1. Provide a comprehensive explanation of the essential concepts of SCM and explain to what extent SCM is applicable to a service operation such as CII.
2. Evaluate how partnering with some of the suppliers could benefitCII. What issues should CII consider when developing partnerships?
3. Purchasing, a major function in SCM, is critical in the cruise line industry. Critique the potential conflicts of interest or ethical issues facing the purchasing function.
Customers in the modern day look forward to high quality services, different varieties of experiences, quick delivery, at the lowest prices. To succeed in achieving all these targets and demands of the customers it is extremely crucial for the business organization to understand the needs of customers and satisfy their demands in the most efficient way possible. This policy is applicable to every kind of industry and the cruise industry is no exception. There is a huge rise in the travel industry in the present day world. According to the data from Cruise International (2018), the overall number of passenger in cruise industry has risen from 500,000 in 1970s to about five million in 1990 and 19 million in 2010. In 2006, the extent of the overall voyage showcase was around 12 million travelers. Of those 12 million travelers, 10 million travelers left on voyages from ports in North America. The U.S. voyage travelers constitute around 78% of the overall cruise travelers and they have around 9 million travelers. Cruise International, Inc. (CII) is a well-known travel organization that helps travelers to find essentials for a proper travel experience under one roof (Cruise International 2018). The global cruise industry has grown and is anticipated to rise by 39.6 billion by 2016. Cruise companies tried to successful in meeting their customers’ demands and carry on its business and have a competitive profit that includes its supply chain management. The various entertainments, relaxations for the passengers on the ship is the main service of a cruise for which the customers get into a cruise. For this the customers expect the cruise to satisfy their expectations. Therefore like every sector in business the cruise industry looks after fulfilling these demands of the customers.
Supply chain management involves suppliers, service providers, distributors, retailers and consumers. In the last few years, the competition between the various cruise organizations has been focused on vertical (quality) and horizontal (variety and offering). Supply chain management can be described as a service provider that provides services and products to the customers at the right time, right place and right quantity and quality. The University of Tennessee defined it as set of few companies that are directly linked to one another by an upward and downward flow of products, services, information and finances. The purpose of this mission is to supply the best services to the cruise customers at the lowest inventory and working cost. Supply Chain or Production network by and large connects with providers, specialist organizations, makers, wholesalers, retailers, and buyers. Over the most recent couple of decades, rivalry among Cruise organizations has picked up in most parts in the quality and assortment and offerings (Hwang and Han 2014). Supply chain partnership or store network organization gives Cruise line International different prospects to improve their business operation, for instance, better administrations at lower cost (Stadtler 2015).
Overview of Supply Chain Management
The SCM demonstrates the ability of the organization to provide proper service and products to the customers within the fixed time, at perfect place. The quality and the quantity are also maintained by the organization in the process. Therefore, the process can be defined as the two entities linked by flow of products or services. The supply chain management can be different types such as a manufacturing unit will supply its products by making it as per the demand of the company. Furthermore, the other organizations will supply the product by understanding the need of the organization and supplying product by ordering to another manufacturing unit. Therefore, according to the concepts of SCM, it incorporates everything from raw materials to finished products.
