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Information Systems in Shipping Industry

Describe about the Information Systems Strategy for Shipping Organization.

Background of the company

The company chosen is a private sector shipping organization which is spread internationally across 23 different countries. It is the second largest company in shipping business in the home country in terms of capacity. It runs out water transportation operators, equipment and handling services.  It’s shipping and offshore services including tankers, dry bulk carriers, coal transportation facilities, and Oil& gas transportation services. These facilities are provided from its base in India while its offshore operations are managed by Singapore.

Information Flow

A shipping supply chain involves a considerable number of actors who participate in the process and contribution to information flow such as producers, warehouse managers, freight forwarders, and carriers. All these actors generate different kinds of information that flow between them. If this information can be obtained accurately and on time then it would lead to more efficient business decisions.

In order to handle the flow of products, processes, and business, flow of information has to be managed properly. The quality of information, that flows between different stakeholders, in a shipping project need to be good. A communication flows between shipping lines and container operators and with good quality of information, efficiency of the processes involved between them can be improved.

Containing Discharging is the key process of maritime shipment which can be analysed to understand the flow of processes such that the information flow can be understood. It begins with vessels having containers inside them that are discharged and goods are loaded on the terminals. A stowage plan is to be prepared which is followed when goods have to be delivered more than one terminals.

Traditionally, terminals operators used to depend on phone, emails, and fax for confirmations but now the information is made available seamlessly through Terminal Operating Systems that connects all departments with centralized system. This system helps sharing of information electronically and the system also proposes solutions to resolve problems of issues based on the status of the shipments or the internal rules set by the organization. The information that is received by these TOS systems is actually obtained through different interfaces like electronic data Interchange (EDI).

Key functions of an organization into shipment include technical management, procurement, quality management, safety management, financial management crewing. Business intelligence systems are used by shipping organizations that integrate the information from all these systems and enabling reporting and analysis of the same such that actionable insights can be obtained for taking fast decisions.

Information Management

Many shipping organizations are starting to use centralized systems for managing these operations such as in case of invoicing, a central place can be built where all the invoices coming to the company are received and can be sent to customers from. Electronic approvals are taken from this point which automates the process of payment management. A document management system may be used for recording all invoices and managing them. These systems rout the invoices to different related departments and once payments are realized, they are archived. These records can later be used for the process of auditing. Shipment accounting systems are also used by these organizations so as to manage reporting and analysis of accounting information.

Shipment organizations have to follow Sola regulation that defined VGM requirements demanding shipping organizations to have an efficient and accurate information flow. The regulation requires documentation of gross mass of the container that is with the shipper. This can be obtained after packing and sealing of container or before that. In case the mass is measured become container sealing, the weight of the container is added to the final mass figure (IMO, 2014). This is important as while delivering the goods to the respective terminals, weight can tell if the container has desired quantity of goods. The record of the same ahs to be sent to the received before the goods are sent such that upon receiving them, weight can be checked for verification and if there are any discrepancies, appropriate actions can be taken.

Information has always been important since the inception of the shipping industry merchant fleets. Lloyd Association was developed for ship-owners and merchants so that they could meet and exchange information which would help them takes decisions about insurance. With expansion of fleets and the worldwide containers, the flow of such information increased to such an extent that manual recording of such information and presentation of the same through personal meetings became a big challenge. These challenges were overcome to a great extent through development of information and communication technologies.

In recent years, information technology has developed to a great extent and automation has been achieved in many areas such as invoicing and accounting. For instance, information technology solutions like document management are now capable of doing a three way matching between orders, packing slips, and invoice automatically such that the processing time is greatly reduced and a greater control is achieved on the supplier’s behaviour making the accounting process more productive (Lloyd, 2013).

Recent Developments

There have been developments in the shipping industry that have changed the way cargo consignments were managed and delivered. A trend of containerization emerged which has increased shippers, transactions, and receivers. This increased the flow of information. Moreover, this required that this information is reported and processed fast so that the turnaround time of shop coming on ports can be increased.

Security is a major challenge in the area of shipping information management and thus, for enhancing security of the information systems in the maritime industry, system called MARIS has been developed through an initiation by European Union. This system promotes interpretability making EDI also simpler besides enhancing security of systems. For specific industry, specific modules are developed including MARVEL for shipbuilding, MARSAFE for safety, and MARTRANS for transportation.

Another project called BOLERO initiated by the Transport Club came up with systems that followed four principles including cross-industry usage, open commercial model, legal infrastructure, and third-party interaction.

Information Needs and Data Systems

The company has some active players involved in the information flow which is managed between users, sources, and information analysts. The company is majorly taking care of the container transport. Parties to transportation and the container arrangements generate requirement for information mainly due to commercial and legal arrangements between them.

