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Supply chain management in the shipbuilding industry: challenges and perspectives

M H Mello and J O Strandhagen
Proceedings of the Institution of Mechanical Engineers, Part M: Journal of Engineering for the Maritime Environment 2011
225: 261 originally published online 24 June 2011
DOI: 10.1177/1475090211406836

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 261

Supply chain management in the shipbuilding

industry: challenges and perspectives
M H Mello* and J O Strandhagen
Norwegian University of Science and Technology, Department of Production and Quality Engineering, Trondheim,
Norway

The manuscript was received on 26 October 2010 and was accepted after revision for publication on 22 March 2011.

DOI: 10.1177/1475090211406836

Abstract: Currently, one of the main challenges for most of the shipbuilding companies is to
manage the activities performed by a network of suppliers worldwide. Empirical evidence
shows that the lack of integration and coordination between partners of the same supply
chain affects the quality and the delivery date. Supply chain management (SCM) has been
proposed to manage the flow of material, information, and service through the supply chain.
However, the literature has dedicated significant emphasis to the high-volume sector, while
other sectors have been largely ignored. Different approaches for SCM should be considered
according to the characteristics of each industry. Therefore, this paper was proposed to pro-
vide an understanding of the role of SCM in the shipbuilding industry. A review of the litera-
ture identifies the main concepts, principles, and methods of SCM, and a case study provides
a discussion of the barriers to implementing them. The results showed that SCM in shipbuild-
ing depends essentially on improving the relationship with suppliers and adopting appropriate
information and communication technology (ICT).

Keywords: supply chain management, shipbuilding network, managing ship projects

1 INTRODUCTION If partnership with other companies is essential in a

One consequence of globalization is that competi-
tion is going to occur between supply chains com-
posed of companies of different nationalities.
According to Kotler [1]
As firms globalize, they realize that no matter how
large they are, they lack the total resources and
requisites for success. Viewing the complete supply
chain for producing value, they recognize the neces-
sity of partnering with other organizations.
*Corresponding author: Norwegian University of Science and
Technology, Department of Production and Quality Engineering,
NTNU – Valgrinda, N-7491 Trondheim, Norway.
email: mario.mello@ntnu.no
global context, the supply chain that better learns
how to manage the flow of material, information,
and service through different companies tends to be
more competitive. As Christopher [2] says
We are now entering the era of ‘network competi-
tion’, where the prizes will go to those organizations
who can better structure, coordinate and manage
the relationships with their partners in a network
committed to delivering superior value in the final
marketplace.
In Norway, after the recent intensification of the
globalization process, some shipbuilding companies
started to focus on their core competence and out-
source other activities worldwide [3]. Nowadays,
shipbuilding involves activities carried out by com-
panies in different countries that are challenging
to manage. Also, shipbuilding has many specific
challenges that are not common to other industries,

