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- 1. CRUISE INTERNATIONAL, INC. A VIRTUAL SERVICE CASE Operations Management, 4e Reid, Sanders Chapter 4: Supply Chain Management at Cruise International, Inc. Details of Your Next Assignment Bob Bristol, your boss at Cruise International, Inc., just called to tell you that he was impressed with your progress thus far in familiarizing yourself with operations at CII-both the strategic details pertaining to its mission, competitive priorities, etc. and the specific details concerning its services and processes. He tells you that, with all the buzz about supply chain management (SCM) that you hear these days, CII is actively interested in exploring how different SCM concepts and techniques could be used in their operations. Maintaining an adequate, assured supply of a variety of mechanical equipment, entertainment equipment, retail merchandise, food products, and supplies for maintaining the ship is critical to CII. Meghan Willoughby, Chief Purser aboard the Friendly Seas I, has a couple of specific assignments that you will work on later. But for now, Meghan would like a concise
- 2. research report for the top management team addressing SCM issues relevant to CII. "Leila Jensen liked your write-up on the CII service package and delivery system. Meghan Willoughby wants you to prepare a similar report addressing SCM issues relevant to CII. Senior Administrators at CII are actively involved in exploring how SCM concepts and techniques could be adopted in their operations. Prepare a concise report addressing the specific questions that Meghan has put together for you. I look forward to receiving your report, which I am sure will provide insight for SC applications at CII." Assignment Questions for Chapter 4. 1. Describe the essential concepts of SCM and explain to what extent SCM is applicable to a service operation such as CII. 2. Describe the use of the Internet as a means to exchange information and explain how CII could benefit from using the Internet. 3. Describe how partnering with some of its suppliers could benefit CII. What issues should CII consider when developing partnerships? 4. Consider the different activities or services in CII's supply chain. Describe which activities might be better outsourced than done internally by CII. Describe the key issues to consider before outsourcing a service or activity. 5. Purchasing, a major function in SCM, is critical in the cruise line industry. Given your fresh-from-
- 3. school perspective, describe the potential conflicts of interest or ethical issues facing the purchasing function. Assignment 1 – MBALN670 – Supply Chain Management Assignment Brief: Prior to attempting the assignment questions please read the following material: o Cruise Data • North American Passenger Capacity • Cruise Destination Data • Cruise Destination Data (Seasonalized) • Average Length of Cruise Data
- 4. • Length of Cruise Demand Data • Average Capacity Utilization Quality Survey Data • Billing Errors Data • Guest Survey Data • Housekeeping Stateroom Cleaning Data o Housekeeping Work Sampling Data Hours Required to Accomplish Routine Maintenance Tasks Cost Reports Processing Time Chart http://edugen.wiley.com/edugen/courses/crs5658/simulations/vc /infodata.html#passengercapacity http://edugen.wiley.com/edugen/courses/crs5658/simulations/vc /infodata.html#passengercapacity http://edugen.wiley.com/edugen/courses/crs5658/simulations/vc
- 6. individual assignment own will be penalized – Use Harvard or APA referencing method. implies a deduction of 10 marks per day body, and a conclusion – 50% say Learning Outcome Assessed: 1,2,3 CHAPTER 4: Supply Chain Management at Cruise International, Inc. Bob Bristol, your boss at Cruise International, Inc., just called to tell you that he was impressed with your progress thus far in familiarizing yourself with operations at CII- both the strategic details pertaining to its mission, competitive
- 7. priorities, etc. and the specific details concerning its services and processes. He tells you that, with all the buzz about supply chain management (SCM) that you hear these days, CII is actively interested in exploring how different SCM concepts and techniques could be used in their operations. Maintaining an adequate, assured supply of a variety of mechanical equipment, entertainment equipment, retail merchandise, food products, and supplies for maintaining the ship is critical to CII. Meghan Willoughby, Chief Purser aboard the Friendly Seas I, has a couple of specific assignments that you will work on later. But for now, Meghan would like a concise research report for the top management team addressing SCM issues relevant to CII. "Leila Jensen liked your write-up on the CII service package and delivery system. Meghan Willoughby wants you to prepare a similar report addressing SCM issues relevant to CII. Senior Administrators at CII are actively
- 8. involved in exploring how SCM concepts and techniques could be adopted in their operations. Prepare a concise report addressing the specific questions that Meghan has put together for you. I look forward to receiving your report, which I am sure will provide insight for SC applications at CII." 1. Provide a comprehensive explanation of the essential concepts of SCM and explain to what extent SCM is applicable to a service operation such as CII. 2. Evaluate how partnering with some of the suppliers could benefit CII. What issues should CII consider when developing partnerships? 3. Purchasing, a major function in SCM, is critical in the cruise line industry. Critique the potential conflicts of interest or ethical issues facing the purchasing function.
