Using standardization to optimize the global supply chain design of Damen Shipyards BV

The research aims to provide an answer of how the global supply chain design should be structured to optimize efficiency, controllability and economies of scale, with the emphasis on standardization. The idea behind standardization is that a standardized process minimizes risks, creates continuity for the customer and increases efficiency. This increased efficiency is required to lower current handling costs to improve the competitive advantage of Damen Shipyard BV. Shipbuilding is a traditional industry that moves in its own pace. When unexpectedly business grows it is all hands on deck to keep up with the organization. As a reaction employees are quickly hired and buildings expand to accommodate that growth. In that response to the growth, the efficiency of the supply chain processes decreases and transaction costs rise which makes a vessel less competitive. The supply chain which should facilitate this growth is for this study focused on the internal supply chain which includes the procurement, logistics and part catalogue department. These departments are controlled by a centralized control tower approach which provides end to end visibility throughout the supply chain and is responsible for decision-making in the cross-channel. This cross-channel reflects the operational flows of departments through which the goods are handled from the supplier to the yard. Therefore, the control tower should focus on standardization opportunities to optimize the global supply chain design. Though standardization is in principle determined by the production method that is being used for a vessel, in which a distinction can be made between a predefined or a fully customizable vessel. Based on the production method the level of standardization can be defined which for the supply chain should be based on the internal customer values, since not all standardization improvements are a value added for the customer, the yard. The thesis uses a design-oriented research which not only focusses on the current situation but designs a proper standardization strategy for the control tower approach. Important is the data analysis phase which shows that the current control tower is mainly focused internally which limits the economies of scale and results in an unstable planning due to the lack of information sharing between yards. Next to that is the volatility of part usage since all vessels are partly customized. As a recommendation a roadmap is created that optimizes the global supply chain design by standardization. The roadmap proposes that from a production method templates should be created including an option list, which reduces the fluctuations per part usage. Accommodated with a yard vessel planning, it can be used to create forecasts in which better price agreement can be negotiated. The three focal points of standardization improvements are examined in three mini cases. The first mini case has shown that with part commonalities a single toolkit can reduce €10,000 (75% saving) on handling costs annually. This provides potential for all other part types. The second case has shown that with the implementation of a material requirements planning (MRP) in combination with two other optimizations the ordering process could be partly automated, which could save over €100,000 (49%) on handling costs annually. The third case introduces a non-conformity report tool to solve structural delivery issues in a sustainable manner, which in a conservative reduction could save €52,000 (50%) annually. These results prove that when the design of the control tower approach is focussed on standardization an optimization in efficiency, quality and costs for the cross-channel can be achieved.