Procurement Excellence in the Maritime Industry: Insights from Rick Ackermann at BW LPG
Rick Ackermann, Head of Procurement at BW LPG, brings a wealth of experience and strategic vision to the table, steering the procurement department of one of the leading LPG shipping companies. In this exclusive interview, Rick shares his approach to enhancing procurement efficiency, integrating sustainability, and navigating the complexities of the global market. Discover his insights on building supplier relationships, leveraging technology, and the future trends poised to reshape the procurement landscape in the maritime industry. Join us as Rick delves into the principles that guide his leadership and the innovative initiatives driving BW LPG’s procurement success.
Click below to access the digital brochure version
Role Overview: Could you describe your role as the Head of Procurement at BW LPG and the primary responsibilities it entails?
At BW LPG, the Head of Procurement is responsible for all procurement of goods and services, as well as being involved in all dry dockings. We have a team of four buyers and a Logistics Coordinator in Manila, and two buyers in Oslo. The Head of Procurement is stationed in Singapore. The main goal is to be a solid business partner for the business, which entails working closely with the Technical and Operations teams. Key activities include contract management, inventory management, innovation, ESG, and maintaining best-in-class procurement practices to provide the highest added value for BW LPG.
Strategic Procurement Initiatives: What are the key strategic initiatives you have implemented in BW LPG’s procurement practices since assuming your role?
Short and sweet:
- Value Chain: From day one, I have moved the role of Procurement higher up the value chain. The traditional view of Procurement has changed from a Purchasing department into a strategic business partner.
- Transparency: In the past, it wasn’t always clear what Procurement did and what people could expect from our department. I have changed our procedures and setup in such a way that it is very transparent on every level. I also changed the perception that Procurement is a group of people taking care of things. We are all part of the Procurement process.
- Contract Management: We purchased a very intuitive contract management system (Scanmarket), which is easily accessible and currently contains over 170 contracts that we have in place.
- ESG: I have invested a lot of effort into ESG in our supply chain. This varies from introducing the Supplier Code of Ethics in all of our agreements and purchase orders to plastics reduction programs on board our vessels.
- Group Procurement: I started a collaboration team with the Heads of Procurement of the other BW entities. Procurement has transformed from a central procurement department in Oslo to a decentralised setup around the world. By collaborating on volumes, best practices, and innovation, we have migrated into a hybrid solution.
Challenges in Procurement: What are the most significant challenges you face in procurement for an LPG shipping company, and how do you address them?
From a procurement perspective, we would like to be as efficient as possible. Planning of transports is very challenging in our industry, as the port of delivery for our goods and services is sometimes changing on a daily basis. Unfortunately, this means that we have to airfreight a lot of our spare parts, which has a negative impact on our carbon footprint.
Another challenge everybody faces in shipping, which makes it more fun at the same time, is that this is a very conservative industry. As a standard, the credo is “if it ain’t broke, don’t fix it!” This means that driving innovation is upstream, and solutions found in other industries still have to be introduced in shipping. The fun part is convincing people and the fact that there is still room for improvement.
Supplier Relationships: How do you cultivate effective supplier relationships to ensure seamless operations and business continuity at BW LPG?
In order to do that, I still rely on the Kraljic matrix. It is a well-known tool to classify the importance of suppliers products and services, and is very effective when it comes to supplier positioning, criticality analysis, and quadrant strategy. As a basis, you should figure out what kind of relationship you have or need to have with a supplier or partner. You then make sure that you assign the right buyer to the right quadrant and thus supplier. Not doing this correctly could potentially damage the relationship and therefore our position. Setting this up in the right way tremendously influences our position and leverage. Above all, whatever you do and in whatever position you are in with regards to the supplier, respect is always the keyword.
Technology in Procurement: Can you discuss the role of technology in enhancing procurement efficiency and transparency at BW LPG?
Especially with regards to the operational part of the procurement process, there are some quick wins when it comes to the role of technology. As we digitise the purchasing role, we can introduce innovations and efficiency improvements. We are, for example, introducing Amazon-type platforms with certain suppliers for technical stores and PPE, such as Source 2 Sea, which makes it easier for the crew on board our vessels to simply click on the picture of the parts or equipment they need. Also benchmarking and forecasting through Closelink for Lube Oil is a new development which we embraced. The role of Procurement is to facilitate this – we can help organise the financial back office, monitor deviations, and take on the more mundane tasks so that our colleagues at sea can focus on the strategic issues and flawless operations. Another major step we are currently investigating is the introduction of new technology regarding inventory management. Together with one of our partners in freight forwarding, Marinetrans, we are developing an inventory management platform, eSeastore, that will give us the tools to plan based on stock levels and have sophisticated tools on board to maintain stock on the vessel. This is a very exciting project.
Sustainability Practices: How does BW LPG integrate sustainability into its procurement processes, especially considering the environmental impact of shipping?
We have the Supplier Code of Ethics as an integral part of everything we do. In addition to this, we are increasingly choosing sustainable solutions for parts and services in different regions of the world. There is a lot more work that we can do on the sustainability front, and we are working hard to improve both individually as a company, and with partners. One example of the latter would be us working with our suppliers to reduce single-use plastics in our victuals.
Impact of Global Markets: How do global economic conditions and market fluctuations impact your procurement strategies?
Obviously, they do, and they disrupt anything that we plan or forecast. I mean, who was counting on COVID-19? Or the political uncertainties in many parts of the world? The blockage of the Suez Canal? Drought at the Panama Canal, etc. The good thing is that we know we are very creative when it comes to problem-solving. Yes, we like to plan as much as possible, but we are agile and switch gears when necessary and required.
Future Procurement Trends: What emerging trends do you see in procurement that could significantly impact the LPG shipping industry in the coming years?
From a leverage point of view, unfortunately, increasingly I see large companies buying out the smaller ones, which impacts our ability to leverage in certain parts of the supply chain. This is not a good development.
The two biggest trends, however, are undoubtedly in ESG and AI.
I strongly believe and hope that in a few years’ we will have surpassed the awareness phase of ESG and that there will be more regulation and certification, making it a lot easier for all companies to determine, on the basis of a standard, who to work with. ISO did the same thing for business processes in the 1980s.
Artificial Intelligence is an absolute game changer in any business. A lot of our repetitive activities will be taken over by AI, but also market analytics, supplier dashboards, forecasting, and reporting will be a lot easier and faster. Is this a threat to our procurement existence? Not at all, it simply means that we have more time for actual procurement activities instead of creating tools to help us do just that.
