CASE STUDY: “SOLUTION”

EURASIA INTERNATIONAL:
TOTAL QUALITY MANAGEMENT IN THE
SHIPPING INDUSTRY
SYNOPSIS:
This Case gives an account of how a ship management company was able to set itself apart from competitors and from its clients’ own in-house technical and crew-management capabilities by embracing a culture of continuous improvement and by implementing Total Quality Management systems. The shipping industry was not alone in having regulation imposed upon it, but its distinctly international nature made ship managers, as cost-cutting practitioners, particularly open to criticism. A ship management company’s very existence hinged upon its ability to convince ship-owners that it would preserve their valuable assets and maximize revenue-earning potential – demonstrating that its collective skills were superior and more cost-effective. As a result, an effective quality assurance system that continuously improved the organization’s human and business systems could enhance efficiency and also have a significant marketing impact.

ANALYSIS:

1. With the changes taking place in the shipping industry, what were the ship-owners’ motivations for outsourcing vessel and crew management to third-party ship managers?
With the rise in outsourcing arrangements, management structures have become more explicit. In the highly competitive international shipping industry, ship-owners were continually seeking ways to keep their costs down and their business performance ahead of the competition. As a result, ship-owners were taking a serious look at the option of outsourcing crew and technical management functions as a way of lowering costs and keeping pace with industry best practices. By concentrating on the sales and marketing function, ship-owners could hive off operations activities to more suitable providers who were knowledgeable about the regulatory climate and on the