Sea Transport Corporation

www.seatransport.com

Executive Summary

Established in 1976, Sea Transport Solutions (STS) offer design and consulting services in shipbuilding of commercial vessels and pleasure craft. Based in Southport, Queensland, STS employs 14 full time and two part time staff.

STS conduct 80 percent of their business with international clients.  As a result, the company's methods for marketing, research and communication required significant time commitments and accounted for a large quantity of annual expenditure. Endeavouring to improve the efficiency of business processes such as marketing and communications, Steve Bennett, Design Office Manager, introduced the company to email in 1992.   This initiative was followed by development of a website in 1996 which has just recently been upgraded to include an interactive project management tool.

The establishment of a website has launched STS's products to a worldwide market, effectively overcoming the barriers of geography and differing time zones.   Use of electronic communication and online project management facilities via the website has assisted in strengthening interaction with international clients.  Furthermore, the online project management tool allows customers greater participation in projects and provides the ability to monitor progress and coordinate operations 24 hours a day.

STS's e-commerce initiative has exposed the company to a broader customer base, generating additional revenue of $200,000 in 2001.  Additional business gained as a result of online marketing via the website and customer appreciation of e-commerce solutions was estimated at $65,000.  This contributed $85,000 to gross profit, approximately double the establishment costs of $43,540.

In the future, STS plans to enhance the interactivity of the website's project management section to incorporate Customer Relationship Management (CRM). This will enable the company to produce and target customised newsletters for groups and individual clients.

The Business

Established in 1975, Sea Transport Solutions (STS) is the project and design office of the Sea Transport Corporation group of companies. They offer design and consulting services in shipbuilding to operators of both commercial and pleasure craft in the marine industry.

A family company based in Southport, Queensland, STS employs 18 full time staff and has completed projects in over 33 countries.

Getting Started

With 80 percent of business being conducted internationally, STS's marketing, research and communication required significant time commitments and cost.  In order to increase the efficiency of these business processes, Steve Bennett, General Manager, introduced the company to email in 1992.

An internal staff member with some Information Technology (IT) experience identified potential business processes that could be improved by Internet technologies and IT experts were recruited to implement the ideas.

The next step of STS's e-commerce implementation took place in 1996 with a brochure style company website launched to extend their reach into international markets. Further development of the website saw multimedia such as videos of completed vessels being incorporated to enhance the diversity of online information.

Recently, the website has been upgraded to include interactive technology.  Clients can now login to the website and access project management tools, drawings and project schedules.

International Trade

Traditionally, Australian industries have suffered significant barriers to entry to international markets due to geographical constraints.  In particular, heavy capital requirements to set up international operations have impeded overseas expansion for small to medium enterprises.

The establishment of a website has launched STS's products to a worldwide customer base, effectively overcoming the barriers of geography and differing time zones.   Use of electronic communication and online project management facilities via the website has assisted in strengthening interaction with international clients.  This has enabled STS to work with some of the world's larger shipping companies including British Columbia Ferry Corporation in Canada, Rederij - Doeksen from Holland, and the Daimler Chrysler Corporation in the U.S.A.

The use of online research has allowed staff to keep abreast of new developments in the shipping industry, such as international laws and regulations for seaworthiness.  In particular, electronic communication and online resources have simplified compliance procedures with the Uniform Shipping Law (USL).

Furthermore, electronic data interchange has enabled STS to reduce expenditure on international couriers. Previously large and cumbersome blueprints can now be downloaded at the customers' convenience in a more manageable electronic format.

Current e-commerce strategy

Currently, 70 percent of STS's purchasing is conducted online.  The company participates in an electronic supply chain with a steel merchant who cuts steel plates for the construction of STS designs. STS send orders electronically to the steel merchant, including electronic versions of drawings and specifications. These are then downloaded to the merchant's software enabling accurate cutting with Computer Numerically Controlled (CNC) machinery.

Another core feature of STS's e-commerce strategy is the company website. Besides company information and demonstrational videos, the website includes a project management section accessible by registered clients.  Clients can log in via a password to access real time information about their order.  Features include the viewing, editing and downloading of relevant documents, blueprints and drawings.  Scheduling applications allow customers to monitor the progress of their project, enabling them to plan and coordinate their own activities within the project.