Supply chain management is the organized way to manage the flow of the good, fuels, raw materials needed by the organization. Cruise line international would utilize the supply chain management in areas like fuel, food supply, Coach Services, Port Services, warehouses, which can be given to the customer for the best experience on their voyage (Staff 2018). Hotel accommodation is a service that is needed by the clients of cruise international and to make the company focus on its core business, this service can be provided by another business firm that deals with hotel accommodations in the supply chain. Financial Services, ticket arrangements and Insurance Services can moreover be given by cruise line International to its clients through Agencies. Services like maintenance of the cruise including its cleanliness, maintaining its electrical equipment, machines, Machinery, Lubricants, Internet and Information Technologies can be contracted to another business which specializes in these fields so that the Cruise Ships get the best association which would affect customers to remain on the voyage happily. Recruiting new employees and providing them training is crucial for the success of this industry. It is important for the organization to respond to the need of customers as well as understanding the requirements of the employees as employee satisfaction and loyalty determines the ability of the service. Therefore employee training is used to widen the employee’s ability to engage them in the teamwork. This will further help them to increase their professionalism and commitment towards their duty. This is because this training and influential process for employee and customers satisfaction can be applied in the Cruise International organization as the SCM of the organization can be applied to a broader section. Various studies reveal that workers who are trained have higher amount of job satisfaction than the ones who are not trained. Training increases the employee’s satisfaction and higher productivity. It improves their skill, increases their professionalism and has an impact on their employee commitment and satisfaction in the organization. In this way it can be easier for the cruise line organization since they have various working site including onboard and multiple harbors. Supply chain management in the cruise industry will require faith and collaboration amongst all of their supply chain partners. There needs to be greater flexibility, a close business collaborative system with efficient strategies, planning and information sharing at every levels. The failure of any single level of supplier to supply its service or products at the correct time and place when required can give rise to several problems for the management and operation of the entire business which can have its impact on all the others levels like a chain reaction and lead to service disruptions in the cruise company and their customers. This can make the company suffer a serious deal of issues in its professional role and image in the market.
Application of SCM in the Cruise Industry
Hence, it can be said that SCM should be applied on the cruise industry to increase and develop the belief and trust of entire SCM partners, as in this business strategy, planning, and sharing of information decides the success of the organization.
Partnership by cruise line international with its suppliers give them the best chance to improve their various operations for example delivery of services at lower cost, sharing information, solving problems, allocating resources, sharing financial and non-financial risks decrease in operating costs quick reaction to market needs are some of the reasons that make supply chain partnerships important. The companies that have supply chain partners are more efficient in their outputs than those companies that do not have such supply chain. Hindley and Font (2017) included that smart relationship among manufacturers and suppliers affects the performance of supply chain. Cruise must first recognize its partners who would give them the best services at the best prices. Having a supplier as a partner might seem nice but it has several benefits like training, systems, work methodologies, equipment utilization and several other opportunities that decrease the cost of operations benefiting the management and the quality of the operations (Hindley and Font 2017). Cruise line worldwide would likewise profit in territories, for example, access to new markets and clients, resulting in its prosperity and development quickly. Other advantages include assets and Tools, for example, present day advances which would not be possible for Cruise Line International to secure such assets independently (Véronneau, Roy and Beaulieu 2015). The organization will profit by preparing that would empower making it smarter, more productive and beneficial business through the expertise of the other businesses in the supply chain. There will be the beneficial installment terms, allowing the Cruise line to place bigger orders and fuel growth, without paying additional money. An example of such benefit is the usage of technologies and different Media for the transfer and advertisement of the products that are to be supplied to different organization. The transport management software for the digital transfer of the products, usage of radio frequency identification number for the product transfer and usage of social media to find social chain operators are few of the benefits of partnering with suppliers.
In an industry that is continually hoping to enhance services and products provided to their customers, the future will depend especially on working intimately with providers and sellers to set up the best journey experience to its customers (Pallis2015).
Benefits of Supply Chain Partnerships
It is very common to face a conflict of thinking and processes and ethical considerations in a supply chain management system. For example if a manpower working in the CII supply chain management works for some other companies SCM and leaks the information of the CII, then it can arise a situation of ethical conflict in the organization.
While working in CII, the ethical conflict can arise in different situations, few of which is described below (Cruise International 2018).
- Outside contracts in zones similar to those of Cruise Line worldwide.
- Affiliations with non-profit associations that get subsidies or different methods for help from Cruise line global.
- The acknowledgment and additionally stretching out of any business cordialities.
- Being highly associated with private, professional, political, scholastic or other interest that may clash with Cruise line universal interests (Stadtler 2015).
- Private business associations like partnerships, shareholdings, board participation or investments that might do business or might compete with Cruise Line universal.