- 9. CRUISE INTERNATIONAL, INC. A VIRTUAL SERVICE CASE Operations Management, 4e Reid, Sanders Mission Statement We are committed to serving our customers, both the guests and travel agents who book and support our cruises. Every service we provide must be of the highest quality whether it be shipboard or shore side. We constantly seek improvement and innovation as we strive to reduce costs in order to maintain reasonable fares, further enhancing the value of our service. All bookings are serviced promptly and accurately with the highest respect and courtesy. We recognize that our suppliers and distributors must have an opportunity to make a fair profit. Cruise International, Inc. is concerned about our staff, the men and women who work with us, whether shipboard or shore side. All employees are provided with clean, orderly, and safe working conditions. Each employee is treated with respect and recognized for his/her effort. Cruise International is committed
- 10. to providing competent management. Our ultimate responsibility is to our parent company and its stockholders. Our business must make a reasonable profit. Data and Charts Cruise Data • North American Passenger Capacity • Cruise Destination Data • Cruise Destination Data (Seasonalized) • Average Length of Cruise Data • Length of Cruise Demand Data • Average Capacity Utilization Quality Survey Data • Billing Errors Data • Guest Survey Data • Housekeeping Stateroom Cleaning Data Work Sampling Data Hours Required to Accomplish Routine Maintenance Tasks Cost Reports Processing Time Chart Activities for Telemedicine System Implementation CRUISE DATA North American Passenger Capacity Individual Cruise Line Detail at Year-End 2009
- 11. Cruise Line No. of Lower Berths No. of Ships Carnival Cruise Lines 47,908 21 Celebrity Cruises 14,762 9 Costa Cruise Lines 17,265 10 Cruise International, Inc. 13,120 12 Crystal Cruises 2,014 2 Cunard Line, Ltd. 4.411 2 Disney Cruise Line 3,508 2 Holland America Line 16,929 12 MSC Cruises USA 9,073 7 Norwegian Coastal Voyages 5,923 13 Norwegian Cruise Line 20,950 11 Oceania Cruises, Inc. 2,052 3 Orient Lines, Inc. 845 1 Princess Cruises 28,800 14 Regent Seven Seas Cruises 2,410 5 Royal Caribbean International 45,570 20 Seabourn Cruise Lines 624 3 Silversea Cruises 1,356 4 Swan Hellenic 360 1 Windstar Cruises 604 3 Total 234,077 155 Cruise Destination Data
- 12. Cruise Destination Data (Seasonalized) Average Length of Cruise Length of Cruise Demand Data
- 14. QUALITY SURVEY DATA Billing Errors Data Cruise Number Number of Defective Bills 1 47 2 45 3 59 4 50 5 74 6 71 7 65 8 49 9 26 10 29 11 32 12 35 13 48 14 46 15 51 16 64
- 15. 17 52 18 44 19 46 20 51 21 45 Total 1029 Guest Survey Data Cruise Number Number of Outstanding Responses 1 14 2 13 3 15 4 14 5 18 6 10 7 26 8 8 9 17 10 12 11 13 12 14
- 16. 13 17 14 11 15 8 Total 210 Housekeeping Stateroom Data Day Number of Defects 1 108 2 104 3 94 4 105 5 88 6 150 7 85 8 98 9 145 10 95 11 105 12 65 13 77 14 82 15 90 16 98 17 116 18 113 19 88 20 94
- 17. Total 2000 Housekeeping Work Sampling Data Activity Number of times observed Cleaning stateroom 144 Delivering room service 12 Removing room service dishes 17 Arranging laundry/dry cleaning service 13 Delivering clean garments 22 Evening turndown service 70 Assisting guests 20 Preparing for crew show 10 Other activity 20 Unavailable for observation 38 Hours Required to Accomplish Routine Maintenance Tasks Cost Reports Processing Time Chart Cost Reports Process Time (minutes) Report Review Time Data Entry Time Specialty Restaurant I 12 10
- 18. Specialty Restaurant II 14 16 Wine I 17 18 Wine II 20 22 Wine III 12 15 Bar Service I 10 15 Bar Service II 25 32 Bar Service III 22 28 Bar Service IV 16 20 Shore Excursions 30 35 Gift Shops 24 30 Salon/Spa 18 25 CRUISE INTERNATIONAL, INC. A VIRTUAL SERVICE CASE Operations Management, 4e Reid, Sanders An Overview of Cruise International, Inc. Cruise International has been in business for more than two
- 19. decades. The organization competes in all aspects of the cruise industry. They provide cruises with small ships (fewer than 500 passengers), medium ships (between 500 and 1,500 passengers), and large ships (over 1,500 passengers), as well as several different luxury levels. Cruise International, Inc. currently uses the following port cities for embarkation and disembarkation. Amsterdam, Holland Auckland, New Zealand Barcelona, Spain Beijing, China Buenos Aires, Argentina Cape Liberty, Bayonne, New Jersey Ensenada, Mexico Ft. Lauderdale, Florida Harwich, England Hong Kong, China Honolulu, Oahu, Hawaii Los Angeles, California Miami, Florida Rome, Italy San Diego, California San Francisco, California San Juan, Puerto Rico Seattle, Washington Seward, Alaska Singapore Southampton, England Stockholm, Sweden Sydney, Australia