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262 M H Mello and J O Strandhagen
such as the need to involve multiple companies to
design and build a vessel [4], the generation and
manipulation of enormous amounts of information
[5], the complexity of information flow because of
the operation itself and the numerous working dis-
ciplines involved [6]. Basically, every vessel is differ-
ent; even vessels from the same series differ
somewhat from each other [5]. Approximately 60–80
per cent of the value of a ship is outsourced, and the
complex structure of a ship demands a considerable
coordination between all those involved in the
design, engineering, and production [7]. The com-
petence in a supply chain lies in the ability to coor-
dinate activities across businesses and to interact
with different partners as if it were a single business
unit [8].
Supply chain management (SCM) has been pro-
posed to manage the flow of material, information,
and service through the supply chain [9–11]. In the
literature, there is a considerable quantity of articles
available addressing SCM issues. However, signifi-
cant emphasis has been dedicated to the high-
volume sector, while other sectors have been almost
ignored [12, 13]. Most concepts for SCM design and
analysis have focused on inventory control and dis-
tribution [14, 15]. The characteristics of the ship-
building industry demand new concepts that also
consider the product development phase (i.e. ten-
dering, contract, concept, design, engineering, and
procurement), and its interface with fabrication (i.e.
supply, manufacturing, building, and commission-
ing) [13]. Therefore, this paper is aimed at under-
standing the role of SCM in the shipbuilding
industry, outlining the main drivers and barriers.
The paper is organized as follows: section 2 gives an
overview of the research method. Section 3 presents
the emergence of a shipbuilding network, while sec-
tion 4 discusses the need to extend SCM beyond the
high-volume sector and presents some key drivers
of SCM for shipbuilding. Section 5 then presents
some experiences from a Norwegian shipbuilding
company and section 6 discusses the barriers to
achieving an effective SCM, combining insights
from the literature and a case study. Finally, section
7 provides a conclusion and highlights the potential
for future research.
2 RESEARCH METHOD
This paper examines the drivers (concepts, princi-
ples, or methods) and barriers to achieving an effec-
tive SCM in the shipbuilding industry. Owing to the
immaturity of SCM issues [16], this study has
applied a more exploratory approach. Two research
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questions were used to guide the development of
the study.
1. What are the key drivers of SCM for the ship-
building industry?
2. What are the barriers to applying these key driv-
ers in the shipbuilding industry?
To answer these questions, a review of the literature
and a case study were performed. The literature
review was aimed at identifying the main drivers of
SCM in shipbuilding, while also considering the
engineering and construction perspectives. The arti-
cles were collected from databases such as Ebsco,
Scopus, Compendex, Google Scholar, and ISI Web
of Knowledge, as well as specific journals in the
maritime sector. Additional literature, including
book chapters and reports, was obtained from the
lists of references available in the articles. The
search considered the literature that contained the
following keywords: ‘supply chain’ and, ‘shipbuild-
ing’, or ‘maritime’, or ‘ship’, or ‘engineer’, or ‘ETO’
(engineering to order), or ‘EPC’ (engineer, procure,
construct), or ‘construction’ in the title or abstract.
Thereafter, the literature was screened for concepts,
principles, or methods for SCM as defined in the
scope of this study. A list with the most common
drivers found in the literature was made in order to
identify the key drivers.
A case study in a shipbuilding company was per-
formed to investigate the barriers to implementation
of the key drivers. The case study is acknowledged
as an appropriate methodology to investigate
exploratory research questions and contemporary
issues [17]. The case study was carried out over a
period of time in different departments of the com-
pany, including sales, design/engineering, procure-
ment, logistics, and project management. The data
were collected through semi-structured interviews,
on-site observations, and analysis of reports. Each
interview was conducted with the manager and took
about 1 h. Additional explanation regarding more
specific issues that were unclear was also obtained
later by telephone. Through this study, the main
challenges faced by the company were described
and discussed.
3 SHIPBUILDING NETWORK
The increasing complexity of products, as well as
the number of technologies and competences in the
production process, has created enormous chal-
lenges for vertically integrated companies [18].
Many companies have shifted to a new fragmented
 Supply chain management in the shipbuilding industry 263