Legal Aspects: Legal views are governed by contractual and administrative laws. As per the law of contract, there are some obligations that companies have to meet to operate. This includes laws related to parties to contracts and defines their duties and liabilities in case of the damage of the cargo during transportation or at any stage of shipment. These laws also define loading procedures, notifications, fine payment systems and so on. Thus, company is required to incorporate all the information requirements defined in these regulatory laws. All the agreements that are made between different contractors are documented by the company considering statutory requirements such that at the time of conflicts or other complications, these agreements can be revisited to take decisions. For this, the company requires a document management system for recoding all contractual arrangements, regulatory requirement disclosure documents and government approved documents related to shipment.

Public administrative laws and duties cover aspects of regulatory provisions and service provisions. Government provides a regulatory framework for the shipping industry that has to be followed by the organization while operating the business. As per this regulatory requirement, a container operator company needs to provide the statistics on operations, document all the business activities, and provide documents for cargo and shipment clearance.  These laws also define rules for book keeping and licensing. A major challenge before the company is that it has too much of information to be shared in order to adhere to these regulatory measures.  Moreover, the information is required to be correct and accurate as custom procedures and regulations are very sensitive areas of shipping business and can become obstacles to business operations, if the regulatory requirements are not followed.

Shipping Company

Legal and commercial Information needs

Figure 1: Legal and commercial Information needs

Commercial Aspects: Long term planning, forecasting, and other operational functions are a part of the organizations information system. Information is generated by the organization for various kinds of commercial needs such as:

Information is required for measuring the performance of the organization. This mainly for financial auditing assistance. All the related commercial information has to be collected and processed such that desired reports can be prepared such that performance of the company can be assessed. The reports that are prepared by the current shipping organization for this purpose include cash flow statements, balance sheets, expense accounts and more.

Information is recorded, processed and reported for the purpose of making critical decisions about the company. These decisions could be related to the development of strategy about the use of resources, alignment of the organizational structure, risk identification and management, and development of new systems using new technologies.

Some information is generated for supporting day to day operations of the shipping organization. This information is generated every second and thus, is huge which is difficult to manage for the organization. The information is used for taking decisions regarding supply pricing, responding to currency fluctuations, and so on.

Data systems of the company would have to manage a huge amount of ship and shipment related data and information. This information starts to get generated from the moment a ship is constructed or acquired by the company. The information primarily is used by shipping managers to take appropriate decisions about operations. Major sources of information include ship, office, trading and market. The information that is obtained from each of these sources includes:

Ship information: The information about the ship includes data about its performance, costs, supplies, equipments, and voyage information. The company records performance metric about the ships it owns which includes war and tear of equipments, speed, carrying capacity, fuel consumption, maintenance costs, and so on. Costs are majorly incurred in managing fuel and managing labour. These parameters account to 60% of the total cost of running the ship business. The company keeps a record of prices from different suppliers such that decisions can be made on procurement and other expenses such that savings can be achieved. Moreover, the company also maintains the information on the inventory of supplies and various equipments such that company have an idea about what stocks are available on the ship already and thus, can be directly used. The voyage information recorded include ship position, bunker availability, speed, weather information, common routes, accident information, ISM, safety reports, and other kinds of reports. This information is required to be shared between cargo owners, ship owners, and transporting agents.

Office information: Office information includes personnel data, inventory control data, financial data, and quality assurance procedures. The inventory data includes information on containers available, those located on the boards, position of each item, damage related data, and so on. Container status has to be monitored and updated so that shippers can see the position of the ship and can take decisions accordingly. The personnel data includes information about crew agency, officers, their employment background, contact information, social security data and other important data that may be required, for personnel management. Company has implemented quality control systems under which the company follows ISO9002 procedures and International Safety Management (ISM) code. Documentation required by each of these procedures is maintained in the office information.

Trading information: A continuous flow of trading information is maintained using information systems for which various kinds of documents may be produced such as bills of lading, booking notes, invoices, notes, and fixtures.

Market information: Market information includes data on ship brokers and media and internet. The ship brokers may provide information about market trends as well as market reports are generated from personal communications. Media information includes information obtained from emails, discussion groups, databases and video conferences (Drungilas, 1999).

The company maintains a MIS system which aims to increase the efficiency of the organization, improve its resource utilization, reduce cost and increase profits.  A support system is required to take decisions such that these benefits can actually be achieved. Thus, the company had some defined objectives for the MIS system which included smooth transportation processes, just in time deliveries, and precise delivery time information.

The MIS system of the organization is used by the company for managing different kinds of information such as inventory, procurement, accounting, treasury, suppliers, banks, buyers, freight forwarders, gents, insurance, custom, brokers, and more. For recording, accessing, processing and handling this data, different systems are used. The information technology that is used for these operations, by the shipping organization involves three major components used for information management. These include Electronic Data Processing (EDP), exchange of data and information.