- 20. Valparaiso, Chile Vancouver, British Columbia Venice, Italy Corporate headquarters for Cruise International, Inc. are located in Miami, Florida. The cruise ships used by CII have a number of departments and services. The Administration basically handles the paper work during the cruise. The Deck and Engine members are responsible for the operation and maintenance of the ship. Entertainment Services provide the onboard entertainment. Food and Beverage Services are responsible for dining and drinking aboard the ship. The Hotel function is responsible for the staterooms for guests and crew. Housekeeping cleans the public areas of the ship as well as the staterooms. Information Technology is responsible for the operation and maintenance of all areas of the cruise ship's onboard computer system. The Cruise Staff is responsible for maintaining guest relations. Clicking on the underlined department allows you to find out more about the department or simply go to the Cruise International, Inc. Departments and Services Page. The descriptions of job positions were taken from http://www.cruiseservices.co.uk and http://www.cruiseshipjobs.biz.
- 21. http://www.cruiseservices.co.uk/ http://www.cruiseshipjobs.biz/cruise_ship_job_descriptions_pos itions_on_cruise_ships_employment_opportunities CRUISE INTERNATIONAL, INC. A VIRTUAL SERVICE CASE Operations Management, 4e Reid, Sanders The following virtual service case has been developed as an interactive supplement to the Reid & Sanders Operations Management textbook. The case requires you, the student, to assume the role of an intern working for Cruise International, Inc. (CII). Cruise International operates cruise ships globally. During your internship you will be working at corporate headquarters on both strategic and tactical issues as well as on board one or more of our cruise ships. While Cruise International is a fictional company, much of the data used with regard to the cruise industry is real. There has been some manipulation of the data to include Cruise International as part of the industry. Much of the data has been adapted from an annual report done by the Cruise Lines International Association, Inc. The style and format of this virtual case draws heavily from the previous Virtual Company Consulting Case developed by Ted Helmer of Theodore Helmer and Associates, Inc. and Jon Ozmun of Northern Arizona University.
- 22. An Overview of the Cruise Industry In 2006, the size of the worldwide cruise market was approximately 12 million passengers. Of those 12 million passengers, 10 million passengers embarked on cruise voyages from ports in North America. The U.S. cruise passengers, representing approximately 78% of the worldwide cruise passengers, have about 9 million passenger embarkations. The total economic impact of the cruise lines, passengers, and their U.S. suppliers reached $35.7 billion according to a study done by the Business Research and Economic Advisors (BREA). In the BREA report, it shows the following U.S. industries that most benefited from the cruise industry. Direct spending of the cruise lines and their passengers on goods and services produced in the United States in 2006 was $17.6 billion. This spending resulted in 348,000 U.S. jobs paying $14.7 billion in wages. In 2006, the top ten U.S. cruise port cities, ranked by number of embarkations, were Miami, Port Canaveral,
- 23. Port Everglades, Galveston, Los Angeles, New York, Tampa, Long Beach, Seattle, and Honolulu. Florida remains the center of the U.S. cruising industry, accounting for almost 56% of the embarkations. California's cruise ports represented nearly 14% of all U.S. embarkations. Texas is the highest growth market. New York increased embarkations to 536,000 with the opening of the Brooklyn Cruise Terminal. U.S. ports of call had approximately five million cruise ship visits in 2006. Most of the visits were to Alaska, Hawaii, and Key West. Following are some fast facts about the cruise industry. -passenger cruise ship with 950 crew members generates approximately $322,700 in offshore spending in a U.S. homeport city. one or more nights in a port city either before or after the cruise. Each of these visitors spends an average of $289 per visit on retail, dining, local transit, and lodging. (CLIA), the industry has had an average annual growth rate of 8.5% per annum. million passengers have taken a deep- water cruise. Of this number, almost 60% have done their cruise within the past ten years.
- 24. Americans expressed an intent to cruise within three years. Of those, 31 million expressed a strong intent to cruise within three years. At this point in time, only 17% of the U.S. population has ever cruised. design concepts, new onboard and/or onshore activities, new cruise themes, and new cruise lengths to reflect the changing vacation patterns of today's market. expectations. Cruising consistently receives top marks. destination areas to which passengers may return for a future vacation. states and Canada.