Optimizing shipping company operations using business process modelling

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  • This article was downloaded by: [Dipartmento di Studi E Reicerche]On: 05 August 2013, At: 17:33Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954 Registeredoffice: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK

    Maritime Policy & Management: Theflagship journal of internationalshipping and port researchPublication details, including instructions for authors andsubscription information:http://www.tandfonline.com/loi/tmpm20

    Optimizing shipping companyoperations using business processmodellingD. V. Lyridis a , T. Fyrvik b , G. N. Kapetanis a , N. Ventikos a , P.Anaxagorou a , E. Uthaug a & H. N. Psaraftis aa National Technical University of Athens, Greeceb MARINTEK Solutions, Norwegian Marine Technology ResearchInstitute, NorwayPublished online: 19 Aug 2006.

    To cite this article: D. V. Lyridis , T. Fyrvik , G. N. Kapetanis , N. Ventikos , P. Anaxagorou , E.Uthaug & H. N. Psaraftis (2005) Optimizing shipping company operations using business processmodelling, Maritime Policy & Management: The flagship journal of international shipping and portresearch, 32:4, 403-420, DOI: 10.1080/03088830500300636

    To link to this article: http://dx.doi.org/10.1080/03088830500300636

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  • MARIT. POL. MGMT., OCTOBERDECEMBER 2005VOL. 32, NO. 4, 403420

    Optimizing shipping company operationsusing business process modelling

    D. V. LYRIDIS*y, T. FYRVIKz, G. N. KAPETANISy,N. VENTIKOSy, P. ANAXAGOROUy, E. UTHAUG andH. N. PSARAFTISyyNational Technical University of Athens, GreecezMARINTEK Solutions, Norwegian Marine TechnologyResearch Institute, Norway

    In order to identify the elements constituting quality in services, a businessprocess modelling methodology has been applied in the case of a Greek linershipping company. The company operations have been identied and analysedin order to assess the complete performance of service elements and thereafteridentify how to match the service performance against the user requirements.A liner container service within Europe has to compete with the road transportwhich, in many cases, is an alternative to the sea transportation and notcomplementary to it. Thus, not only the ship has to be envisaged when aimingto improve quality in services but also the whole chain, namely port authorities,land transportation enterprises, subcontractors, agents, charterers and others.A set of potential improvements within this framework are thus suggested andtime and cost (examined in a specic voyage scenario) are measured before andafter the implementation of these measures. Very large time and cost savingsare observed after the application of the technology improvements, allowing,in fact, the shipping company to even increase the number of round tripsper year in the examined route. This indicates that very large benets can bedrawn by analysing and critically adjusting business processes in modern shippingcompanies.

    1. IntroductionIn order for European short sea shipping to play an increasingly important role,several aspects of the industrial philosophy of total quality must be implemented.Individual shipping companies, starting preferably with those oering liner services,should realize the importance of oering integrated quality services to theircustomers. This paper aims at addressing total quality issues in a shipping companyas a rst step to better understanding how the modelling of business processes in themaritime sector may contribute to an improved quality in shipping operations.

    Business process modelling (BPM) permits strategies to be eciently put intopractice. BPM means focusing on, and understanding, what gives results andvalue to ones customers. An important part of BPM consists of developing andusing process models of a companys own elds of activity as a basis for

    *To whom correspondence should be addressed. e-mail: dsvir@central.ntua.gr

    Maritime Policy & Management ISSN 03088839 print/ISSN 14645254 online # 2005 Taylor & Francishttp://www.tandf.co.uk/journalsDOI: 10.1080/03088830500300636

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  • re-engineering, training, communication, working routine descriptions, improve-

    ment initiatives, quality control, system development and more.In any business, the overarching goal must be to balance the organization, work-

    ing processes, and the supporting information and communication technology (ICT)

    systems and resources. Business process management will monitor and adjust the

    processes, organization and ICT in order to meet the objectives outlined in the

    strategic planning (gure 1).To identify and document process models is a prerequisite for successful imple-

    mentation of BPM. Modelling the business processes helps to identify all funda-

    mental aspects of a company and constitutes a powerful yet simple approach to

    understanding and communicating what really happens in existing processes. In

    this way, it represents the basis for a subsequent optimization of the company sectors

    or even re-engineering of the whole structure that result in cost and time savings.For the demonstration of these capabilities of the BMP methodology as outlined

    above, a Greek shipping company with a regular liner service in the Mediterranean

    Sea is chosen and the transportation ow of a single container is tracked and

    analysed in terms of cost and time. By describing in detail the processes of operation

    and identifying what may be considered as core business or as secondary processes

    (management and support) the potential for re-engineering the business processes

    is shown.In section 2 of this paper the framework under which a business process model is

    established is presented and the respective methodology is described. In section 3

    the BPM is used in order to model shipping operations of a specic Greek shipping

    company which is a container operator. It focuses on a specic scenario/voyage

    (section 4) and follows a container from the point of origin to the nal point of

    delivery taking down various parameters along the way. Derived from this analysis,

    a set of improvements are proposed that are implemented in the scenario in section 5.

    Strategic planning

    Supporting ICTsystemsOrganization

    Business Process Management

    Source Make Deliver

    Plan

    Figure 1. Business process management balance strategic objectives, processes, ICT andorganization [1].

    404 D. V. Lyridis et al.

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  • In section 6 both the scenario specic conclusions as well as the more generalexperience gained by using BPM are described [25].

