Enterprise Resource Planning in a Shipyard and Shipbuilding

Introduction

Modern global sphere of shipbuilding experiences reduction of margins together with the total increase of customer expectations. To reach success and meet the requirements demanded by customers mean to provide them with the detail information beginning from building planning and up to the description of supply analysis.

ERP (Enterprise Resource Planning) is the background for successful and effective usage of building assets providing customers with the required visibility. This system is very important for the sphere of shipbuilding and investing in it is quite beneficial as it helps to realize the mission of the effective supply and reduced technology costs. (Caruso, 2007)

The main purpose of this research is to investigate the ways in which cost-efficiency can be increased by using ERP in controlling the logistics in a shipyard. The paper will also try to ascertain the effects of ERP in resource utilization in shipbuilding. Significant results can be achieved with less hassle, by the use of ERP to pro-actively improve business reporting, concentrating with key staff on given tasks. However, control issues and reporting tend to present a long term issue and a collective challenge to develop continuously and permanently. It is also essential that control systems are reviewed on a regularly basis due to environmental change, after activation.

This research paper will help to recognize deep dependence of the shipbuilding sphere on the Enterprise Resource Planning and how these two spheres are interrelated with each other. It is important to stress that one should understand in what way ERP system helps the sphere of shipbuilding to meet the requirements of the consumers.

The ERP Promotion and Contribution into Shipbuilding

Nowadays a lot of modern shipyard companies examine the opportunities of ERP introduction into its sphere. This system helps shipbuilding companies to consult the experience of the related shipyard enterprises and use it for the improvement of their own aspects and details of building process.

Unfortunately, a lot of shipbuilding companies have some problems as to the usage of ERP systems in their sphere and the methods of its promotion in order to get positive effects in costs reduction. And there are some opinions that these systems cannot be used for such companies at all. The project under consideration will prove that these myths are mistakable and ERP system has a positive impact on the sphere of shipbuilding. It is an integral part of the process of costs reduction and meeting the requirements of the customers. (Johnson, 2004)

It has been argued that cost-effectiveness in a shipyard can be increased by usage ERP system in controlling the logistics. This would bring about better working relationships, a guaranteed worker productivity level, an increase in informed IT users, improvement in communications, a reliable and efficient service, and a general reduction in request processing times and inventory losses. Although there are quite a lot of differences between various shipyards, most shipyards have similar economic conditions in a global market. This has led to the shipyards putting in place new information systems in order to enhance greater design flexibility and ensure a more effective production process. The goal is to improve on the shipyard’s position in a competitive market by using designs that are innovative, faster time-to-market, increased quality and tighter cost control. Hence, IT requirements are created for collaboration, simulation, digital mockup, ship floor assistance, change control and also production control.

Scope

This paper will investigate how ERP can be used by the shipyard management in the decision-making process and new computer systems.

ERP can be used by a computer programmer to write applications and software that will enhance shipbuilding. This paper will also discuss ERP security policy, which may be utilized by IT staff for controlling network usage, thereby causing a change in the behaviour of network users.

Problem statement

Control issues and reporting have always been a kind of team challenge and a long term issue to permanent development. After activation, a control system has to be reviewed on a regular basis, and according to environmental change. According to an IBM Product Lifecycle Management Resource Paper, “Shipping has experienced good times since 1997. Most shipping sectors have been going through an expansion rarely seen before, especially in the segments of container, LNG and cruise shipping. At the same time, order books have been well filled for most of the shipyards worldwide and an expansion of shipbuilding capacity has been ongoing, first in Korea and now in China.” (Shipbuilding Process – Challenges and Opportunities, 2002)

Shipbuilding and shipping depend on consumer behavior and on prevailing economic situations around the globe, but other more specific developments like automobile industry production patterns, oil consumption in the Western world, paper consumption, leisure market and holiday spending also have an effect on shipbuilding. The outcome (i.e. the list and rationale) of suspected outdated problems and processes can be utilized by shipyard managers (actors) in making decisions about how the vestigial manual processes can be safely removed without damaging company business throughput, thereby generating increased effectiveness targets that are centered on the full use of ERP.

Shipbuilding tends to increase the rate of development of these cycles. Shipyard owners in various shipping sectors over-ordered in 1999 and 2000 probably due to the good shipping market and higher rates. Scrapping rose marginally, and so older vessels had to be kept to take advantage of any possible quick returns.

Modern ERP Project

The introduction of the ERP project usually takes about one full year for the shipbuilding companies. The most important and problematic aspects in its promotion were devoted to the interface creation and integration regulations. Nowadays modern functions of the ERP project in the sphere of shipbuilding are the following:

• Supply and storage management;
• Finance regulations;
• Manufacturing management;
• Project creation and aspects of its promotion;
• DEM (Dynamic Enterprise Modulation).

The process of ERP system functioning is rather complicated. All orders concerning projection and design of ships are presented in PDM, where the model WBS is formed. This model is basically concentrated on the ship system composition rather than on the process of building itself. It comprises the following steps:

• Electric Plant;
• Auxiliary Systems;
• Hull Structure;
• Armament;
• Propulsion Plant;
• Ship Assembly and Support Services.