form of organization derived from concepts of divi- The nature of decision making is very different
sion of labour. This transformation has enabled from one side of the DP to another, separating the
the companies to focus on their core competence company into forecast-driven (upstream) and order-
and outsource other activities, with implications for driven (downstream) sectors [20]. Thus, the focus of
reducing costs, increasing the ability to innovate, SCM should also change according to the position
and responding quickly to market changes [18]. of the DP, from reducing the level of stocks (down-
According to the Department of Trade and Industry stream) to reducing the delivery time (upstream). As
(DTI) [18] the shipbuilding industry in Western Europe pro-
duces more sophisticated and tailored ships, this
The restructuring that has occurred has been truly industry can be generically identified as engineer-
radical. Apart from anything else, it has compelled to-order (ETO) [5, 21]. Some characteristics of ETO
firms to engage proactively in both the creation and operations are listed below [13].
management of viable supply chains.
1. Individual products are generally highly custo-
Similarly, in the past, shipbuilding companies mized to meet individual customer require-
were responsible for performing most of the activi- ments.
ties to produce a vessel; even some equipment was 2. There is production of a very low volume of
produced internally. This meant that many compa- engineered products (one of a kind to small
nies were vertically integrated. Nowadays, sourcing series).
can cover almost every phase performed in the ship- 3. The main products have deep and complex
yard. The so-called ‘full shipyard’ became an product structures with levels of assembly
‘assembly shipyard’ [7]. Thus, companies decided to process.
outsource some activities to other shipyards, and 4. There are some components required in very
focus on the activities where they could remain low volume whereas others are required in
competitive [5]. Consequently, shipbuilding has medium or large volume.
become a global business, involving companies in 5. Certain components are highly customized
different countries. As each company performs a while others are standardized.
diverse range of activities to produce the same prod- 6. Some systems use advanced control while struc-
uct, the integration and coordination has become tural steelwork does not.
increasingly important to achieve higher perfor- 7. In general, high levels of customization lead to
mance levels [19]. Therefore, the success of imple- increased costs, higher risks, and long lead
menting a shipbuilding network depends on the times.
ability to manage the supply chain.
There are also some similarities between ship-
building and the construction industry sectors that
4 SCM IN SHIPBUILDING, ENGINEERING, AND
operate as make-to-order (MTO), e.g. fluctuating
CONSTRUCTION
demand cycles, project-specific product demands,
uncertain production conditions, and combining a
One way to understand the different types of pro- diverse range of specialist skills [22]. Compared with
duction is the place of stock. The place of the stock construction, differences are that shipbuilding is not
defines the decoupling point (DP) that indicates performed in different sites and the duration of
how deeply the customer order penetrates into the projects is usually greater.
goods flow [20] (Fig. 1). Considering some aspects of the operation, ship-
building has faced similar challenges to both engi-
neering and the construction industry, which have
Decoupling point operations organized on a project basis. There are
Level of stocks Delivery me large amounts of information, people, equipment,
Distribute-To-Stock(DTS) and materials to be managed [23]. Engineering of
the complex products demands coordination of
Customers
Suppliers

Make-To-Stock(MTS)
Assembly-To-Order(ATO)
Make-To-Order(MTO)
Engineer-To-Order(ETO)
Fig. 1 The different types of operations according to
DP (adapted from Hoekstra and Romme [20])
contributions of different partners since it involves a
large volume of data and information during the
development process [24]. The interdependency
between specific tasks of main suppliers and the
shipbuilding company is very high and needs to be
coordinated [24]. The attempts to reduce the supply

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264 M H Mello and J O Strandhagen
base and move towards more collaborative relation-
ships have often been filled with frustration by a
lack of trust, which can be attributed to: adversarial
relationships; a low-volume and infrequent demand
for many items [13]; use of a price-competitive pro-
curement approach and rigid contract [25]. Also, the
subordinate position of the subcontractor is used to
exert pressure in the distribution of responsibility
for problems occurring later in the project [22].
All these challenges evidence that SCM has not
been adequately addressed in a project-based con-
text, whereas there is extensive literature on the
high-volume sectors, particularly automotive and
electronics [12, 13, 23, 25–27]. There are many
important aspects of SCM that are relevant for ETO
operations, but which have not been considered. For
example, the interactions between different phases
such as development, sourcing, fabrication, and
commissioning need to be better understood and
improved. During the development phase there is an
intensive interaction between different activities such
as tendering, contract, and design that needs to be
coordinated [13]. The characteristics of the engineer-
ing industry somehow seem to restrict the applica-
tion of current SCM methods [13]. Moreover, the
SCM in project-oriented companies seems to be con-
siderably more complex than SCM in manufacturing
companies because many projects involve several
suppliers, considerable variability in supply delivery
lead times and resource constraints, as well as fre-
quent changes in the project scope [26, 27].
Different approaches for SCM need to be consid-
ered based on the different characteristics of each
type of industry [18]. One of the specific characteris-
tics of shipbuilding is the variety and complexity of
systems that are developed according to customer
requirements. This demands the involvement of a
considerable number of different companies to
design and build a vessel. In complex ships about
70–80 per cent of relevant innovations are developed
and implemented in a wide network of subcontrac-
tors and suppliers [28]. Suppliers and subcontractors
are also taking part in the basic research [7]. Thus,
one critical issue for SCM in improving performance
in shipbuilding is to efficiently integrate and coordi-
nate the network of suppliers, subcontractors, and
shipyard resources [5].
A considerable number of concepts, principles,
and methods of SCM in shipbuilding, engineering,
and construction were considered from the litera-
ture (Table 1) in order to identify key drivers. The
literature was divided into three categories: ship-
building, engineering, and construction. Then a
classification was performed considering the fre-
quency that a driver was mentioned in each
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category: high was five or four occurrences; medium
was three or two occurrences; and low was one or
no occurrences. The key drivers that follow were
selected from the drivers classified with high fre-
quency, and represent the most common concepts,
principles, and methods in the literature. This does
not mean that others drivers are not relevant, just
that they have been less addressed in the literature:
(a) form strategic partnerships;
(b) integrate management information systems;
(c) develop a culture of trust;
(d) collaborate with suppliers;
(e) communicate across multiple companies;
(f) involve suppliers in development;
(g) inter-firm coordination;
(h) exchange of design and production information;
(i) inter-firm teams;
(j) integrate product information systems.
5 STUDY OF A SHIPBUILDING COMPANY
The study of a shipbuilding company in Norway
demonstrates that nowadays shipbuilding involves
shipyards in different countries aiming to take
advantage of a global market (Fig. 2). For example, a
company A (case company) may perform a range of
activities relating to shipbuilding operations (usually
concept design, contract design, detailed design,
engineering, and equipment sourcing) based on
their expertise (that in this case is located in
Norway) while the remaining activities (usually fab-
rication, building, and so on) may be carried out by
a company B (a shipyard that could be located in
China, Croatia, Singapore, Turkey, Brazil, etc.). The
main advantage of this type of operation is obtain-
ing the best competence from each business partner
to increase the competitive advantage of the whole
supply chain [35]. At the same time, this type of
operation enables the companies to take advantage
of satisfying their requirements for using the local
suppliers provided by many countries (e.g. China
and Brazil). On the other hand, the disadvantage is
that the effort to coordinate cross-business pro-
cesses and interact with partners in the supply
chain can erode all the gains. The evidence from the
case company showed that the management of
shipbuilding operations that are widely geographi-
cally distributed is significantly complex, for the fol-
lowing reasons.
1. Each shipyard has different production meth-
ods, levels of organization, and technology;
 Supply chain management in the shipbuilding industry 265

