data analysis
Data Analysis
Introduction
The researcher conducted interviews withthe management staff of different shipping companies in China. For privacy and protection of the identity of the individuals, they were not supposed to say during the interview the companies they are working for. The interview of the 26 staff members' quantitative data on the factors that increase cost in the shipping companies was identified. In this chapter, an analysis of the collected information is performed to understand the situation better.
Do you agree that the initial cost of the vessels impacts the overall running costs of the company?
|
Response |
Count |
|
strongly agree |
8 |
|
Disagree |
3 |
|
Undecided |
2 |
|
Total |
13 |
This question aimed to understand whether the shipping companies incur significant costs in purchasing the vessels. Out of the 13 interviewees, 8 strongly agreed that this is an important cause of increased costs in their organizations while 2 were undecided on this. The remaining 3 disagreed with the findings. They indicated that their companies incur hiring costs of the vessels since they prefer to use other companies' vessels instead of acquiring theirs. Figure 1 shows the responses on how the initial cost of the ship influences the total charges in the organization.
Figure 1: Initial Cost Impact on Total Costs
Does transportation cost vary across the year?
The shipping companies in China are involved in the transportation of goods over the year. These goods have high and low demands depending on the destination. Therefore, it was essential to understand whether transportation costs are constant or vary over time and the effect of variations. 6 of the interviewees agreed that the costs of transportation varied across the year. 3 of them strongly agreed with this. However, 1 interviewee did not think the transportation costs were affected by the time of the year. 2 strongly disagreed with this and 1 were neutral and did not know the effect of the yearly seasons on the shipping companies. Figure 2 shows the responses on how transportation costs affect the costs.
Figure 2: Variation of transportation cost across the year
Select the hidden costs your shipping company deal with?
The shipping companies operate under particular jurisdictions where they must adhere to the specified laws and regulations. However, in some instances, the area of operation affects the costs incurred. This question aimed to understand the costs that arise during the operations of the shipping companies that directly contribute to increased costs and a reduction in profitability. In this question, the interviewees were supposed to answer in two parts. The first part was the foreseeable hidden costs in shipping that affect the company profitability. 30.8% stated that the charges for goods sent to the wrong destination affected their business. 65.4% stated that the cost of deferment affected their business. The cost of deferment affects businesses because the shipping company has to pay for duty and VAT on behalf of the customers before doing the direct billing. 84.6% of the interviewees stated that extra delivery costs increased their expenses. The extra delivery costs are incurred due to the improper billing of client goods as per the destination. In case of the shipping company mistake, they have to deliver the goods to the correct location even when the charges are lower. The shipping companies quote their charges based on standard delivery. Any misunderstanding with the customer leads to the company bearing higher costs. 61.5% of the interviewees indicated the customs clearance delays in different ports increased their hidden costs. This is especially when the ports require the companies to pay for port charges before the goods can be stored for collection later by the customers. Figure 3 shows the responses on the foreseeable hidden costs affecting the total costs in the shipping companies.
Figure 3: Foreseeable costs in the shipping companies
The second part of the question shows unforeseeable costs that the company incur over time. 88.5% of the total responses indicated that the management staff agreed that extra exworks charges could be an issue when there is a mistake on the local customs declaration. The client is not liable to any costs before the goods reach their destination. Therefore, the extra cost during such a mistake is incurred by the shipping company. The country of destination customs delays can also be a cause of extra costs. This occurs when the authorities in charge of customs show interest in the cargo and hence increasing delays. The goods can be held without offloading,increasing the time a vessel spends in one particular destination. 47.8% of the responses showed the management staff agreed that the custom delays cause increased costs of operation for the shipping companies. Figure 4 shows the unforeseeable costs that affect shipping companies.
Figure 4: Unforeseeable shipping costs
What are the significantvariable costs affecting the company profitability?
This question aimed to understand the different costs that affected the shipping industries in China. The interviewees were supposed to select the costs that affected their shipping companies. From the preferred choices, 73.1% agreed that the manning costs were amongst the rising variable costs. However, 56.7% of the interviewees believed that repair and maintenance constituted a high fraction of the variable costs. These are the costs of maintaining the vessels and the warehouses. 26.9% believed that the variable costs were influenced by the store and supply costs. However, 46.2% believed that administrative costs were a significant source of variable costs. Figure 5 shows the variable costs affecting the shipping industry
Figure 5: variable costs in the shipping industry
What are cost control systems available for your company?
The costs in the shipping companies can be controlled to enhance performance and profitability. 10 interviewees stated that their companies had adopted information recording as a form of managing costs. The costs are accounted for, including allocating costs per ship and using numerical codes to determine the budgets. 12 of the responses showed that budgetary execution control was the cost control system in place. It is the process of comparative analysis between the current costs and the forecasted expenses in the budgets. Figure 6 shows the cost control approaches used by the shipping companies.
Figure 6: Cost control mechanisms
Do you agree that technology is essential in cost control?
Technology has influenced the operations of different companies. 7 of the interviewees strongly agreed that technology is the missing factor that helps enhance cost control in shipping companies. 3 agreed that technology is essential, 2 disagreed while 1 strongly disagreed. Figure 7 shows the responses on the effects of technology on cost control.
