CAPITAL,VOYAGE AND OPERATING COST OF SHIP. CHIEF ENGINEERS ROLE AND MODERN PRINCIPLE OF INVENTORY MANAGEMENT

Discuss the capital,voyage and operating costs of ship operation and explain chief engineer’s role in optimizing them.

what are the modern management principles used in inventory control.

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CAPITAL, VOYAGE AND OPERATING COST OF SHIP

                THE COST ASSOCIATED WITH COMMERCIAL SHIPPING ARE IMMENCE, THE SHIPPING COST MAINLY DEVIDES AS CAPITAL COST, VOYAGE COST AND OPERATIONAL COST THE OPERATIONAL COST IS INCLUDING PERIODICAL MAINTENANCE COST AND CARGO HOLDING COST.

CAPITAL COST

THE OWNER OF THE SHIP MAKES INVESTMENT FOR PURCHASE OF SHIP WHICH IS THE CAPITAL COST OF THE OWNER/COMPANY. IT INCLUDES

1. COST OF THESHIP

2. INTEREST ON LOAN/DIVIDEND ON SHARES

3. PRE DELIVERY COSTS, INITIAL REGISTRATION CHARGES AND INSURANCE CHARGES

4. DEPRECIATION VALUE OF THE SHIP ON ANY METHOD

VOYAGE COST

VOYAGE COST CONSISTS OF

1. BUNKER CHARGES      DEPENDS ON FUEL PRICES AND FUEL CONSUMPTION RATE/DAY OR HOUR AT GIVEN SPEED ON DIFFERENT SEA STATES. THE FUEL CONSUMPTION DIRECTLY PROPORTIONAL TO THE ENGINE EFFICIENCY, SPEED, CONDITION AND DESIGN OF HULL.

COST OF FRESH WATER / WATER MAKING CHARGES ALSO CONSIDERED

2.PORT CHARGES             DEPENDS ON TONNAGE OF SHIPS INCLUDING DOCKING AND WARFAGE CHARGES MOORING/UNMOORING, PORT DUES, PILOTAGES, TUGS, GARBAGE DISPOSAL ETC.

3.CARGO HANDLING COST          LOADING AND DISCHARGING COST TO SERVICE RENDERS

4.CANAL DUES  TRANSIT OF CANALS eg. PANAM,SUEZ

5.AGENCY COMMISSION AND TAXES ON FREIGHTS ANOTHER VOYAGE COSTS

OPERATIONAL COSTS

MANNING COSTS  WHICH  INCLUDES  CREW SALARY,CREW ESTABLISHMENT COST, CREW REPATRIATION, MEDICAL EXPENDS, TRAINING ETC.

STORES AND LUBRICANTS  INCLUDES SPARE PARTS, DECK AND ENGINE STORES, LUBE OIL FOR OPERATING SHIP AND PROVISION FOR CREWS.

REPAIRS AND MAINTENANCE  ROUTINE MAINTENANCE AND REPAIRS OF THE SHIP FOR MAINTAIN THE SHIP AS PER CLASS AND ADMINISTRATION REQUIREMENT

INSURANCE COST   COVERS RISK RELATED TO HULL & MACHINERY,WAR RISKP&I, CARGO CLAIMS, THIRD PARTY CLAIMS,OIL BONDS,WRECK REMOVAL FUNDS ETC.

ADMINISTRATIVE COSTS  IT INCLUDES THE EXPENDITURE OF OFFICE

CHIEF ENGINEERS ROLE ON OPTIMIZING THE COSTS

                THE CHIEF ENGINEER HAS IMPORTANT ROLE ON ECONOMICAL OPERATION OF SHIP BY REDUCING OPERATIONAL AND VOYAGE COST BY MAINTAINING THE ENGINE AND MACHINERIES. THIS REDUCING THE FUEL OIL CONSUMPTION AND ELIMINATE THE BREAK VOYAGES, RUNNING THE ENGINE AT ECONOMICAL SPEED AT DIFFERENT SEA STATE & CHARTER REQUIREMENTS. ALSO BY EFFICIENT INVENTORY CONTROL AND PERIODICAL MAINTENANCE.

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PRINCIPLE OF MODERN INVENTORY MANAGEMENT

            AN INVENTORY OF SPARE PARTS SUFFICIENT TO MEET THE NEED POSED BY THE SHIP PLAN OF OPERATION IS MAINTAINED ONBOARD.

