#2 Supply and Purchasing

Question 1

reasons for supply

Answer 1

Necessity
* meet statutory requirement

Efficiency
* efficient operation

Under owner’s account (unless required for a
particular voyage -> charterer’s account)

Question 2

basic ways to supply food for the crew

Answer 2

1. Crew paid an allowance for food. Owner only
   supplies cooking equipment, refrigerators and store rooms
2. Chief steward/cook paid by owner to supply crew’s food.
3. Owner supplies the food directly. Owner budget the cost per head per day.

Question 3

Information required prior to supplying to ships

Answer 3

inventory of equipment and stores on
board and its consumption.

the max. and min. stock required.

when major storing should take place and amount to purchase.

world prices and availability of stores.

type, specification & cost.

Question 4

Factors to consider when supplying equipment
and stores to ships in practice

Answer 4

Ensure sufficient equipment and
stores.

supplied economically.

 Right quantity purchased at lowest
price.

shelf life.

storage space

Question 6

Company Competitiveness

Answer 6

Know more about your company
Strategic Analysis of your company
SWOT
Porter’s Five Forces
Michael Porter’s Theory on Industry Analysis

Question 7

Broad environment (General Environment)

Answer 7

affect the whole industry

Technological
Economical
Social
Political
Educational

Question 8

Competitive environment (Specific Environment)

Answer 8

specific
forces which affect companies differently

Suppliers
Buyers
Substitutes
New entrants
Rivalry

Question 9

Porter’s Five Forces

Answer 9

analyzing a company’s competitive
environment

number and power of a
company’s competitive rivals,
potential new market entrants,
suppliers,
customers, and
substitute products

Question 10

Michael Porter’s Theory on Industry Analysis

Answer 10

rivalry
 power of suppliers
 power of buyers
 threat of new entrants
 threats of substitutes

Question 11

Growth of ship management companies

Answer 11

Cut operating cost.
Economies of scale
Increase in open registers.
Access to new sources of manpower.
Difficult to finance
increased complexity of ship management

Question 12

Singapore Registry of Ships (SRS)

Answer 12

Largest merchant fleet in Asia.
5th largest merchant fleet in the world.
As of end 2005, there were more than 3,200 ships
under the Singapore flag, totaling 33 million GT

Adoption of International Standard
Good Safety Record
Responsible Administration NON-FOC flag

Exemption of profits from income tax
No restriction on crew nationality
Recognition of foreign COC
Stable and Political Environment
No restriction on trading areas

Choice of Classification Societies
Treatment of Vessel Sales Proceeds as Capital Gains. Shipping companies owning SRS ships are assured of upfront certainty that vessel sales will be treated as capital gains, from 2005 for a period of 5 years. Growth of Singapore Registry of Ships (SRS)

Question 12

International Safety
Management (ISM) Code

Answer 12

falling standards of seamanship

Lack of care and investment by some ship
owners/ managers.

Response to pressure by society as a result of the loss of life and environmental pollution

Question 13

Objective of ISM

Answer 13

To ensure safety at sea,
Prevent human injury or loss of life and
Avoid damage to the marine environment and property

Question 14

Phase I (ISM)

Answer 14

Came into force on 1 st July 1998
Applicable to passenger ships including high speed craft
Tankers
Bulk Carriers
Cargo high speed craft of 500 GT and above

Question 15

Phase II (ISM)

Answer 15

Came into force on 1st July 2002
 Applicable to all other vessels of 500 GT and above which
were not covered under Phase I
 General Cargo ships, survey vessels, container ships,
ocean tugs, mobile offshore drilling units, reefer ships, car
carriers, livestock carriers, cement carriers and woodchip
carriers.

Question 16

Requirements (ISM)

Answer 16

Establishment of Safety Management System (SMS)
 SMS to be set up in the company
 SMS set out procedures to manage the safety and pollution prevention aspects of ships, both ashore and on board.
International Safety Management (ISM) Code
Company able to follow the set procedures to check that it complies and continues to comply
Company to provide necessary resources and shore-based support to implement SMS
Company to designate a person(s) ashore (DPA) having direct access to the highest level of management

Certification
Company must produce objective evidence to show that
the SMS has been in operation for at least 3 months on board at least one ship of each type.
Administration to verify that the company has properly developed and implemented a SMS which complies with ISM Code.
Thereafter Document of Compliance (DOC) will be
issued.
Validity of DOC is 5 years subject to annual verification.
An initial verification of compliance by way of an
external audit on board the ship will be carried out.
A Safety Management Certificate (SMC) will then
be issued to each ship operated by the company.
Validity of SMC is 5 years with one intermediate
verification.

Question 17

DESIGNATED PERSON ASHORE (DPA)

Answer 17

direct access to the highest level of
management.

To ensure the safe operation of each ship.
To provide the link between the company and those on board.
Have access to the highest level of management.
Monitor the safety and pollution prevention aspects of the operation of each ship.
Ensure adequate resources and shored based
support are applied as required.
Contactable 24 hrs.