It is unethical for Supply chain professionals to use their positions to have unfair advantages (Hindley and Font 2017). Potential clashes can rise from family, business, individual or budgetary associations. The workers attached to the supply chain must maintain a safe distance from the chances of any such kind of conflicts. Areas that can result in clashes are other employer’s gifts, business meals, relationships, product samples, advertising, market power and standards.
Individuals from the production network must stay away from practices or activities that may adversely impact, or seem to impact, supply decisions before the commencement of supply chain services. Every year, Supply Chain Management requires all partners in to finish and sign a Conflict of Interest as well as Commitment Disclosure Form. Individuals ought to inform the individuals concerned for suggestions and guidance when a potential irreconcilable circumstance emerges (Staff 2018). At the point when vital such individuals must be reassigned to different duties which are proper would not represent a danger of another irreconcilable situation. Therefore while working in the supply chain management, different code of ethics such as professionalism, personal integrity, compatibility and continuous improvement should be followed.
High increase in ticket price
Alternative cheap resources to cut down prices
A decrease in ticket price will attract many travelers
Cheap resources may question the quality of service provided n the cruise (Staff 2018).
Currency devaluation and Long term debt on new ship construction
Promotion of business, increase in profit margin, innovative and attractive ideas to attract travelers
Devaluation of currency resulted in purchasing at a lower price from the suppliers
Business loss and raising debt.
Liozu and Hinterhuberv (2013) say that the cruise international should focus more on expanding its client base rather than on making profit. This can be done by understanding the needs of customers demographically and psychologically instead of looking after ways to increase their profit margins. Once they win over the customer’s loyalty and needs they can later think of ways to develop their pricing strategies. Fulfilling their social duty should be more important to the cruise and not just their own income. Understanding the demands of the clients and fulfilling them and giving them an experience of delight would in the long run be beneficial for the company even if for that in the present they might have lower profit margins. This form of esteem based marketing is extremely popular in travel industry.
Cruise Line International seeks to satisfy their clientele and fulfill it’s the various consumer characteristics of different age with an assortment of on-the-ship and ashore benefits. The organization's production network association will build benefits for all accomplices by lessening absolute cost of operation and enhancing the nature of administrations. There is a potential for irreconcilable situation in store network administration, yet an arrangement and nonstop checking will limit its impact. Supply chain network is an imperative bit of the Cruise operations that is by and large required in the pre-embarkation, on the ship and the post disembarkation parts of the business. The supply chain of the cruise must be capable and monetarily clever with a specific goal of delivering the demanded quality service on the right time to make its customers experience a memorable stay.
Cruise International 2018. welcometocruiseinternational.[online] Available at: https://1952008_1781944965_WELCOMETOCRUISEINTERNATIONAL%20(1).pdf [Accessed 22 Jan. 2018].
Hindley, A. and Font, X., 2017. Ethics and influences in tourist perceptions of climate change. Current Issues in Tourism, 20(16), pp.1684-1700.
Hwang, J. and Han, H., 2014. Examining strategies for maximizing and utilizing brand prestige in the luxury cruise industry. Tourism Management, 40, pp.244-259.
Liozu, S.M. and Hinterhuber, A., 2013. Pricing orientation, pricing capabilities, and firm performance. Management Decision, 51(3), pp.594-614.
Pallis, T., 2015. Cruise shipping and urban development: state of the art of the industry and cruise ports. International Transport Forum Discussion Paper.
Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.
Staff, C. 2018. F&B Supply Chain Management: Global Master Plan. [online] Cruiseindustrynews.com. Available at: https://www.cruiseindustrynews.com/cruise-magazine/feature-magazine-articles/11293-summer-2014-fab-supply-chain-management-global-master-plan.html [Accessed 22 Jan. 2018].
Véronneau, S., Roy, J. and Beaulieu, M., 2015. Cruise ship suppliers: A field study of the supplier relationship characteristics in a service supply chain. Tourism Management Perspectives, 16, pp.76-84.
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