Ship Operations-What s Next? Tanker Operator Conference April Athens

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1 Ship Operations-What s Next? Tanker Operator Conference April Athens Martin L Shaw Managing Director Marine Operations and Assurance Management Solutions Ltd

2 Outline Where we are today Industry development What are the choices? Cost versus Risk Resilience Brittleness Cost Management versus Cost Cutting What do I need to do? Marine Operations and Assurance Management Solutions Ltd 2012

3 Freight Markets Marine Operations and Assurance Management Solutions Ltd 2012

4 Building Booms Marine Operations and Assurance Management Solutions Ltd 2012

5 1980 s?...then and Now What's the Same? Low Freight Rates Oversupply Global Recession Energy Costs What's Different? Finance Technology Manning Corporate Structure Global Village New legislation Environment Complexity Quality, Charterers and Port State Marine Operations and Assurance Management Solutions Ltd 2012

6 Quality improvement since the 1980 s Intertanko Statistics Marine Operations and Assurance Management Solutions Ltd 2012

7 Why the increase? More ships more accidents New ships Teething problems Understanding of new technology (ECDIS, Integrated bridges) Experience gap from lost recruiting in the 80 s and 90 s But...what about complexity Marine Operations and Assurance Management Solutions Ltd 2012

8 Compliance Capacity to Absorb Procedures Requirements and Communications Complexity in Operations Corner Cutting Risk Anarchy Simplicity Clarity Confusion Distortion Box Ticking Culture Time Marine Operations and Assurance Management Solutions Ltd 2012

9 PROTECTION What are the Choices? PERFORMANCE Safe Profitable Operation After James Reason Managing the Risks of Organisational Accidents Marine Operations and Assurance Management Solutions Ltd 2012

10 PROTECTION Choices-Squeezing Operations PERFORMANCE After James Reason Managing the Risks of Organisational Accidents Marine Operations and Assurance Management Solutions Ltd 2012

11 Choices-Another View The Banks Shareholders Creditors Your Company Legislators and Customers Source Scylla and Charybdis by ~EarthDefect on deviantart To succeed owners will need to adapt and be resilient Marine Operations and Assurance Management Solutions Ltd 2012

12 Resilience The ability of an organisation to succeed in changing circumstances not just survive Finds opportunities Clarity and Agility Learns Anticipates Adapts Monitors People who can think not just follow rules Bends but does not break under pressure Marine Operations and Assurance Management Solutions Ltd 2012

13 Brittleness The inability of an organisation to survive in changing circumstances Lack of clarity on goals Blame culture/motivation Complex organisation and processes Rules based. Initiative not encouraged Puts all its effort into the routine leaving no capacity for dealing with the unexpected Breaks under pressure Marine Operations and Assurance Management Solutions Ltd 2012

14 Operating Mode Resilient Brittle Normal Abnormal Emergency Normal Abnormal Emergency Resilient organisation will adapt from normal operation to abnormal operation and recover. In emergency resilience will be able to adapt further to avoid catastrophe Brittle organisation will need all its resources to maintain normal operation leaving limited capacity to deal with the abnormal. Rule based mentality will be unable to cope with novel emergencies and will fail. Marine Operations and Assurance Management Solutions Ltd 2012

15 Resilient Organisation Resilient Organisation Owner Organisation Can change its strategy and market Position rapidly in response to changed circumstances Operations Management Resilient Operation Upward Resilience Downward Resilience Marine Operations and Assurance Management Solutions Ltd 2012

16 Resilient Operation Owner Downward Resilience What the Owner Wants ostrategy ovalues ogoals and Goal Conflict How the owner wants it to work oculture omotivation How the owner is seen oleadership ocommunication Upward Resilience The Human Contribution onot human error!! Choosing the right people oselection oretention Learning and Training otechnical Skills onon technical skills o ( the human element) odecision making oon board training Operations Management Resilient Operation Marine Operations and Assurance Management Solutions Ltd 2012

17 Resilient Operations Management Owner Keeping it all together Reinforcing the owners message Feedback from ships Communication Change Management Understanding the organisation and how it fits together Understanding cost and value Customer Requirements Operations Management Regulators Requirements Keeping Knowledge Up to Date Best Practice Risks and Barriers Investigation Resilient Operation Managing Complexity Simple process Simplifying external demands Workload and space for resilience Marine Operations and Assurance Management Solutions Ltd 2012

18 Plan Cost Management not Cost Cutting Understand the objectives Explore all the options Design Understand the Consequences Understand the risks, costs, value, value loss Understand your organisation and how it works Implement Communicate more Listen for feedback Carry on monitoring the change Make sure the change is fully integrated Procedures Training Marine Operations and Assurance Management Solutions Ltd 2012

19 Consequence of poor cost management Lost Value Customer relationships Vessels unacceptable Poor service Lost Revenue Missed cargoes Reduced freight due to poor loading Increased demurrage Loss of knowledge Loss of motivation Loss of key staff Increased Cost Higher repair costs drydock costs spare costs Higher supervision costs Office staff Compliance staff Repair yard supervision Higher manning cost recruiting retraining Marine Operations and Assurance Management Solutions Ltd 2012

20 Conclusion Challenging Times Markets/Oversupply Customers and Legislators Complexity Choices Cost versus value Resilience Brittleness Cost management versus cost management Where are you now-resilient of brittle? Not just surviving but succeeding Marine Operations and Assurance Management Solutions Ltd 2012