Korean shipping companies are facing various aspects of difficulties such as an increase of prime cost which is caused by a continuous increase of crew cost, a rising oil price, and a rise of ship price and an increase of risk of exchange rate due to fluctuation.
In these circumstances, it is essential to adopt an effective management system which can cope with a change in business environment and improve business performance to get competitive power in the international shipping market.
The management system can be established and operated in various ways but it should be coincided with the objective of a company’s establishment and management.
Therefore, management system should be operated centering on process to manage interrelated activities systematically. However, most of Korean shipping companies are operating department centered management systems leading to limited roles in achievement of their management objectives.
In this point of view, process management, which is emphasized by BPR, six sigma, ISO 9000, ABC, TCM, and SCM in business innovation techniques,suggests important points in establishing and operating management system.
Most existing studies were restricted in a grasp of the way or effects of adoption of management system.
These studies are limited to the examination of relationship between individual elements in the adopted management system and business performance. The improvement in the management system by examination of causal relationship between each process hasn't been examined yet.
Therefore this studies to define core processes affecting business performance and identify causal relationship to raise international competitive power in Korean shipping companies.
To achieve the aim of this study this study was carried out as follows:
Firstly, pre-examination was made by literature research on characteristic of shipping business and present condition to understand what effects on shipping business performance.
Secondly, examination was made on business innovation techniques, which emphasize process management and are adopted by many Korean enterprises,such as BPR, six sigma, ISO 9000, TQM, TCM, and SCM. Literature research was focused to process in the pre-examination.
Thirdly, analysis was made on present condition of company’s process management based on result from literature research of documents for management system and, in conclusion, core processes were identified such as management responsibility, shore based personnel management, crew management, ship management, and ship operating management.
Finally, analysis was made on the survey research to prove the effects of shipping companies’ process management on business performance and statistical analysis was made to identify mutual relationship between 5 core processes and business performance.
This study is summarized as follows:
Firstly, five core processes in shipping companies have causal relationshipmutually and they effect on business performance. Also, staffs of Korean shipping companies put an importance in ship operating management, crew management,ship management, shore based personnel management and management responsibility in order. This means that the ship operating management is the process which accepts customers’ demands and realizes them resulting in freight, and other processes mean supporting processes for successful shipping.
Also, it implies that for successful ship operating, it is essential to provide with human resources and material resources such as appropriate crew and ships.
Secondly, 5 core processes affect more on an increase in profit than cost reduction. According to the result of Kendall’s rating verification, there is a causal relationship as effective orderly in a decrease of accident rate, an increase of ship operation rate, a rise of customer satisfaction, an increase of timely operation rate, a reduction of insurance rate, an increase of sales and net income,and a reduction of operational expenses.
Thirdly, 5 core processes affect one after the other to shipping companies’performance.
According to this study management of Korean shipping companies are recommended to consider this effect relationship and manage the process in stages to maximize the effect of cost reduction and the effect of profit increase.