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There is eminent failure for businesses without effective supply chain management. Companies
devote vast amounts of capital to meet customer needs, however, if there is not effective
supply chain management, it inevitably affects a company’s performance.
Firstly, an introduction of the broad subject matter, Supply chain management, was defined,
then narrowed down to tendering in the procurement process, as that was the main subject
matter.
Next an outline of the report was stated, after which the report provided an orientation
consisting of three parts - a framework of relevant literature; inclusive of procurement and
tendering works, the case organisation; specifically, the Port Authority of Trinidad and Tobago
(PATT) and the research issue; inconsistent tendering processes.
Section three detailed that the research methodology used was secondary data collection,
where the sources the data was retrieved from and the importance of data triangulation is
provided.
In section four a presentation of findings was detailed; gaps were identified and qualitative and
quantitate results specified. This section also contains a SWOT and PESTEL analysis of the PATT.
Implications and recommendations were further stated in section five, alluding to the premise
that if the issues are corrected stakeholder satisfaction would increase. Finally, the project is
concluded in section six, with the writers’ views.
Table of Contents
1. Introduction ............................................................................................................................1
1.1 Procurement and Purchasing in the supply chain ..............................................................1
1.1.1 Tendering procedure in procurement .........................................................................1
1.2 Report Outline ...................................................................................................................2
2. Orientation: literature, organisation and research issue ..........................................................2
2.1 Literature review ...............................................................................................................2
2.1.1 Procurement...............................................................................................................2
2.1.2 Tendering ...................................................................................................................3
2.1.3 Tender Agencies in Trinidad and Tobago.....................................................................4
2.2 Case organisation ..............................................................................................................5
2.2.1 Port Authority of Trinidad and Tobago Governing Unit ...............................................5
2.2.2 Trinidad and Tobago Inter-Island Transportation Company ........................................6
2.3 Research Issue ...................................................................................................................6
2.3.1 Gaps and inconsistencies ............................................................................................6
3. Research methodology ............................................................................................................7
3.1 Method .............................................................................................................................7
3.2 Secondary Data collection .................................................................................................7
3.2.1 Data sources ...............................................................................................................7
4. Presentation of findings ..........................................................................................................8
4.1 Analysing the data .............................................................................................................8
4.1.1 Gaps in tender process ...............................................................................................8
4.1.2 Quantitative results ..................................................................................................10
4.1.3 Qualitative results .....................................................................................................11
4.1.4 Analysis of PATT ........................................................................................................11
5. Implications and recommendations ......................................................................................12
6. Conclusion .............................................................................................................................14
References ................................................................................................................................15
Appendices ...............................................................................................................................18
1. Introduction
A supply chain can be described as an integrated structure of multiple organisations linked
directly by one or multiple organisations to permit the flow of products, services, finances, and
information from a main source the final end user (Mentzer, Min & Zacharia 2000). It involves
using a systems method of discerning the supply chain in its entirety and managing the
complete flow of service, product or information from the initial supplier to the end user.
According to Mentzer (cited in Mentzer, Stank, & Esper 2008 p. 32) Supply Chain Management
is in essence:
...the systemic, strategic coordination of the traditional business functions within a company
and across businesses within the supply chain, for the purposes of improving the long-term
performance of the individual companies and the entire supply chain.
Moreover, SCM produces net value, shapes an economical arrangement, influences logistics,
synchronises demand with supply and provides a measure of global performance.
The Supply Chain Management Institute has created a prominent framework designated the
Global Supply Chain Forum (GSCF) Model which consist of eight management practices
through; customer relationship, supplier relationship, customer service, demand, order
fulfilment, manufacturing flow, product development and commercialisation, and returns
management. This model is both cross-functional and cross-enterprise in nature and each
practise interfaces with key customers and suppliers.
Therefore, the GSCF model comprises all business functions (Murphy & Knemeyer 2015).
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stipulate the requirements and subsequently open bidding in a practice recognised as
tendering. Interested enterprises may then submit their offers conforming to the requirements.
The entity proposing the tender will then assess the tenders to select which offer best suits
requirements initially outlined
Within the supply one of the related stages is the procurement process.
2.1.1 Procurement
Love et al (1998) describes a procurement system an organisational arrangement assigning
specific duties and authorities to individuals and organisations. Similarly, it is also defined as a
mechanism for networking and harmonising a process in a distinctive systematic arrangement,
both functionally and contractually (Naouma cited in Naouma & Egbu 2015).
Lysons & Farrington (2012) defines procurement as the process of buying goods, works or
services and in this project it involves all three. The purchase of operation services and
administration of a RoPax vessel to conduct ferry services between Trinidad and Tobago. This
agreement is termed a Public Private Partnership (PPP), this is a long-term arrangement
between a private enterprise and a government enterprise, for providing a public asset or
service. In this contract, the private party bears substantial risk, management duties and
compensation is associated to performance (Burke 2003).
