KPI Best practices from a Ship Manager’s Perspective

There are many different definitions for a Ship Manager so it might be interesting to look at what a Ship Manager really is and it does not matter if the Ship Manager is an in-house manager or a third-party manager, but the integrated components of ship management are what really matters. Management translates market rate and days into profit and good management maximizes those profits or to put it simply, good Ship management transfers charters into dollars.

2013.11.07 - KPI Best practices from a Ship Manager's Perspective

With that in mind I a look should be given at practices that are not best, more specifically the ‘Worst Practices’ and what is failure as far as management goes. A definition that one can find is that failure refers to the state or condition of not meeting a desirable or intended objective and may be viewed as the opposite of success.

What is the cost of worst practice? Some are obvious like the loss of a vessel, loss of process, which leads to loss of money, loss of reputation, personal or corporate reputation which is important to all as it is difficult and takes a lot of time to get, and very quick to lose. Another cost of Worst Practice is environmental damage. Let’s also look at the personal cost which is sleepless nights and ones health, imprisonment or fine, and then ultimately of course the sack. Bad management can affect one personally; it can affect family and livelihood. Best management practice thus ensures a safe, reliable, efficient and compliant operation.

How do we know our adopted practices are the best ones, if we cannot measure them? And this leads on to KPIs, the three letters that must strike terror into the heart of every shipping executive. But we need them and everybody uses them. How do we know how well we are performing? If we need to improve and how we know if our competitors are managing better than us? Do we want to improve and can we identify how this can be done? That what which don’t measure, you can’t control and that which you don’t control you can’t improve! So the virtuous cycle is plan, do, check, act and keep it going.

As for the current industry situation in respect of KPIs, there are too many different indicators (KPIs) and the comparison of performance between companies is difficult due to lack of standardization. It is difficult to mobilize organizational focus on quality improvement. Moreover, an additional manpower is required to present the same information in many different ways (onboard, in office and to externals) and of course there are emerging new reporting requirements.

When it comes to what, when and how many KPIS, it can depend upon the level of the organization, it depends on who is using them. Some KPIs are used at all levels (e.g. LTIF) and additionally too many KPI’s “Dilute” the effectiveness or focus.

The objective of the InterManager’s Shipping KPI Project, developed by a panel of experts from the industry, was to allow companies to benchmark against the industry by developing tools to measure company and vessel performance and have these recognized as “a Standard Industry Measurement Tool”. The reason was to boost performance improvements internally and provide and efficient communication about ship operation performance information to internal and external stakeholders through increased transparency.

In conclusion, when considering the best practices from a ship manager the answer to the question whether you can manage without measuring, is not if you want, or need, to improve your performance. What when and how many? If you are not already doing it, start with the Shipping KPI’s developed by InterManager for quarterly benchmarking.

And finally, practical advice for the use of KPIs

  • Consider what you and your team need for day to day management
  • Start with reviewing the information you already have available.
  • “Traffic light” tools are readily available for use with existing databases
  • Nobody will focus their personal effort on more than five Key Performance Indicators

Best practice comes from operational safety and environmental awareness!

Above article is an edited version of Mr Alastair Evitt’s. General Manager, V.Ships Greece Ltd., presentation during 2013 SAFETY4SEA Athens Forum

You may view relevant video by clicking here.

The article was initally published in SAFETY4SEA.

For anyone interested in Intermanager’s Shipping KPI Project, additional information can be found in the following links:

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