This Report is just an

overview of how an Inventory

Management system will play
crucial role in the Level of
control of our Material
Procurement cost.

Current Scenario:
Scenario after
implementation of Inventory
Management System:
Level of Control: LOW
Level of Control: Medium-High
Level of Planning: LOW
Level of Planning: High

This graphical representation explains

about the overall System with central
database. Various sub-heads, within
which
anInventory
Inventory manager
should
Ship
Management
work.
There are 2 points which are
System
highlighted in it:
Maintain Bulk Inventory Re-order
Point and alert users when required:
This will be only possible if we
properly plan and maintain
database of the inventories. There
should be automatic generation of
alert as and when inventory fall
below the set level
Inventory Categorization Group: A
Team of Technical should divide the
inventory into various categories
and feed it in the system. A
complete list of items should be
available in the system to choose
from.

Ships
Type of
Inventory Inventory
Management
Flow Chart
Spares
Monthly/Urgen
Selection t/Extraordinar
Enter The
Monthly
Extraordin
Criticality
Remaining
of
Serial
y?
/Urgency
ary
Spares
Spares(Se
Number

Selection
Urgent
Reason
of
spares
For
(Serial

Lubes
Stores
Paints
Chemicals/Gas
Saloon/Galley/Others
Engine
Deck
Extraordinary
Specification
xtraordinary
Select
Remaining
Criticality?
Quarterly
Stores
Stores
Item
es
Item
Stores
Chemical/Gase
Paints
LubesItem
(Limit)
Item
Item
Extraordin
Bimestri
Bimestri
Remainin
Remainin
Criticalit
Select
Select
s (Limit)
Select
Select
ary
al g al
g
y?
(Serial

Spares: 12 Indents/Year

Stores: 6 Indents/YearPaints: 4
Indents/Year
Total: 34
Indents/Year/Vessel +
Critical/Urgent Spares Indents
(Negligible)
Lubes: 4 Indents/Year
Chemicals: 4 Indents/Year
Gases: 4 Indents/Year

Inventory Management is the

source of Material Procurement
cost. 70% of the Procurement
cost can be reduced by Effective
Inventory Management System.
Current Scenario: 300-400
indents are raised per vessel per
year. It is almost every day an
indent is raised. It is very
important for the Master/Chief
Engineer to understand the cost
of raising indents. If we observe
Logistics cost of raising indent, it
is 10000-15000 per indent.
Number of indents is very much
correlated to Logistics cost. After
performing a regression analysis,
the result showed Correlation of
0.8(High). Hence by Reducing the
Number of Indents to Double

Digit, Logistics Cost will also

reduce.

HOW DO WE REDUCE THE

NUMBER OF INDENTS?
Inventory Categorization:
Categorizing the Inventories into
sub classes within the system
1)
Spares
2)
Stores
a) Engine Stores
b) Deck Stores
c) Galley Stores
3)
Paints
4)
Lubes
5)
Chemicals
6)
Gases
7)
Urgent/Critical Spares

Feeding Into The system:

List of all the items of particular

type of vessel should be fed in
the system with their Serial
Number. Set Minimum number
of all the items to be
maintained by the ship at all
times. Set Limitations to
Number of particular items to
be held by a ship in the system
Spares: Every Month Items will
be reviewed and ordered
Stores: Every 2 Months Items
will be reviewed and ordered
Paints/Lubes/Chemicals/Gases:
Every Quarterly Items will be
reviewed and ordered
Urgent/Critical Spares: As and
when Required

The System should be able to

automatically generate the Reorder point as and when Items
are required. At end of each
period (according to the item
type), an Indent will be created
confirming it with the
Master/Chief Engineer.

If we achieve all of the above

we would be generating around
34 Indents/Year/Vessel
Excluding Urgent/Critical
Spares. There should be no
urgent requirements for stores
and other items except for
critical spares.
As we can see in above Tables:

 Reducing Indents to 50, our

Logistics cost reduces around
85%
Reducing Indents to 75, our
Logistics cost reduces around
80%
Reducing Indents to 100, our
Logistics cost reduces around
75%

I would suggest,
1.
Optimizing our inventory
management by proper
planning by Master/Chief
Engineer would drastically
reduce our Procurement cost
2.
Reduction of number of
Indents will also reduce
Logistics cost

3.
An IT system which has
full transparency to all the
stake-holders for procuring
the material
4.
An IT system which
contains all the details of all
the items (spares, stores,
paints etc.) of all the ships to
be maintained by the ships
5.
More Integration and Coordination between MPC,
Technical & Operations while
procuring the materials
6.
Before-hand schedule of
all the ships to be known to
all the stake-holders (As much
as a chartering dept. knows)