2006.09.12
The Shipping KPI Project
… a joint industry initiativefor excellence in ship management …
Svein Sorlie, Wilh. Wilhelmsen ASAEgil Rensvik, MARINTEK
Lloyds Ship Management Conference 2006Limassol, Cyprus
Contents
• Background and project establishment• Project idea• Challenges and opportunities• Objectives• Participants – Sponsor group• Commitment
Project Initiation
• A group of 18 leading ship management and ship owning companies (The Sponsor Group) launched a project to establish unambiguous ways of measuring performance in ship operation.
• The objective was to develop an international standard for “Key Performance Indicators” (KPIs) in ship operation.
Background
• The absence of an international standard for ship management results in each company defining, measuring, and reporting information on operational performance differently. The consequences are:– Too many different indicators (KPIs)– Comparison of performance between companies is not possible– Increasing customer demand for transparency can not be met.– Bigger possibilities for confusions and mistakes.– Difficult to mobilize organizational focus on quality
improvement – Additional manpower required to present the same information
in many different ways (onboard and in office).
Project establishment milestones
• Q4 2004: Project launched• March 2005: Conducted pilot project workshop• April 2005: Pilot study concluded• June 2005: “Round table discussion” with other
industry organizations• Q3+Q4 2005: Sponsor Group members - discussion
with their contacts in the industry• February 2006: Decision to initiate Phase 2 of the project• June 2006: Received part funding of the project
from the Research Council of Norway• October 2006: Phase 2 start up
Project idea, Phase 2
•• Improve the ability of the shipping industry to respond to Improve the ability of the shipping industry to respond to increasing demands from increasing demands from ““SocietySociety”” for:for:– Better governance in ship operation– Enhanced transparency about ship operation issues– Meaningful discussions with the industry about quality of
operations, operational methodology, environmental impact, manpower issues, regulatory intervention, etc.
– Easier-to-understand reporting from Ship Managers / Ship Operators to various stakeholders
– Benchmarking of ship management services
Challenges and improvement opportunities in shipping:
• Limited transparency– Too many companies are still not observing basic disclosure
requirements about their structure, organization, operation, etc.
• “Underdeveloped” communication with “Society”– Shipping is too often in focus for the wrong reasons
[accidents, pollution, substandard personnel practices, etc.], and not given due credit for the important role it plays as the backbone of the world’s transportation infrastructure
• Standardized operational procedures– Lack of focus on standardization of operational procedures
[“best practices”] are exposing shipping companies for ‘unfair’criticism when vessels are exposed to the “perils of the sea”
Main project objectives
• Enable measurement of operational performance with regard to safety, quality and environmental protection through a standardized set of KPIs
• Initiate a process for standardization of “best practices” in ship operation
• Develop a communication framework for operational performance in shipping that makes sense for people without technical or maritime background
Project - Success factors
A standard has impact only if the majority of stakeholders adoptA standard has impact only if the majority of stakeholders adopt it.it.
• The KPIs must be relevant, useful, and easy to measureThe ability to measure output is one of the most important parts of the framework for process and organizational improvements, and instrumental for operational excellence and the highest level ofquality and safety
• Adoption of a Convergence StrategyMost companies today have their own unique way of doing things. The project will enable each company to evaluate their own practices and methodologies against industry norms
• Resolve differences of opinion between various stakeholdersFurther development of a methodology to measure/ rank the value of various operational attributes with regards to impact on safety and quality in a multi-stakeholder environment (based on positive experience from pilot study spring 2005).
The Sponsor Group
• Anglo Eastern Ship Management
• Barber Ship Management / Wilhelmsen Maritime Services
• Chemikalien Seetransport• Columbia Shipmanagement• Dobson Fleet Management • DS Schiffahrt GmbH• Eurasia Group• Fleet Management• Hanseatic Shipping Company
• Jebsen Management• Navigo Shipmanagers• OSM Group• Stolt-Nielsen Transportation
Group• TESMA Holding• Thome Ship Management• V. Ships Shipmanagement/
V. Ships Inc.• Viken Ship Management • Wallem Group Ltd
Commitment from project participants
• Shipping companies are often seen as being slow to respond to new requirements from “Society”, and they are frequently accused of having improper balance between financial and social goals
• Intermanager and the Sponsor Group members want to demonstrate that they are an association of forward looking companies that genuinely responds to the requirements for greater transparency and meaningful dialogues about operational issues
• These companies take responsibility for maritime safety and environmental protection and are firm believers that commitment to a regime based on self regulation is the way forward to excellence in ship operation.