Table 1 Review of the literature: drivers of SCM

Shipbuilding Engineering Construction

Vrijhoef and Koskela ½32

Hong  Minh et al: ½34

Sanderson and Cox ½29

Briscoe and Dainty ½33

Gosling and Naim ½12
Gronau and Kern ½24

McGovern et al: ½30

Venkataraman ½26
Fleischer et al: ½19

Yeo and Ning ½27

Yeo and Ning ½31

Dainty et al: ½22

Hicks etal: ½13
Bolton ½4
Held ½7
Drivers of SCM

Strategic partnerships U U U U U U U U U U U U U
Integrate management information systems U U U U U U U U U
Develop a culture of trust U U U U U U U U U
Collaboration with suppliers U U U U U U U U U
Communication across multiple companies U U U U U U U U U
Involve suppliers in development U U U U U U U U
Inter-firm coordination U U U U U U U U
Exchange of design and production information U U U U U U U U
Inter-firm teams U U U U U U U
Integrate product information systems U U U U U U
Sharing risks and rewards/power balance U U U U U U
Joint project management U U U U U U
Streamline the workflow/process orientation U U U U U U
Electronic data exchange (EDI)/E-procurement U U U U U
Cooperative production planning U U U U U
Adopt modular design/standard items U U U U U
Frame agreements U U U U
Supplier/subcontractor development U U U U
Use of turnkey suppliers/systems suppliers U U U U
Postponement of product differentiation U U U U
Total cost analysis U U U
Manage the knowledge developed in projects U U U
Integrate logistics and production information U U U
Involve procurement in the specification U U U
Understand customer requirements/manage changes U U U
Supplier quality certification/TQM U U U
Similar values/common performance measures U U U
Involve suppliers in customer negotiation U U
Vendor managed inventory (VMI) U U
Online inventory management/inventory control U U
Time compression U U
Flexible control/adaptable scheduling U U
Critical chain method U U
Process standardization U U
Kanban/JIT deliveries U
Joint container systems U
Shop floor coordination using RFID U
Consolidated purchasing U
Develop new suppliers U
Shift supply chain structure from ETO to ATO U
Reduce pollution and hazardous materials U
Ensure on-time payments to suppliers U
Protocol for dealing with problems and disputes U