                THE INVENTORY CONTROL SHOULD ENSURES THE SUPPLY OF REQUIRED QUALITY  AND QUANTITY OF INVENTORY AT REQUIRED TIME AND AT THE SAME TIME PREVENTS UNNECESSARY INVESTMENT IN INVENTORIES

THE KEY PRINCIPLE INVENTORY MANAGEMENT IS BASED ON -

ACCURACY

AN ACCURATE INVENTRY CONTROL SYSTEM GIVES THE NUMBEER OF UNITS THAT ARE IN STOCK.THE SYSTEM ACHIEVE A HIGH ACCURACY FOR ON HAND QUANTITIES BY COUNTING THE NUMBER OF UNITS  IN INVENTORY AND SUBSTRACTING THE NUMBER OF UNITS TAKEN FROM INVENTORY. SHOULD BE PHYSICALLY COUNT THE UNITS  PERIODICALLY REMAIN IN STOCK AND COMPARE  WITH THE INVENTORY CONTROL SYSTEM

SECURITY

THE KEY FUNCTION OF INVENTORY CONTROL SYSTEM THAT KEEP MATERIAL IN INVENTORY SECURELY. MUST CONTROL ACCESS TO STORE AND PREVENT DAMAGE. IF MATERIAL IS DAMAGED DURING HANLING OR WHILE IN INVENTORY, TRACK THE DAMAGED ITEM AND ANALYZE HOW IT DAMAGED AND PREVENT RECURRENCE SAME TIME REMOVES THE DAMAGED MATERIAL FROM  INVENTORY AND SYSTEM.

LOCATION

AN EFFECTIVE INVENTORY CONTROL SYSTEM WILL REVEAL THE EXACT LOCATION OF THE MATERIAL  AS WELL AS THE NUMBER OF INVENTORY. THE STORES ARE ORGANISED ON A GRID WITH AISLESS,ROW NUMBERS AND NUMBERED SHELVES. TRACKING THE PHYSICAL LOCATION OF AN INVENTORY MAKES THE PERIODICAL PHYSICAL VERIFICATION LESS TIME CONSUMING

DEMAND

AN INVENTORY CONTROL SYSTEM HAS TO BE ESTIMATE FUTURE DEMAND.SHOULD BE DEMAND FORECASTING. ACCURATE DEMAND FORECASTING HAS THE HIGHEST POTENTIAL SAVING, BOTH OVER AND UNDER SUPPLY CAN HAVE CRITICAL BUSINESS COST

MODERN INVENTORY MANAGEMENT TECHNIQUES

                THERE ARE LOT OF MODERN INVENTORY MANAGEMENT TECHNIQUES SOME OF ARE-

JUST IN TIME (JIT) – THE ITEM REQUIRED TO PURCHASE IS ORDERED A FEW DAYS BEFORE IT IS NEEDED. SO THAT IT ARRIVES AT JUST IN TIME FOR USE. IT HELPS TO SAVE ON INVENTORY HOLDING COST BY KEEPING STOCK LEVEL LOW

ABC ANALYZE

                IT DIVIDING ON HAND INVENTORY IN TO THREE CATEGORIES. A,B AND C BASED ON ANNUAL CONSUMPTION UNIT, INVENTORY VALUE AND COST SIGNIFICANCE

A – ITEMS OF HIGH VALUE (70%) AND SMALL IN NUMBER (10%)

B  - ITEMS OF MODERATE VALUE (20%) AND MODERATE IN NUMBER (20%)

C  - ITEMS OF SMALL VALUE (10%) AND LARGE IN NUMBER (70%)

                THIS ALLOWS FOR THE PRIORITIZATION IN TERMS OF MANAGING DIFFERENT GOODS AND INVENTORY, WHERE SELECTIVE CONTROL AND ALLOCATION OF FUNDS AND HUMAN RESOURCE IS DEPLOYED

DROP SHIPPING  THIS ELEMENTS THE COST OF HOLDING INVENTORY ALTOGETHER IN DROP SHIPPING AGREEMENT

CROSS DOCKING AND BULK SHIPMENTS ARE OTHER  SOME OF INVENTORY TECHNIQUES