Royal Caribbean Cruises, with 22 ships and counting, has come to the harsh realization that its manual processes of managing suppliers aren't working. The Miami-based company began seeking a more efficient and cost-effective approach to supply chain management (SCM), and so began its foray into collaborative commerce. The big hurdle for Royal Caribbean was that its supply chains had holes--there were some purchasing activities that were undefined and unknown.
The company saw that it needed to provide much more guidance and much more timely information about inventory positions, itinerary changes, or even menu changes that could drive or change consumption patterns. Royal Caribbean then needed to translate the needs of these operations programs into purchasing and supply chain requirements. The procurement and logistics processes together spend in excess of $600 million of the company's $2.9 billion in total revenue. "One estimate is that we could reduce our excess inventory by as much as half. Even as a one-time reduction, that's a substantial value, but the potential recurring cash savings would also be significant," the company official said. "Overall, we estimate about $5-6 million in one-time and recurring savings enterprise-wide for the total supply chain upgrade."