Generalizable simulation framework for the request-to-order process in the procurement of onboard vessel requisitions

TL;DR

This paper presents a flexible simulation framework for maritime procurement processes, comparing contract-based and spot market strategies, revealing trade-offs in cost and compliance, and providing insights for improved decision-making.

Contribution

It introduces a novel, adaptable simulation framework for request-to-order processes in maritime procurement, enabling analysis of different order allocation policies.

Findings

Spot market reliance can reduce costs but risks contract compliance.

High spot rate sensitivity leads to overuse of contracts, requiring larger commitments.

The framework aids in optimizing procurement strategies under demand uncertainties.

Abstract

Procurement in maritime logistics faces challenges due to uncertainties in demand and fluctuating market conditions. To address these complexities, we introduce a flexible discrete-event simulation framework that models the request-to-order process. This framework captures critical stages, including the generation of onboard vessel requisitions, requisition handling, and order allocation. Through numerical analysis, we compare two order allocation policies: a naive practice, which relies heavily on contracts, and a dynamic supplier selection approach that explores cost opportunities in the spot market. Our findings reveal trade-offs between cost efficiency and contract compliance, particularly in meeting volume commitments to contracted suppliers. Excessive reliance on spot market opportunities can yield significant savings but at the expense of contract compliance. Additionally, when spot rates are highly sensitive to order quantities, both policies tend to overutilize contracts, highlighting the need for larger volume commitments in such cases. These results offer actionable insights for improving procurement practices, while the framework's adaptability makes it a powerful decision-support tool across diverse procurement contexts.