Several administrative functions are now also web-enabled, included banking and supplier payments.  By administering these transactions online, the company saves significant costs in staff time and bank charges attached to foreign exchange transactions.

In addition to physical security, a firewall, data encryption, and password protection are used to protect information from unauthorised access. Daily updates to anti-virus software and security patches also limit the possibility of external attacks. The company's website itself is hosted on a separate web server to further protect the internal network.  Daily backups to tape and Compact Disk (CD) are stored offsite.

Revenue and Costs

* Note: Capital Expenditure was amortised over a four-year period

Financial Analysis

STS's e-commerce initiative has enabled the company to enter new international markets, generating additional revenue of $200,000 in 2001. Additional business gained from the use of the website as a marketing tool and increased customer satisfaction, which led to additional contracts, was estimated at $65,000.  In 2001, this contributed a total of $85,000 to gross profit, nearly double the establishment cost of $43,540.

Cost savings in 2001 totalled $124,700. The prevalence of web-enabled transactions across the company has improved overall staff efficiency by $35,000.  Electronic banking has saved staff time and reduced local and foreign exchange bank charges resulting by $10,000. 

Greater marketing, research, and communication efficiencies have reduced the need for international travel, eliminating $50,000 in travel costs.  Use of email has reduced reliance on telephone and fax correspondence saving staff time valued at $20,000 and an additional $2,000 in telecommunication charges. Postage and freight expenditure was reduced by $4,000 as broadsheet blueprints and drawings are now forwarded overseas electronically. This has further reduced stationery and photocopying costs by $1,000 and $200 respectively.

Establishment costs for the e-commerce system amounted to $43,540. Steve invested $2,500 of his own time in preliminary research before recruiting an external web developer to create an interactive website for $5,000.  A significant investment was made in hardware infrastructure including cabling to allow Broadband Internet ($2,500), backup tapes/Compact Disc (CD) drives ($2,500), cabinet and desks ($1,000) and a new computer terminal ($3,000).  Services required to support system implementation include data base integration ($1,000) and system design ($20,000).

Ongoing costs associated with e-commerce for 2001 totalled $42,685.  System maintenance incurs IT consultant fees of $20,000, data storage costs of $6,000 and software application fees of $500.  Costs associated with supporting the website include $600 in Internet Service Provider fees and $2,000 in website hosting fess by Netplus.  In addition, $10,885 was allocated to the amortisation of capital expenditure over a four year period.

Non-financial Benefits

Customers of STS have been impressed with the website, confirming its success in improving customer satisfaction and the international profile of the company.  Clients value the ability to monitor their order progress in real time as they can now coordinate their own activities and remain informed of every aspect of their order.

Both customers and staff have benefited from the efficiencies generated from web-enabled marketing, communication and finance processes.  This has contributed to decreased order turnaround time, which in turn has improved service delivery to clients.

Challenges

System reliability was an issue when the new network was integrated with the existing software and hardware infrastructure. The original hardware had difficulties supporting the multi user capabilities of STS's Asymmetric Digital Subscriber Line (ADSL) Internet connection.  In addition, the networking capabilities of their existing software presented performance issues.

After seeking expert advice, the operating systems were upgraded along with the supporting hardware to support the multi-user networking environment. This solution provided the answer to the legacy system's performance problems.

Future

In the future, the company intends to further develop the interactivity of the website's project management functions to incorporate Customer Relationship Management (CRM). This will enable the company to produce and target customised newsletters for groups and individual clients.  The website is being reviewed and updated with new pictures, and the latest in video and graphic design technology to encourage return visits by clients and potential customers.

Steve views awareness of customer needs and future requirements as the greatest factor for success in STS's implementation. He advises any company embarking on an e-commerce initiative to spend time discussing needs and requirements with IT specialists and to always seek a second opinion. Steve also recommends looking at complementary (parallel) businesses to research what can be done, how it worked for them, and the lessons learnt.