Simple and transparent purchasing of marine fuels and lubricants will be underpinned by new online platforms
In the drive for more efficiency, productivity and cost-savings, digitalisation and data-driven decision-making is replacing traditional marine practices in shipping, logistics and procurement. While this experience has not yet been fully integrated into the procurement of marine fuels and lubricants, the digital shift is coming, said panellists during Marine Lubricants Webinar Week, produced by Riviera Maritime Media with the support of Castrol.
“We’re focusing on online data-driven decision-making, replacing orders quickly, managing costs and market uncertainty,” said Bulugo partnerships director Grant Norton.
Speaking during the webinar Marine Lubrication: improving procurement through performance, Mr Norton said the coronavirus has “acted as a catalyst for change”, speeding the adoption and implementation of digitalisation, IT and artificial intelligence. He said, for example, that the increased use of technologies such as drones and AUVs in the maritime industry wasn’t being driven by sustainability, but rather by the requirement for increased efficiency and performance.
“The time is right for a fully integrated online platform for the procurement of lubricants and fuels”
Mr Norton’s company, Bulugo, has developed an online procurement platform for marine lubricants and fuels. In his presentation, Mr Norton traced the timeline of the general online procurement world, from being virtually non-existent in 2000 to the widespread proliferation of digital procurement options today, noting that it is a change that has, so far, not been fully integrated in the marine lubricants sector.
Ten to 15 years ago, all the pieces were not in place for the digital shift in online procurement, but that is no longer the case. Underpinned by the high-speed connectivity infrastructure, platform availability, the desire for ‘instant procurement’ and industry’s drive for efficiency, the time is right for a fully integrated online platform for the procurement of lubricants and fuels.
As shipping moves towards reducing greenhouse gases by 2030 and decarbonisation by 2050, there is also a shift underway towards technologies and alternative fuels that will add even more complexity to the procurement process, noted Mr Norton. For example, Mr Norton, said, in the future there will be increased use of low-carbon alternative fuels – biofuels, LNG, ammonia and hydrogen. These fuels will have the knock-on effect of requiring lubricants with different characteristics.
He asked: “How are these alternative fuels going to affect the performance of marine lubricants? How will we optimise these lubricants? How will we procure these lubricants over the next 30 years?”
While orders are likely to be dynamic, rather than standard, there are areas of online procurement that could be simplified to make the process more efficient. Mr Norton offered the view that the marine sector should automate low-value, repetitive tasks to increase efficiency, focusing on high-value tasks.
“We are going to move from fragmented communications – e-mails, WhatsApp, etc – to a more integrated approach.” Platforms that use an integrated chat function, reducing and driving out those low-value repetitive tasks, while still retaining the human personnel interaction.
“We think there is going to be a shift to simple and more transparent procurement,” said Mr Norton.
Mr Norton wanted to encourage interactions between suppliers and customers and let the operational details be executed with technology, which should assist completion of lubricant deals, rather than be an additional hurdle.
Fellow panellist ExxonMobil aviation and marine offer advisor Joseph Star focused on some of the insights being culled from data that will support and drive procurement, improve maintenance and improve the bottom line of operators.
“Digitalisation is no longer an option; it has become a requirement,” said Mr Star.
He noted that cylinder oil can account for the lion’s share of a deepsea vessel’s budget – roughly 60 to 65% of spend.
Mr Star’s message to the industry was to take a holistic approach to managing lubricants on board vessels. He noted that in the post-IMO 2020 world, he has seen examples of sub-optimal use of lubricants and an increase in consumption. “About 54% of vessels in operation are not optimally lubricated,” said Mr Star. This could have a long-term impact on the engine’s lifespan, components, drydocking intervals and procurement. This means increased consumption leads to more orders being placed and an increase in near-term operating expenses, he noted.
In an ideal world, the marine sector should have a “power by the hour” KPI, similar to that used by Rolls-Royce for its jet engines in the aviation sector, he said. However, he said the right formula is not yet available for marine because “there are too many variables.” He said it was true that no two ships are alike – even sister ships on the same trades exhibit different rates of consumption – the nuances are small but the impact is large.
He said, operators “should find your cost baseline,” and work towards full visibility. This requires knowing your supplier, he said.
“Coronavirus has acted as a catalyst for change, speeding the adoption and implementation of digitalisation”
“Scrutinise their credentials” to try to determine the answer to the question, “can they provide the answers?” he advised.
The third panel member, Drew Marine senior director, marine lubricants and specialty chemicals John Kalafatides echoed Mr Star’s view, emphasising the need to know your lubricant suppliers, noting the importance of relationships and collaboration between suppliers and clients.
“Who will you go to if there is a problem or mistake in the order?” he asked.
Mr Kalafatides, who has decades of experience in the business, said: “I can tell you a litany of issues regarding wrong orders and wrong products, and it is important to have a supplier or suppliers that add value. It is important for both sides to gain from that added value,” he said.
During the Q&A, the panel were asked what three questions a prospective client should ask a potential supplier of marine lubricants. The consensus from the panellists was that the first two questions a client should ask focus on the range and quality of products available from the potential supplier. If these meet the client’s needs, the third question to ask is: where and how does the supplier add value for the client? If all three questions can be answered positively, there is a basis to take the relationship to the next level.
50% use electronic ordering
Polls taken during the webinar offered insight into the level of interest among delegates for online procurement of fuels and lubricants. In one poll, 50% of respondents said they used a form of electronic ordering in the purchasing department, while 30% were unaware of the systems used, and 20% said they had no electronic ordering system.
Of those which did use a procurement system, half used an in-house system and half used a third-party platform to support marine lubricant procurement.