Integrating The S B Model

Integrating the Shipbuilding Business Model
Thomas P. Brewton (M); Partner, Maritime Management Consulting, LLC Mitchell E. Steller (M); Partner, Maritime Management Consulting, LLC

ABSTRACT The shipbuilding business has traditionally focused heavily on the technical aspects of the products, from education through customer service. Correspondingly less emphasis is placed on the business ofshipbuilding, to the detriment of shipyards and shipowners around the world. Based on their experience, the authors present some alternatives for better integrating the shipbuilding business model, all with a view to ensuring satisfied and profitable shipyards and shipowners.

SEPARATE THREADS TO WHOLE CLOTH Since man first began creating maritime vessels, they have been among the most technicallycomplex items produced by a given civilization. One need only consider the Norse long-boat, the 44-gun Revolutionary War frigate or the WW II battleship to recognize their technical content, relative to other goods and services produced at that time. From this history, a strong emphasis on the technical “thread” is found to this day in modern shipyards. From concept design through post-deliverysupport, decision-making is driven by an (often) overriding emphasis on technical issues. Also present is a business “thread”, one that concerns itself with customers, commercial relationships, finances, profit/loss and other mundane issues of enterprise survival. This relationship between the two threads is depicted in Exhibit 1, below. It is the authors’ conviction, after some years of experienceboth within the industry and consulting to it, that this business thread is often only

loosely bound to the technical thread, and is seemingly viewed in a casual, after-the-fact manner. Even some very senior shipbuilding managers treat business concerns as less important than technical matters during the course of a design/construction program. But is this common in other businesses,industries, or fields of endeavor?

1

Business & Commercial Thread
Markets & Customers Product Definition Suppliers Production Management & Control Service & Support

Technical Thread
Exhibit 1 – Business/Technical Parallelism, Typical in the Marine Industry

In today’s economy, there are many examples of products and/or systems that rival the technical complexity of a modern vessel:pharmaceutical manufacturing facilities, automotive supply chains or high-tech manufacturing plants, to name a few. In these other industries, key players in the supply chain have figured out how to tightly integrate both technical and business considerations into an integrated approach to serving customers. They have done this by coordinating four drivers of high performance: • Business strategy

• • •People Process Information management and other technology

In the remainder of this paper, the authors will examine the way in which technical-business parallelism is impacting modern shipbuilding, and then suggest some steps and examples to create a more integrated model.

AN IMPERFECT PATTERN OF INFORMATION DISTRIBUTION Many shipbuilding projects are initiated by a series of discussionsbetween technical parties from both sides; i.e., a sales engineer from a shipyard starts talking to owner engineers, or an owner’s technical department begins exploratory discussions with a design agent or shipyard engineering group. By and large, these talks begin with, and stay largely focused on, the technical aspects of the vessel, whether inherent characteristics, relevant cargo systems orproduction considerations. At this stage in the typical sales cycle, a considerable portion of the vessel’s cost is being committed. At some point, and parallel to these technical discussions, assorted representatives from various functional business areas will be involved but usually sequential to technical milestones (as information is considered ready to “throw over the wall”). Finance personnel...