Cruise Firm Switches to Online Purchasing

Friday, October 21, 2005
Royal Caribbean Cruises has implemented electronic purchasing technology to cut the $1bn it spends annually on resources for its ships. The cruise operator completed a switch to vendor Ariba’s software technology last month, and is using a web portal to purchase goods ranging from ship parts to food and drink. The firm also hopes to reduce purchasing costs and administration through a managed service contract with Ariba, which will process past invoices and accounts payable data. ‘We operate nearly 30 cruise ships, which have been built in different countries at different times, and there are hundreds of thousands of parts we need to buy to keep them running,’ said Michael McNamara, director of strategic sourcing planning and automation at Royal Caribbean. ‘By taking all the data, cleansing it and grouping it together, we can improve supplier relationships and negotiations on a global basis. ‘By having a holistic picture of our relationships, we can rationalise or renegotiate contracts, or look for more competitive service levels.’ The online auctioning tool, which compares bids in multiple currencies, will help Royal Caribbean deliver goods to the 200 ports where its ships dock, using real-time bidding details about despatch times. The system will also be used by the firm’s European logistics operations in the UK and Germany. ‘Each of our ships must be self-supporting; some carry more than 5,000 people,’ said McNamara. ‘We must provision energy, maintenance, IT, waste management, consumables and other necessities. Ariba gives us a strategic advantage because we have a single point of integration for sourcing and analysis.’ The company started its shift to the online purchasing system in June. It initially used Ariba QuickSource, before transferring to the fully-managed service.
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