Project details – Phase 2:
• Project period: June 2006 to December 2008
• Project budget: Approx. US$ 4 mill. • Support from Research
Council of Norway: Approx. 40%• Participants contributions: Approx. 35%• Other sources: Approx. 25%
• Project manager: Marintek, Trondheim• Project responsible: Intermanager/
Wilh. Wilhelmsen ASA• Other Norwegian
participants: Høegh Fleet ServicesJebsen Management
2006.09.12
Shipping KPI phase 2Next steps
Next steps
• Obtain sufficient support for the KPI-project among stakeholders– Ship managers, owners– Oil majors, other customers– Authorities, regulatory parties
• Develop KPI depository– Collect input from several companies– Categorize and analyze consistency of indicators and
parameters measurement
What is the ‘depository’
• The ship management industry’s collective experience and knowledge about measurement and reporting of operational performance
• Current use of KPIs
• A common framework for KPI reporting:– A set of agreed common KPIs– Consistent KPI definitions – Unambiguous parameter measurements– Standard/reference shipping processes– Standard KPI reporting process
KPI Depository – practical approach
• KPIs used in ship management companies today form basis for a KPI Depository– Collect input from several companies– Create depository structure and reference processes – Categorize and analyze consistency in indicators and
parameters measurementAlready we see similar KPIs with same objectives, but with different names and definitions
• Alignment– Identify similar KPIs– Discuss and analyze strengths and weaknesses with selected
KPIs– Agree on use of a common set of KPIs
KPI Depository - an exampleKPI (name) KPI
CategoryDefinition (what
to measure)Objective (Why
measure?)How to
measure?Operational target / best
practiceKPI 1 •Environ.
•Finance•Technical•Medical•Crew…
Describes the KPI and exactly what to measure.
States the objective of the KPI and which business objectives it supports.
Defines mathematically how to calculate the value of the KPI and how it is registered
States the numeric target defining the best obtained practice of the industry.
…. … … … …
Environmental incidents
Environ-mental
Incidents affecting environment
Company policy Count of number of incidents per annum
Oil spills (>1000 litr)
Environ-mental
No. of spills more than 1000 l.
Company policy Count of number of incidents per annum
Pollution incidents
Environ-mental
No. of incidents resulting in spills, emissions etc.
Company policy Count of number of incidents per annum
Environmental protection
Environ-mental
Incidents affecting environment
Company policy Count of number of incidents per annum
… … … … … …
KPI G
uide
line
We shall not reinvent the wheel…
• Some relevant standards and industry projects– SCOR - cross-industry standard diagnostic tool for supply-
chain management. SCOR enables users to address, improve, and communicate supply-chain management practices within and between all interested parties
– APQC - the Open Standards Benchmarking CollaborativeSM(OSBC) a common database of process definitions, surveys, and measures to enable organizations to benchmark their performance across the organization.
– ENAPS/APM - EU projects to develop a comprehensive performance measurement approach and an online benchmarking database.
– CII Benchmarking - a benchmarking service available to members of the Construction Industry Institute for comparing projects.
– US Benchmarking Index
Activities next 6 months• Workshop this afternoon• Individual discussions with stakeholders• Regional workshops
– Singapore– Hamburg– London– US East coast– Tokyo– Dubai– Hong Kong
• Dissemination– Participation at conferences– Magazine articles– WEB site
Workshop today
Purpose:
• KPI in your organization – focus, use and need for development
• Depository discussion– How should the depository look?– What is the content?– How will/should it be used?– Identify important KPIs
• Establish contact for further AS-IS mapping
Here in the Grand HallAt 16:15
Come back with your tea!
EC -European Maritime Policy – excerpts from Green Paper 2006
To what extent can economic incentives, self-regulation and corporate social responsibility complement government regulation?
• Corporate Social Responsibility (CSR) may have important and complementary roles to play.
• The adoption of CSR strategies and the disclosure of performance in relation to announced goals represent an alternative to regulation.
• CSR can contribute to sustainable development, while enhancing Europe’s innovative potential and competitiveness.
• It can bring direct benefits to companies, allowing them to operate in full symbiosis with their environment, having positive effects namely on insurance premiums or access to finance.
More information?
[email protected]@marintek.sintef.no [email protected]@ww--group.comgroup.com
schapman@[email protected]
www.shipping-kpi.comwww.shipping-kpi.com
[email protected]@marintek.sintef.no