ATO: assemble to order; RFID: radio frequency identification; TQM: total quality management; JIT: just-in-time.

consequently the requisites to perform each may demand yard supervision during the produc-
activity change from one shipyard to another, tion, while others do not. This creates a challenge
and this is difficult to predict. Thus, an intensive to plan the resources needed in each project.
interaction with each shipyard is necessary dur- 3. The fact that many activities are performed
ing the project execution, which demands a simultaneously in shipbuilding (based on the
large amount of time and increases the costs. principles of concurrent engineering) poses
2. The extension of activities that a shipyard may additional challenges to integrate the informa-
assume varies from one project to another, tion and material flow. For example, hull pro-
depending on the terms of the contract signed duction normally starts before the engineering is
with a shipyard. For example, some shipyards finished.

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266 M H Mello and J O Strandhagen
4. Each company uses diverse information and
communication technology (ICT) systems,
which are provided by different software suppli-
ers, and can demand extra work in order to inte-
grate the computational systems. The shipyard
sometimes has to be convinced to sign a con-
tract accepting the adoption of the same project
management software package.
5. As the shipyards involved in the production do
not belong to the same group, the level of inter-
ference in their operations is often limited. For
example, the shipyard may not be committed to
change its working methods, although this could
benefit another partner in the project.
6. The risks of performing projects globally are
higher given that there are more uncontrolled
factors (i.e. economical, political, social, and
others) involving different aspects of the opera-
tion. Also, the capital invested to build a vessel
is high, thus the role of each partner in the proj-
ect is usually defined in a contract and this lim-
its the potential synergy, as each partner just
follows the contractual obligations.
Globalization from an operation management per-
spective demands a better understanding of the char-
acteristics of different operations to reach the benefits
of an effective SCM. For instance, a practical issue
may be related by a manager from the case company
that it is not clear which changes are necessary in the
upstream phases (development) to avoid problems
during the downstream phases (fabrication). Since the
companies are located in different countries, the
‘brick wall’ problem between the engineering and fab-
rication is much bigger. For example, an engineering
package (which contains all the documentation, tech-
nical specifications, and drawings to produce the ves-
sel) of a ship already produced in Norway, when sent
to be produced in another country, can demand many
changes that were not necessary before (i.e. new
drawings, more technical information, the inclusion
of new components, change of equipment, etc.). This
evidently incurs unexpected delays and costs that
affect the performance of the whole supply chain. As
Lambert et al. [11] concluded ‘Much friction, and thus
waste of valuable resources results when supply
chains are not integrated, appropriately streamlined
and managed.’
The managers from the case company suggest
that it should be possible to develop a model to
manage the supply chain (what they have called
‘meta-planning’) which defines the resources (infor-
mation, knowledge, materials, services, etc.)
required to link smoothly each node of the supply
chain. This model could help to understand the
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compensation required in the upstream activities in
order to eliminate the constraints that affect the
performance indicators in terms of delivery, quality,
and cost. The literature has also shown the potential
for research in SCM to understand better the engi-
neering and its interface with the fabrication in the
different types of ETO operations, which include, for
example, the shipbuilding industry [12,13].
The study confirmed evidence that the informa-
tion flow in shipbuilding is usually confusing and
redundant. It is very difficult to track the work flow.
Shipbuilding involves a huge number of activities
performed concurrently, where the dependencies
between different tasks are massive and compli-
cated [5]. This demonstrates that some shipbuilding
companies have yet to establish an effective SCM.
There is a need to understand how to develop and
apply SCM in shipbuilding. Some examples of possi-
ble supply chain responsibilities in shipbuilding are
listed below.
1. Evaluate the convenience or not of partnership
or alliances with the main equipment suppliers,
and define the appropriate relationship with
each supplier.
2. Centralize the control of modifications that
occur during the project, and check if these
changes affect other activities.
3. Identify the need to provide technical support
for other partners when a problem in the supply
chain appears.
4. Analyse the best cost-effective solution for ship-
ping equipments to the shipyard.
5. Manage the knowledge from previous projects
and make it available for other partners.
6. Check the progress of different phases and sti-
