas of senior management to the companies we had globally. The Category Manager dealt with all the large suppliers and large contracts for the major items – lubes, paints, safety items – while I was analysing all the data, providing an insight into the process. I was able to see what was being spent where, by whom and on what. I could identify where we needed to save.
When I joined, procurement was just launched in Vroon. It was the start of a change in mindset. Everything was being reset and processes were becoming more important to re-evaluate. We had several management companies. Often, suppliers did not even know that they were part of the bigger purchasing group. So, there was no knowledge about what we did as a group. That changed quite quickly after introducing the analytics programme. One of the first things they did was address the way they ordered, moving away from written text orders that were impossible to analyse. We moved over to a system that allowed us to trace and categorise every item we bought per vessel.
It was by no means a perfect approach. There were still big gaps in the dataset. I could not see in which port items were bought and I could not categorise by location. But the new process was still a big leap and we could demonstrate that big financial savings were being made.
We had way better clarity almost overnight and had much better insight into when things went wrong. We were able to change the mentality of buyers towards suppliers, for example. Instead of hunting for suppliers to fix a problem, we adopted a group mentality. We had certain preferred suppliers that we had agreements with on quality, on price and on delivering accommodations.
We changed the approach to procurement. It went from one that was predominantly transactional to one that was much more strategic. The purchasers did not have to think when it came to lube oils, paint and safety gear. They knew whom to order from and what to order in terms of quality. There were savings too.
It sounds ideal, but the reality was that it was not perfect. There was a lot of resistance, a lot of people stuck in the old mindset of ‘find supplier and buy.’ A lot of the time, it was difficult for us to get information from certain regions too, so the cultural resistance was a bit of a problem. To an extent, it undermines the use of data and analytics.
People really want the change to data, but there still is the whole hurdle of, “Don't touch my company. Don't touch my area of working.” With the data I could say, “I am only providing you with insight. You have your own area where you can work. You have your own insight. You are in control.” “I am not in control; you are. Use this data to improve, and we would like to provide assistance in optimising, but you still have the control, and we provide a clear view on what is happening. It is not something secret. It is not our perception of things. It is what is there in the data.”
Analytics was a major force in the way we did things. We could demonstrate without doubt that things were happening in a certain way. With the analytics, I could send out newsletters, and I did, regularly, with status updates on who was performing on what level to certain KPIs. It gives so much more clarity and so much more insight. In the past, I think procurement has been done on instinct and perception rather than fact, especially in the maritime industry. Often, purchasers have no clue what there're buying, where they're buying it from. They do it on the spot, and they have no clue what they did last month. So, in that respect, the data was a very, very strong tool to work with.
So, is the industry ready? Yes, I definitely believe that the industry itself is ready. Will there be a lot of people that resist the change? Yes, of course. But I do think the whole shipping industry is ready for a big leap in data. I think it is only a matter of time before the whole procurement departments globally, in every shipping company, have embraced the whole big data they get from those vessels in its entirety.
This article was originally published in the Marine Trader, IMPA’s official journal for maritime procurement and supply chain management, in issue 04 of 2019. Head over to www.impa.net to find out more or simply read new issues on the go with the MT Journal app.