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Procurement is occasionally carried through tendering, rather than obtaining products directly
from a vendor (PPP Knowledge Lab 2018). An organisation desiring to acquire goods or services
will initially stipulate the requirements and subsequently open bidding in a practice recognised
as tendering - in this case, local government. Interested enterprises may then submit their
offers conforming to the requirements. The Government entity proposing the tender will then
assess the tenders to select which offer best suits requirements initially outlined. However, on
many occasions, the lowest offer is successful, as many Governments try to cut expenses, which
can result in mediocre equipment being purchased.
2.1.2 Tendering
A tender is an acknowledged proposition, from suppliers, to deliver goods and/or services at an
established cost. Thus, it is a procurement method whereupon acceptance of the offer, it is the
basis of a sequential contract (Saunders, Lewis & Thornhill 2016).
There are multiple types of tenders including open tender also called competitive or public
tendering which is publicly available to all qualified bidders and sealed bids are opened in
public, tenderers are then selected based on quality and price. Selective tenders or closed
tendering occurs when specific companies are invited to bid on a contract. One benefit of this is
that of price and performance competition by inviting only pre-qualified contractors to
maintain quality. The most recent is e-tendering Is an online process where all relative
tendering processes are done through the internet. Empowering organisations with efficiency,
speed of information exchange and reduction of paper-based transactions (Business Dictionary
n.d.).
Tendering is a central feature of Purchasing in the Supply chain, especially for government
agencies. The PATT’s tendering process was selected because of the many issues arising from
the inadequate procurement systems and SCM being my specialisation.
A multitude of complications have afflicted the PATT tendering process, affecting the quality of
agreements entered into by the Authority. Specifically, RoPax vessel tendering, which is done
on a global scale as there is no local supplier.
The complete structure has gone awry due to maladministration, manipulation and
misapplication of rules and guidelines set to be practised when tendering for goods and
services. Laissez-faire [leave it be] attitude of authorities who are supposed to ensure the
standard of practice and ethical conduct are appropriate, has created a situation that is very
complexed and problematic to treat with. This in turn has grave consequences on the efficiency
and effectiveness of the PATT’s administration of contract management.
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2.1.3 Tender Agencies in Trinidad and Tobago
2.1.3.1 Central Tenders Board
The Central Tenders Board (CTB) exists to provide procurement and disposal services for the
Government of Trinidad and Tobago, being cost effective, efficient and with a fair treatment to
all parties. Through the expertise of a well-trained staff, supported by workable systems in
keeping with local and international standards, the CTB strives to be a leader in procurement by
providing exceptional services to the public and private sectors.
The CTB was established by Act No. 22 of 1961 and last amended 2010 (see Appendices Figure
1) to ensure that the proper procedures are followed and obtain the most suitable supplies and
services from available sources.
The CBT Ordinance as amended, provides for the establishment of a Central Tenders Board
which has the exclusive authority to act in the name and on behalf of the Government of
Trinidad and Tobago and its’ agencies to which the Ordinance applies. Inclusive of inviting bids,
considering and accepting or rejecting offers for the supply of goods or services works
necessary for carrying out the functions of the Government or any of the Statutory Bodies.
The legislation allows for a Board, sub-committees and special committees all with definite
financial limits. These committees follow the same procedures in the Act and act for and on
behalf of the Board. The Board comprises of eight members; Director of Contracts – Chairman,
Deputy Director of Contracts – Deputy Chairman, Permanent Secretary in the Ministry of Trade,
Industry and Investments, Comptroller of Accounts, Chief State Solicitor (see Appendices Figure
2) however, three members at absent which makes the CTB inefficient and appear lacking in
transparency (Finance.gov.tt. 2018).
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The PPP Unit structure consist of a Coordinator, PPP Project Manager/Engineer, Project
Assistant, Resident Advisor, Senior Financial Analyst, Senior Legal Officer and an Administrative
Assistant (see Appendices Figure 3). However, yet again the last four positions are vacant
(Finance.gov.tt. 2018) and therefore the Unit would be inefficient.
This project will focus on the PATTGU and TTIT business units, as these two relate to the RoPax
vessel.
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2.2.2 Trinidad and Tobago Inter-Island Transportation Company
TTIT boasts of having two passenger fast ferries and one cargo vessel to service the twenty-mile
route between Trinidad and Tobago, with two sailings from each port, seven days a week
(ttitferry.com, n.d.). However, due to frequent breakdowns this schedule cannot be adhered to.
Additionally, this will impact negatively on PATTGU’s deliverables as values two, four and five
are not accomplished.
This project analyses the inadequate RoPax vessel tendering process in the Port Authority of
Trinidad and Tobago (PATT) supply chain. Frequent shutdowns, malfunctioning air condition,
faulty washroom facilities and non-operational cafeteria on the current ships. Which does not
allow the public access to the ferry service. Additionally, the PATT is accountable to taxpayers
since it manages public money and should run its operations efficiently.
