BW LPG – Transforming Gas Carriers

BW LPG is already a leader in the LPG shipping sector, but now the company is advancing its pole position through procurement leadership.

BW LPG is the largest owner and operator of Very Large Gas Carriers (VLGCs), with its 40 vessels delivering cleaner-burning Liquefied Petroleum Gas (LPG) to markets worldwide. BW LPG is making significant investments in technology and R&D as it progresses towards a zero-carbon future.

We have the biggest fleet of VLGCs, and we are an innovative company,” explains Rick Ackermann, Head of Procurement at BW LPG. “We have invested over US$130 million into the decarbonisation of our fleet. This remains the largest commitment to climate action in our sector, and we are proud to not only do our part for the environment but in the process return even greater value to our stakeholders.”

BW LPG can push for developments such as this because, despite its size, the organisation remains nimble, responding flexibly and creatively to market opportunities and technological progress.

“How do we drive innovation? By just doing it!” Ackermann laughs. “We have a very flat organisational structure and very supportive, forward-looking leaders. When we see opportunities such as here in the ESG sector, we have the mandate to explore further.”

Reorganising the Supply Chain

It is tumultuous times, and no one is spared the impact of a global pandemic and ongoing political unrest.

“There is currently an imbalance in the market with regards to logistics. In the supply chain we are seeing a lot of prices of raw materials going up, driving total costs northwards,” Ackermann admits, although he also points out that for BW LPG those price rises are a double-edged sword. “The current situation is both a challenge and an opportunity for us – a challenge because our bunker costs have increased; and an opportunity because we are seeing more opportunities for transporting LPG.”

To respond to these challenges, BW LPG must leverage that famous creativity.

We have to become more and more creative. On the logistics front we’ve initiated bulk transports for our spare parts, planning and consolidating shipments for our vessels” Ackermann says. “We combine as much as possible into each shipment. Together with our freight forwarder, every quarter we look at where our vessels are and how that can be supported through consolidated air freight or sea freight. We’re being more creative in our deployment.”

While some nimble-footedness can make the business more efficient, Ackermann always keeps an eye on the root cause of the challenge- prices.

“Higher costs are a big issue for everyone. We try to optimise our procurement by buying only what is absolutely necessary,” he says. “But at the same time when faced with price increases from suppliers, I always remind them that we will accept it for now, but we need to know what they have done to prevent the increase. I ask, ‘How creative are your suppliers?’ We follow price indexes and once prices go down, we expect our suppliers to reduce prices down the line.”

This is not a one-person effort, and Ackermann speaks highly of the procurement team he has assembled across two countries.

I have a team in Oslo, Norway, consisting of two buyers, and another team of four buyers in Manila, in the Philippines,” he tells us. “The team in Manila was formerly a purchasing department, and we have been enhancing their skills with training sessions and cultural expeditions where I send them to networking opportunities to grow as buyers and learn to deal with greater day-to-day challenges. We are training externally, but also internally.”

A New Benchmark

Among those jobs is the duty of ensuring that every one of BW LPG’s suppliers adheres to the company’s strict standards and that all suppliers are pre-qualified before any business transaction is done.

“We evaluate suppliers before engaging them and ensure they have the ISO qualifications we require. We have ESG standards they must adhere to, and we have hired a third-party consultant to monitor their compliance,” says Ackermann. “By auditing them we can help improve their ESG initiatives and policies, and by extension, our own.”

This is all part of Ackermann’s mission to help raise procurement standards across the shipping sector.

“I have been doing this for 30 years. I have the experience and know more efficient ways of working. My background in shipping and offshore enables me to raise the standards of Procurement and Logistics within BW LPG,” he says. “Shipping, in general, is quite conservative, and I’m playing my part to lift standards.”

Ackermann explains, “We are raising the bar to be far more efficient as a company and smarter in terms of risk management. One of the things I’ve done at BW LPG is introduction of financial risk management. We hired a company to monitor the credit lines of our top 80 suppliers. Managing and monitoring that information means if something changes in the credit line of a supplier I will be notified by email and can ask questions or take immediate action if necessary.”

Looking forward, Ackerman intends to use his position in Procurement to set new standards and present a clear vision for the future.

“Every three years I create a Procurement plan that demonstrates our vision and mission, including an action plan,” he says. “Our current Procurement plan started in 2020, with 12 elements this year, lots of them internal, some of them external, for this and next year. One of those is a shift in how we approach inventory management. Instead of ordering as required, we will start planning spare parts in warehouses worldwide, to eliminate the supplier lead time as much as possible. We want to plan stock more efficiently. This will be the biggest action for Procurement over the next 12 months.”

With a strong strategy and the flexibility to react to changing circumstances, BW LPG is forging a path for the rest of the industry.

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