Electronic Data Processing: EDP is used by the organization to process data using multiple systems such as calculators, microprocessors, and mainframe computers. Over the years, the prices of information technology and hardware has reduced which lead to saving for the company as it adopted the use of normal computers to create powerful systems by connecting them. There are two types of data processing systems that are used by the organization - in-house packages and other software.

In-house packages: The shipping company had developed its own system for performing EDP which it calls Import Information System.  In recent years, the processing needs were modified as well as structures of information systems were improved such that in addition to mainframe, powerful personal computers and servers were also used for EDP. Such in-house packages are more trusted as they are more secure as well as provide better performance due to customization. It also provides high standards of operations and efficiency that can take care of the guiding principles of the company. Although, they prefer to use internal teams that include IT experts and internally developed data processing systems, yet there are some cost-effective solutions available in the market. One benefit of using internal expert teams is that problems occurring can easily be resolved and even faster. Moreover, the knowledge is already available with this internal people making it easy to explain the requirements and resolve issues.

Other Software: The number of software provides have increased in the shipping industry which presents great potential for the market. Off the shelf products are more cost effective to obtain and at the same time. They are also having scalability, speciality, efficiency, and reliability. Moreover, complexities are managed by third parties while company can focus on its own core operations. The methods used for development of these systems are tried and tested across different industries which make the developers update systems frequently making the systems more reliable. The information required for development of systems internally can be limited but the software providers have access to unlimited information about development and thus, managing complexities and updates is easier for them.

Electronic Data Interchange: Data exchange within company people can be done using EDI. The company made use of EDI to eliminate the paperwork. Some benefits were achieved by the company such as avoiding of manual errors, data transfer errors, faster processing of invoices, reduction in administrative costs, information management improvement, JIT management, and improvements in the cash flows related to payments.  Order control and custom clearance was also made faster using EDI.  This was used between customers and suppliers who could talk to each other easily. The customers in the shipping industry are already using EDI system for their supply chain systems and thus, EDI system has become more of a need to remain connected with them and make use of already popular technology. Despite all advantages of the EDI, problems are still faced because of differential standards of these customers or the suppliers of the company that are into the system. Some of the standards used by customers included ANSI X.12 used by American customers, UNGTDI used by European customers, IFTM, Cargo-IMT, and EDIFACT. It was difficult to manage information exchange in presence of so many different systems.

Internet: The Company uses two kinds of services using internet including emailing and web based applications. Interactive internet features are used over the web so as to use it for connecting with the world and for performing various operations for managing information in the real time. Emails make the cost of information sharing and reporting very low. Many of the EDI information sharing methods are being replaced by the internet. However, this realised some security issues and thus, the EDI is still used by the company. O the other side, browser based information systems were connected to the internal systems which allowed others to make use of the backend MIS and other applications from the web based interface.

Conclusions & Recommendations

This report was prepared to understand how information is managed in a shipping industry for which case of one of the shipping companies was taken and its information needs were explored. The report also involved the exploration of the information management strategy used by the organization. It was found that the company has been using an MIS system for managing all its operations.

Moreover, the information system that was developed by the company consisted of three components including EDP, EDI and internet. EDP systems included microprocessors, calculators, mainframe computers, powerful PCs, and servers. EDI systems were used for building a capability to exchange information between the company, its suppliers and customers. It was found that company had been using specific EDI systems but faced challenges in exchange of information with customers who were belonging to different parts of the world and thus, use different formats for information sharing.

Based on the study insights, certain recommendations can be made generally for shipping organizations for devising strategies for information management such as:

For enhancing security of systems and allowing interoperability in the EDI systems, company can adopt new systems like MARVEL for shipbuilding, MARSAFE for safety, and MARTRANS for transportation.

The company can adopt the BOLERO system for managing its legal needs, commercial information needs and third party transaction.

References

Drungilas, A., 1999. Information Management for ContainerLines, s.l.: World Maritime University.

IMO, 2014. GUIDELINES REGARDING THE VERIFIED GROSS MASS OF A CONTAINER CARRYING CARGO, s.l.: IMO.

Lloyd, G., 2013. Best Practice Shipment Management, s.l.: Fraunhofer CML.

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My Assignment Help. (2018). Essay: Info Systems Strategy For Shipping Org." (49 Characters). Retrieved from https://myassignmenthelp.com/free-samples/information-systems-strategy-shipping-organization.

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[Accessed 24 May 2024].

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My Assignment Help. Essay: Info Systems Strategy For Shipping Org." (49 Characters) [Internet]. My Assignment Help. 2018 [cited 24 May 2024]. Available from: https://myassignmenthelp.com/free-samples/information-systems-strategy-shipping-organization.

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