Figure 7: Importance of technology in cost control
What principal benefits accrue from the automation of the cost control system in the companies?
Since technology is essential for managing costs in the shipping industry, it was necessary to understand the principal benefits that companies experience from automating their operations. 53.8% of the management staff interviewed believed that automating cost control resulted in higher accuracy. This is because this helped to see the entire process from the beginning to when the goods are delivered to the destination port. 61.5% of the interviewees believed implementing and adopting automation is essential in enhancing the speed of delivery. This helps to enhance the performance of the company. 34.6% of the responses received showed that the interviewees believed that automation of cost control resulted in comprehensiveness in operations. Figure 8 shows the distribution of responses on the benefits of automating cost control in shipping companies.
Figure 8: Benefits of Automation in Cost Control
Does your company use the ERP system?
The ERP system uses software that enhances the management of the daily business activities in a company. It helps in the planning, budgeting and prediction of the financial performance. 17 of the interviewed people indicated that they have an ERP system in the company. However, the remaining indicated that they do not have such a system. Figure 9 shows the distribution of the companies with and without ERP systems.
Figure 9: ERP Implementation
What are the benefits of implementing an ERP system?
The ERP system was found to be beneficial for the organization. This question aimed to understand the management staff's benefits since their companies implemented the ERP. 70.6% of the responses indicated they using the ERP enhances business reporting. This is because it helps to enhance real-time information using better reporting tools. 41.2% believed that this is a tool that helps to enhance the quality of customer service. 52.9% believed that this helps to improve the inventory costs. 88.2% believed this is a better way of enhancing cost savings, whereas 58.8% believed this helps enhance supply chain management. Figure 10 shows the benefits of implementing ERP in shipping companies.
Figure 10: Benefits of implementing ERP
What lean processes apply to your company?
Lean processes are meant to enhance flow, perfection, and value. Therefore, this question was meant to determine whether the shipping companies valued lean operations principles intended to minimize waste. 70.8% of the responses showed that companies had implemented a continuous improvement culture. This is the culture where the companies work to remove the waste to enhance performance and profitability. Every improvement in cost management is designed to ensure they support customer demand of the value stream. 88.5% of the responses showed that the companies had implemented kaizen as the cost management approach. The companies enhance the performance by having small teams that work intensively to eliminate waste in the processes. 23.1% indicated that their companies used cross-trainings as a way of teaching teamwork and lean practices. The aim is to enhance flexibility in responding to customer demands. Figure 11 shows the different lean practices used in improving cost control in shipping companies.
Figure 10: Lean Processes in Cost control
What benefits accrue from implementing lean processes in controlling costs?
Every company seeks to enhance its performance in the market. Therefore, implementing different methods is meant to be a way of increasing productivity. 92.3% of the interviewed personnel indicated that through lean processes, their companies have improved on the lead times. The process streamlines the processes; hence the companies can respond to the changes in the demand and fluctuations in other market variables. 69.2% showed that they believed implementing lean processes helped enhance sustainability and improve cost management. 96.2% stated that adopting lean processes was crucial in increasing profits.
What do you believe are the drivers of cost reduction in your company?
Cost reduction is mainly driven by the need to enhance competitiveness and improve productivity and profitability. However, there are other instances where companies seek to reduce costs based on different purposes. 42.3% believed that their companies adopted cost control measures to enhance their operations. Lower costs can enhance profitability because revenues are applied in other areas, improving overall company performance. 61.5% believed that most of the companies implemented cost management because they wanted to compete in the industry. 30.8% believed that companies adopt these cost control measures to implement the most significant challenge in their operations. Figure 12 shows the views on reasons for the implementation of cost control in shipping companies.
Figure 12: Reasons for engaging in cost control
Summary
In conclusion, cost management in the shipping industry is an aspect that is gaining much attraction. Every shipping company wants to remain competitive and profitable in the long run. The problems of costs, both hidden and visible, make it hard to achieve such goals. The problem with many companies is the lack of cost control methods. However, it is possible to use budgetary approaches in ensuring there is proper management of the resources and that people work towards common goals. Using lean processes, it is possible to enhance cost management. Through continuous improvement and kaizen, the results are that the shipping industry can eliminate wastes that affect the operations and improve profitability. This helps to increase profitability, comprehensiveness, and better customer service. Therefore, the companies work to adopt the use of cost control processes in China in order to enhance their operations, improve performance and the ability to meet up with the challenge of cost reduction. However, technology is important in enhancing cost control. Through technologies such as ERP enable the shipping companies to control their costs due to higher visibility.
Controlling costs
Continous improvement kaizen Cross training 0.70800000000000052 0.88500000000000001 0.23100000000000001Variation of transportation cost across the year
strongly agree Agree Disagree strongly disagree Undecided 3 6 1 2 1ERP Adoption
Continous improvement kaizen Cross training 0.70800000000000052 0.88500000000000001 0.23100000000000001ERP Adoption
Continous improvement kaizen Cross training 0.70800000000000052 0.88500000000000001 0.23100000000000001Initial Cost Impact on Total Costs
strongly agree Agree Disagree strongly disagree Undecided 3 6 1 2 1Variation of transportation cost across the year
strongly agree Agree Disagree strongly disagree Undecided 3 6 1 2 1