mulate the collaboration to meet the schedule.
7. Measure the risks for the whole supply chain
network in collaboration with other partners in
the project.
8. Carry out studies to improve the overall perfor-
mance of the supply chain, identifying the
potential synergy.
Some of these SCM responsibilities may eventually
overlap those of the project management (PM). In
project-oriented companies these situations natu-
rally occur as many planning and coordination
issues can be shared by both SCM and PM. The
SCM in project-based companies is still under
development. According to Asbjørnslett [23]
The new area, the ‘Promised Land’ for supply chain
management to make a contribution, is the project-
oriented context and within project management.
 Supply chain management in the shipbuilding industry
Also, the approach to deal with SCM in project-
based companies seems to differ from the one usu-
ally applied in manufacturing companies [23, 26].
6 MAJOR BARRIERS FOR THE KEY DRIVERS
There is a trend in shipbuilding to move towards
the adoption of partnerships and reduction of the
supplier base [7, 19]. The main problem seems to
be the limitation of satisfying the requirements of
different customers after forming partnerships with
some suppliers. The customer normally has specific
preferences that need to be considered in order to
award a contract. For example, some ship-owners
have a preference for engines from a specific manu-
facturer to simplify the inventory of components or
to use technical skills already developed in mainte-
nance. Perhaps one way to make partnerships
feasible is to explore with some suppliers the oppor-
tunities of costs saving by avoiding redundant tasks
(i.e. inspection, transport, packing, etc.). This can
increase the flexibility in negotiating the price of
equipment in order to convince the ship-owner to
accept a new supplier. In some cases, the ship-own-
ers do not have a very strong opinion about their
favourite supplier; then a new supplier of the same
equipment, with similar performance, may be
accepted if a better price is offered.
The collaborative relationship with suppliers and
development of a culture of trust can provide almost
the same benefits of partnerships without any for-
mal obligations. Collaboration seems to be more
successful based on mutual benefits rather than
agreements [33]. The competitive procurement
approach largely adopted by shipbuilding compa-
nies creates a barrier to collaboration. Also, some
suppliers provide equipment for different shipbuild-
ing companies that compete with each other, and
this limits the development of trust. The ability to
Fig. 2 An example of ship production network involving two companies
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267
improve the relationship with suppliers depends on
the capability of shipbuilding companies to adopt a
different procurement approach that also considers
the relevance of other aspects such as on-time deliv-
eries, quality problems, level of service, number of
conflicts, etc.
The success of involving suppliers in develop-
ment and establishing inter-firm teams is also
dependent on improvements in the relationship
with suppliers. The company should be able to
identify the characteristics and capabilities of each
supplier before deciding what type of relationship to
establish with them. For example, the leading
Italian shipyard Fincantieri has defined four cate-
gories of suppliers according to the profit impact
and supply risk [19]. The suppliers with higher profit
impact and product with higher supply risks
are more involved in the company decisions.
Nevertheless, many suppliers are geographically dis-
persed or have little (or no) common values with
the shipbuilding company, which limits the poten-
tial to involve them in development or establish
inter-firm teams. Also, some suppliers are potential
competitors; this increases the risks of involving
them in future developments.
Communication across multiple companies is
possible today by applying ICT [4, 36, 37]. However,
the different systems used in different companies
are certainly a barrier to improved communication.
The development of a common ICT infrastructure is
limited by the large number of suppliers and subcon-
tractors, which frequently change from one project to
another. Also, it is complicated to communicate effi-
ciently across multiple companies without establish-
ing a clear information flow among all participants of
a project [38]. The interdependence between different
activities is massive, as many activities are performed
concurrently. One suggestion is to focus on simplify-
ing a few core processes with significant impact on
the delivery time. Business process modelling (BPM),
268 M H Mello and J O Strandhagen
integration definition for function modelling (IDEF0),
or any other method, can be applied to streamline the
work flow in order to understand the interdepen-
dences between activities.
Inter-firm coordination is a central issue to
impro-ving performance in shipbuilding. According
to Held [7]
The traditional supplier structures in the European
maritime industry are characterized by considerable
time and effort spent on coordination, a low level of
transparency and deterioration of efficiency due to
friction.
However, suppliers will not spend time and effort
on improving the coordination, if just the shipbuild-
