Procurement is shipyards' only lifeline

15 November 2001
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15 November 2001 | David Arminas

The survival of Britain's ailing shipbuilding and repair industry depends on major improvements to its procurement methods, according to the first survey to map the sector's supply chain.

The study, commissioned by the Shipbuilders and Shiprepairers Association (SSA) and carried out by the department of marine technology at the University of Newcastle, paints a picture of little collaboration for long-term growth.

It concludes that the industry must radically change its procurement philosophy if modern supply chain practices such as partnering are to help make savings to the sector's annual £3.4 billion spend.

Tom Dougherty, assistant director of the SSA, said progress would be made if communication between buyers and suppliers could be improved.

But he added: "A major problem is that many ship repair contractors are small and medium-sized enterprises that do not have a lot of time to devote to strategic issues.

"Eighty per cent of a new vessel is bought in, so if we are going to improve, we will need to bring the whole supply chain along with us."

The survey questioned 33 shipyards, including naval and merchant yards, and 39 suppliers, including the BOC Group and steel maker Corus.

Among its findings were that there was little evidence of partnering arrangements and a patchy use of IT, which was not generally focused on business needs. It also found that it was difficult for small suppliers to get on to shipyard tender lists and that sub-contractors were failing to follow health and safety standards.

Most building and repair work was done by only a few companies, yet work was allocated on a time-consuming competitive tendering basis, it found.

The collapse earlier this year of shipbuilder Cammell Laird highlighted the precarious nature of the industry.

In July, the SSA started a £5.8 million shipyard improvement programme aimed at setting out benchmarks for performance and e-procurement.

Last year, the Department of Trade and Industry moved to help the sector by setting up a £2.8 million project to fund academic research into relationships within the industry.


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