    2. Establishing the business process modelProcess modelling is an integral part of business process re-engineering, which isdened as the analysis and design of workows and processes within and betweenorganizations or as the critical analysis and radical redesign of existing businessprocesses to achieve breakthrough improvements in performance measures. In orderto be able to perform such business process re-engineering, the business processesmust be made visiblethrough business process models. Business process modelsare normally documented as diagrams with supporting text. The development of theprocess models are implemented in a three-step approach (gure 2).

    The objective of Step 1 is to set the scope of the process mapping. The goal is toset boundaries and identify the main actors and stakeholders to the business or alongthe chain subject to modelling. It also describes how to select suitable references tobe used in the project.

    Step 2 describes how to develop the process model. The goal is to build a model inseveral levels where each new level gives a higher degree of detailing. It is importantto ensure the documentation of all relevant information and to structure it in anappropriate way so that it meets the scope of the project. When the main processeshave been identied, it is necessary to detail each process with sub-processes and/orworkow diagrams.

    Step 3 describes how to present the process model. The goal is to ensure thatpeople involved in the processes, understand the model, its presentation andthat they really think the model actually reects the way they do their job.

    Preparation phase

    Define/describe scope Plan (Mapping) project Appoint Mapping team

    Configuration / Mapping phase

    Develop model Collect and

    structure information

    Presentation phase

    Communicate results Prepare presentation

    Recommendations Further work

    Process Mapping Project

    Step 1: How to .......

    Mapping guide

    Step 2: How to .......

    Step 3: How to .......

    References & Experience

    Modelling tools Pilot studies Process models Experienced people .......

    Presentation techniques HTML PowerPoint Layouts ........

    material

    Functions Processes/Activities Roles Terminology Systems/Architecture

    Figure 2. Three-step method for Process Modeling [1].

    Optimizing shipping company operations 405

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  • Important elements are roles, activities, information ow, and information systems.Process mapping will often form a basis for improvement work, especially when itcomes to dening needs and requirements to reorganization and re-engineeringof business processes. It will therefore be very important to communicate theknowledge established through the process mapping.

    Business process models are usually structured in a hierarchical way with increas-ing levels of detail, from the overall business model to detailed activity descriptions.The illustration in gure 3 shows an example on how a process can be describedusing both processes and workow descriptions.

    A topdown approach is often used in process modelling. First data about thephysical chain must be gathered. This data is used to create a conceptual modelin order to understand the procedural chain and to identify scope of the processmodelling. A business process model is established based on the scope of the projectand includes the top-level processes. These top-level processes can be used todescribe the dierent actors and/or main business units. Equal for all top-levelprocesses is that they cover the dierent steps in the physical chain.

    A top-level process can be further detailed by another sub-process level or bya workow description according to the level of complexity desired for the model.A process model will preferably not have more than 4 levels in order to ease theunderstanding (better navigation and overview).

    Physical logistics chain

    Business process model

    Conceptualapproach

    Process model

    Process decsription (top-process level)

    Details: Roles, activities, Activitypath (sequence), Information flow,Information systems, Events

    Role and activity descriptions

    Workflow descriptions

    SupplierTerminal

    TransporterTransporter

    Installation

    Chain Manager

    ??

    Process decsription(optional sub-process level)

    SupplierInboundtransport

    Terminaloperation

    Seatransport Installation

    ReturnlogisticsRequire purchase

    Goodsreception

    Warehousemgmt.

    Loading and unloadingoperation

    Role 1

    Activity 1

    Activity 3 Activity 4Activity 2

    ICT system 1

    Document

    ICT system 2

    Document

    ICT system 3

    Document

    Document Document

    Role 2 Role 3

    Figure 3. A hierarchical approach to process modelling [1].

    406 D. V. Lyridis et al.

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  • Workow description consists of roles, activities, information systems and eventsin a sequence that illustrates how the process works. The level of detail is only limitedby the scope of the project, but experience shows that unnecessary details should notbe included. A matrix containing additional information, such as role details, workdescriptions, information system descriptions, and message/document descriptions,could also support a process model.

    3. Application of the process modelling (PM) methodology to a shipping companyThe approach described in section 2 is applied on a shipping company in order toanalytically present its core business processes. Its about a major Greek shippingcompany with regular lines in the Mediterranean Sea served by a eet of 11 containervessels. The name of the shipping company is withheld for reasons of condentiality.

    In order to analytically present the companys core business processes, it is rstfocused on the divisions and/or the departments of the company. In each departmentall products, services and operations are established. Then the links between opera-tions and interested parties are highlighted. Finally, additional information for eachoperation (time, cost) is acquired so as to allow identication of the processespotential for improvement and subsequent evaluation of the result.

    It was decided in this case to use a typical Porter value chain approach with threedierent process categories which are grouped in the model in 3 layers representingin sucient detail the existing company structure.

    The rst entity is company management. The full length of the respective boxdenotes the continuous interaction of the management with all the operationsin the company. Another characteristic of this entity is the shadow underneath.It indicates that there is a lower level with a more detailed description of the businessprocesses (gure 4).

    The second entity represents the operations/value chain, which is responsiblefor the company income and satises the client. Additionally, operations areincluded that support the product chain and is the main set on which thispaper concentrates. In this entity Customer need is the input and company

    Figure 4. The business process modelling of the shipping company (Level I).

    Optimizing shipping company...

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