ing company is going to benefit. Coordination does
not occur spontaneously; to enable such coordina-
tion, shipbuilding companies need to agree on shar-
ing the cost savings achieved or provide the
resources demanded for coordination [29].
Integration of management information systems,
exchange of design and production information,
and integration of product information systems
demand high investments in technology, the eco-
nomical return on which is difficult to quantify.
Nevertheless, the integration of different ICT tools is
essential to track the progress of different phases, to
share drawings in different formats, manipulate
technical requirements, validate simulation models,
etc. There is considerable evidence that the ship-
building industry lags behind other industries in
applying new technologies, thus there is a gap to
overcome [5, 19]. In the past some shipbuilding
companies were engaged in developing in-house
systems; however, most of these systems were
stand-alone and were abandoned later as systems
integration became increasingly important. Nowa-
days, there are many commercial tools to facilitate
the communication and information flow in compa-
nies with distributed operations. However, it is chal-
lenging to integrate systems developed from
different suppliers [36, 39]. Shipyards and suppliers
often have different systems platforms, program
languages, and databases. Even though different
systems can communicate with each other via for-
mat conversion, such interfacing often slows com-
munication down and lowers the shipyard’s
competitive edge [40]. Moreover, a shipbuilding
information model deals with a large number of
entity types that are related to a large number of
complex relationships and business rules [41].
Nevertheless, STEP (standard for the exchange of
product model data) as based on ISO 10303, and
XML (extensible markup language) that is defined
Proc. IMechE Vol. 225 Part M: J. Engineering for the Maritime Environment
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by W3C (the World Wide Web Consortium) have
been proposed as standards for exchanging product
model data from different systems [44].
7 CONCLUSION AND FUTURE RESEARCH
This paper has examined the drivers (concepts,
principles, or methods) and barriers to achieving
effective supply chain management in the shipbuild-
ing industry. A review of the literature has identified
the key drivers of SCM in shipbuilding, considering
also the perspectives of engineering and construction
industries. The barriers to implementation of the key
drivers were also discussed based on a case study
performed in a Norwegian shipbuilding company.
The paper contributes to understanding of the role of
SCM in shipbuilding, pointing out specific challenges
that need to be considered in order to improve inte-
gration and coordination. Also, the paper assists
understanding of some industry differences in SCM
and provides a basis for further investigations of
SCM in shipbuilding.
Despite the similarities with engineering and con-
struction, shipbuilding has its own specific character-
istics that determine the concepts, principles, or
methods of SCM. There is a significant complexity in
the product structure and frequent changes from one
product to another. Thus, some key drivers, such as
communication across companies, involving suppliers
in development, inter-firm coordination, exchanging
design and production information, and implement-
ing inter-firm teams, were more frequently mentioned
in shipbuilding than in engineering or construction.
Essentially, SCM in shipbuilding is dependent on
improving the relationship with suppliers and the
adoption of appropriate ICT tools. The suppliers play
a very important role in improving shipbuilding oper-
ations, as they are responsible for a major part of the
value created [42]. Also, shipbuilding is a step behind
in the application of ICT compared with other indus-
tries, thus there is a gap to overcome [5].
Future research will model the interface between
development and supply chain in order to investigate
the constraints in the execution of global pro-jects.
Further research should be conducted comparing the
drivers of SCM in different industrial contexts. This
could clarify the specific drivers of SCM according to
industry characteristics. Many drivers classified as
medium and low frequency should be more fully
investigated. There is also potential for investigating
SCM in shipbuilding considering the different types of
vessels. There is a considerable difference between
producing an offshore support vessel (more custo-
mized) and a container carrier (more standardized).
 Supply chain management in the shipbuilding industry
Finally, the recent advances in ICT provide ways to
improve SCM that still have not been completely
explored [43]. The specific challenges of SCM in ship-
building should be considered when applying ICT.
ACKNOWLEDGEMENTS
This study is part of a project called Innovation in
Global Maritime Production 2020 (IGLO-MP). The
authors acknowledge the Research Council of
Norway (Norges forskningsråd) and sponsor compa-
nies for their financial support. A special acknowl-
edgement is also dedicated to the managers of the
case company that provided the empirical data and
valuable discussion.
Ó Authors 2011
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