These steps are the background for projection, design and building of ships; they help to realize the main aspects of the shipbuilding system.

The sources of ERP Success

It is important to stress that ERP system can be introduced in the shipbuilding sphere according to the following conditions:

1. Correct project organization;
2. Software and enterprise regulation peculiarities are interrelated and work together;
3. Shipbuilding Company experiences the process of WBS model work and its cooperation with manufacturing activities.

Shipyard usually searches for ERP system introduction in order to have the position of the most influential and global suppliers of new vessels.

Impact of the ERP on Shipbuilding

ERP is considered to be like rescue facility for shipbuilding industry as it provides with an opportunity to combine different modules online providing complete access to all of them by means of one window; as a result the whole process is integrated and leads to reduction in inventory. Ship production is considered to be a very difficult process involving construction process and network scheduling system that is why the role of the ERP is very significant for this sphere of industry. This system helps to increase productivity by means of combination of planning and engineering functions. The ways ERP influences the shipbuilding industry are the following:

• The system provides the necessary requirements of the demand by means of network and IT;
• It helps to analyze the project rationally and concisely in order to understand its main aspects and peculiarities and as a result update the required data and programs;
• It provides the necessary level of project management and helps to work out correct and effective strategy.

Although the growth rate in passenger numbers in North America was as high as 17% in 2000, the average rate has been 8.4% since 1980. The industry is recovering well at the moment from the initial drop in passenger numbers after the September 11 terrorist attacks on the U.S., but prices are still well below the level of previous years. Cost cutting is the key word in cruise operations at the moment and it appears that serious discussions will not begin before the latter part of 2002, with deliveries in beginning in 2005 and beyond. (Shipbuilding Process – Challenges and Opportunities 2002)

Some figures mentioned above prove the efficiency of the ERP system introduction not only in the USA but also on the international level. High customization shows that shipbuilding industry cannot be regarded only manufacturing industry. The change of supply for all shipbuilding industries includes the row of transit points (the ways of supply). Execution purposes of production planning are the following:

• Vertical supply chain covering the aspects and peculiarities of inner manufacturing processes;
• Backward supply chain which is an integral part for the materials supply needed for manufacturing process. (Sharma, 2005)

Network Scheduling in Shipbuilding Industry

In the ERP system network scheduling and production planning system play different roles for the industrial shipbuilding process. It is important to stress that both systems are to be networked online in order to work out and plan production, reporting and plan the necessary material. According to the ERP both integrated systems should generate network schedule working online in order to control the process of manufacturing and projection. These combined systems are important for determination the requirements of the material and its complete control. They also provide inner and external reporting for the human resource planning.

The adaptation of the ERP system to the needs of the shipbuilding industry and its customers is very important. A lot of shipyards have tights schedules and to reach the effectiveness it is important to concentrate on the logistics and costs reduction in order to gain secure profit.

ERP system functioning in the shipbuilding company gives an opportunity to be completely aware of ship innovations and have access to the new drawings and documents to know new versions of ship construction and be able to realize them. Thus, ship-owners and engineers with inspectors are able to choose correct version and new order with all necessary documents. (Beames, 2008)

In addition, it is necessary to underline the fact that the system also helps to avoid grave mistakes in the construction process which is also important for the reduction of costs. 3D modeling in the ship industry is the background for the successful manufacturing process and it highlights all the important components specifying their peculiarities of choice. It also saves a lot of time needed for construction process highlighting possible solutions to general manufacturing problems.

Conclusion

The research carried out highlighted the main aspects of the ERP system and showed its role for the shipbuilding industry. It was shown in what way ERP system and IT influence schedule planning and manufacturing process of the shipbuilding companies. The paper under analysis managed to discover a lot of advantages of the ERP system introduction and underlined its beneficial role in the costs reduction process. This system is an integral part of projection, production and manufacturing processes and it is rather influential in the aspect of customers’ requirements. Network process gives an opportunity for the clients to have access to the necessary information and be aware of the entire rapid changed in this sphere.

It is important to note that ERP system is very useful not only for the shipyard but also for all the industries connected with the design, building and manufacturing processes.

This research showed that shipbuilding companies should strive for introduction of the ERP systems into their process of work and planning; the only global problem of it covers the peculiarities of the management aspect, the level of system regulations and correct choice of the software. Thus, in the work planning all these steps are to be regarded and avoided if possible.

ERP system is an integral part of the strategy planning and modules development. It is important for the inspectors and engineers involved into this sphere to be able evaluate and update shipbuilding projects.

References

Caruso, David. 2007. 4 Ways ERP System Improves Supply Chain Performance. D.C. & Associates, Inc.

Johnson, Michael. 2004. Introduction of ERP System in Shipbuilding. CALS Technology. #1.

Shipbuilding Process – Challenges and Opportunities. 2002. An IBM Product Lifecycle Management Resource Paper. Web.

Sharma, R. 2005. An ERP Model for Medium Scale Shipyards-I: Production Planning. NY.

Beames, Colin. 2008. New ERP system increases production efficiency. NY.