Blog
    |
Online solution for Mitsui O.S.K Lines simplifying bunker procurement and enhancing efficiency
Summary
Mitsui O.S.K. Lines (MOL) is one of the world's largest shipping companies, operating a diverse network of container shipping and logistics services around the globe. Headquartered in Tokyo, Japan, MOL was formed in 1964 by the merger of Mitsui Steamship Co. (founded in 1878) and O.S.K. Lines (founded in 1884). In April 1999, MOL merged with Navix Line Japan, to become the world's largest shipping company.
MOL operates a modern, diverse fleet of approximately 500 vessels and has a network covering North America, Europe, Asia, Russia, Africa, South America, Australia, and New Zealand. MOL has the largest fleet when measured in dead weight tonnage.
Challenge
MOL operates a large fleet of modern vessels spread across the globe and has huge bunkering needs. MOL has policy of following centrally managed bunker procurement model. The inherent operational complexities of centrally managed bunker procurement model and number of activities performed in short listing supplier for each bunker requirement, increases the procurement cost and in turn, hit the profit margins. The large number of bunkering requirement and amount of paper work involved for each requirement may reduce efficiency.
MOL needed a system to manage its procurement centrally, find suppliers and get delivery at the desired ports.
Solutions
Calsoft done a detailed study of MOL bunker procurement model and during solution definition phase, proposed an online private procurement solution for bunkering needs. The solution was build on Calsoft's MarketServer and helped MOL to manage all aspects of bunker procurement process including Operators assigning request to a Buyer, Buyer contacting available suppliers and conducting Auction/Open bid, final receipt of invoice.
MarketServer is an integrated framework for e-marketplaces and procurement solutions, which offer buyers and sellers a unique powerful forum to reduce transaction costs, enhance sales and distribution processes, deliver and consume value-added services and streamline customer management. MarketServer consists of a highly customizable and scalable software infrastructure called MarketBase and Transaction engines. The MarketBase forms the base platform for implementing e-marketplace and procurement solutions. MarketServer consists of the Transaction engines like Auction engine, RFQ engine, Exchange engine, Aggregation engine, which are easily customizable to the business needs.
The SPED methodology of Calsoft was followed to implement procurement solution. The implementation was initiated and a steering committee comprising of Calsoft and MOL officials was formed. To arrive at the solution definition, Calsoft did a gap analysis to study the gaps between MOL's business processes and MarketServer framework.
The gap analysis resulted in a Business Modeling Report (BMR). The key findings of the BMR were
- The Requirements of MOL broadly match the processes supported by MarketServer
- Buyers of MOL may use Broker, Reverse Auction or Reverse Open Bid method to select supplier for a particular bunkering request.
- Shipping companies also have Term contract with suppliers for fuel purchase. MOL can use Term contact for bunker procurement.
Some of the other specific requirements were
- The core bidding process to be accessed in two ways a reverse auction or a reverse open bid (similar to an RFQ situation).
- Auction durations were to be non-configurable and the auction process itself was constructed to allow for quick bidding, breaking ties between supplier bids and event-driven notifications.
To facilitate the core bidding process, a number of supporting features were required to manage the supplier interaction. Some of these were:
- Counterpart preferences MOL have preferred supplier at ports. When a bunkering requirement comes for that port preferred suppliers could be selected. This portwise granularity was very important to the client's business.
- Ability to provide weightage to suppliers for instance, if a certain supplier is generally late in his deliveries; his bid could be discounted by $1/MT.
- To verify delivery receipt, accept supplier invoices and take action for any anomalies by the Buyer
The specific needs of the users were
- Email notification
- Order status
- Reports
- Search facility
There was also the issue of getting the users, like MOL buyers and the operators, to use the new system. These issues were handled by collecting all standard business scenarios and demonstrating how new procurement system handles them. By entering the data the ease of use was displayed. Subsequently, the users were trained through hands-on training on the system.
The product was rolled-out on completion of the customization. After a month of user-acceptance phase, the system went live.
Architecture
Technology
This solution was a Windows DNA implementation of the MarketServer. XML was used in the implementation to provide communication and interoperability. All code customized or generated by the MarketServer was in ASP and Visual basic COM components, running SQL server as the database. This solution was developed on Windows NT 4.0 and allows for several high security constructs like SecureID or Digital certificates, to be integrated. The solution was designed to be hosted in a secure data center as a Web Farm with Load Balancing and Clustering to provide maximum availability and redundancy.
Challenges and Highlight
Calsoft have rich experience in developing advance procurement solution for energy sector. But, to certain extent, MOL requirements were unique. The immediate task was to understanding MOL's centrally managed bunker procurement model and come out with a solution within the framework of the model. MOL required a solution, which provide control flow of the information to external users, like brokers and supplier, in a secured manner. This was a challenge that Calsoft undertook during the Solution Definition phase and came out successfully.
Using the MarketServer, Calsoft was able to deliver a high impact solution in the space of 30 days. The bunkering procurement solution designed was highly secured, scaleable, and customized to the bunkering scenario. This was possible due to the benefits provided by the MarketServer and the ease with which it could be integrated.
Benefits
With an online private procurement system, the buyer could log in and create a requirement for bunkering at various ports. Suppliers could see the details of the request and submit a bid for various types of fuel required in that request. The bid would be awarded to the supplier with the best quote. The benefits from such application were extremely high. Some of the key benefits were:
- The procurement solution greatly simplified the paperbased process of getting a best deal.
- Considerable reduction in administrative cost and time.
- Accuracy in delivery receipt, invoices and action for any anomalies
- Consistency of procurement related information across organization
- Detailed procurement information to the management
- Improves monitoring necessary for a centrally managed bunker procurement model.