Therefore, measures and procedures for tendering, awards and the skills of officials involved in
public tendering is investigated to determine if an independent unit should be created with
trained and qualified professionals to process the PATT’s procurement and tendering systems.
These gaps and inconsistencies adversely affect Tobago as its’ economy is driven by service,
vacation tourism and related activities. Therefore, the purpose of this research is to analyse the
poor RoPax vessel tendering process and the consequences to the economy of Tobago.
These issues can result in economic shortfalls for a country’s economy, especially one as fragile
as the economy of Tobago.
There are also issues of measures and procedures for tendering and awards and the skills of
officials involved in public tendering. Additionally, no one agency is taking responsibility for the
underperformance of the ferry service and are all laying blame on other parties.
Lastly, the lack of a full complement of staff in the procurement agencies to complete tenders is
a major issue as these sectors may be viewed as being biased and not transparent.
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3. Research methodology
This section has two parts, the first outlines the research methodology for this Project.
Primarily, a single case research methodology is identified as the research method. Next,
secondary data collection is defined, as this is the only option proposed in the guide.
Additionally, secondary data is cheaper than primary data, easier to verify for accuracy, has no
real ethical implications and more is readily obtainable (Sekaran, 2003).
3.1 Method
A single case research methodology is used for this project. The focus will be on the factors
responsible for the PATT’s lack of transparency and good governance, in the tendering process.
It is classified as a single case study as it examines an ongoing problem facing PATT which has
an adverse impact on customer service, operations, and overall performance of the
organisation. Saunders, Lewis & Thornhill (2016) explains that a single case is frequently used
for a critical, extreme or unique case. Equally, it may be elected deliberately for typical
situations or to provide an opportunity to observe and analyse a singularity that few have
previously considered. It was for this reason that the PATT has been chosen, as there are
abounding issues, yet no paper has been published.
The research yielded qualitative and some quantitative results and a deductive approach was
taken to analyse the data. Current practices will be outlined in the Government’s tender and
PPP policies (GORTT PPP Policy 2012) and compared to a procurement cycle outlined by the
Chartered Institute of Procurement and Supply (CIPS).
Triangulation of data is not only important but a significant representation to add contextual
description, strengthen the case design and enhance credibility of the study (Smith 2018).
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4. Presentation of findings
Findings will demonstrate gaps in PATT’s tender process, identify qualitative and quantitative
results for the twin republic and the PATT and additionally SWOT and PESTEL analyses are
presented.
1 Strategy Development occurs after the determining needs, quantity, scope and
reconciliation of funds. This is when consideration of the likely impact of the external
environment is evaluated. It this instance the PATT cannot use local suppliers as there are
none building RoPax vessels. Therefore, global sourcing must be conducted and because
there are several shipbuilders for passenger vessels the organisation is well positioned to
leverage the market and a competitive tender could be conducted.
2 Supplier relationship and supply chain management is also non-existent, which is extremely
important for Vessel tendering, as this is a long-term contract. A virtuous relationship
between both parties could reduce the risk of not being able to supply the market and aid in
continued profitability.
3 Finally, asset management is not included in PATT’s process and this includes assessing
whether the agreement has changed or is still required and what is learnt that can improve
on the process for the next cycle.
Moreover, with the proliferation of the internet, e-tendering should be used to reach a wider
audience and increase competition.
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4.1.2 Quantitative results
Due to lack of availability of vessels, the PATT has had considerable losses over the past few
years.
By means of only the passenger vessels, the TT Spirit and TT Express an average is taken using
average capacity multiplied by average cost of tickets.
Using an average of two adults and one child per sailing the following is calculated:
Therefore, in the event where both vessels are inactive for one day, the revenue lost would be
535 passengers x $83.33 + $44 581.55.
Additionally, the TT Express was dry docked from June 2047 to present (approximately one
year) which has resulted in more than 8M TT$ in revenue loss (as calculated below using the
same parameters) and more that 8 M TT$ in repairs (Sant 2018).
Additionally, the continual disruption of cargo and passenger services is causing long-term
damage to the Tobago hospitality sector and its dependant businesses. These would include
how stakeholders are affected such as business owners having approximately 34 businesses
being closed, with another 12 near to collapse. Furthermore, over 60 percent of financial losses,
are being experienced by businesses and accruing unabatedly (see Appendices figure 5) (Hadad
2018).
The tourism industry is also experiencing difficulties from the collapse of the sea-bridge in 2017,
with losses in the 7MTT$ range (Kowlessar, 2018). Other than foreigners who use the ferry
service to experience the beautiful vistas between the islands. Many Trinidadians visit Tobago
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for vacationing purposes however, due to the prices of accommodation they use the ferry
service to reduce expenses. In these cases when the sea bridge is closed the result will be a
decline in the revenue from the tourist industry.
People who have booked ferry tickets in advance are now stuck without the service and
although alternative measures have been implemented for travel by air, these passengers have
been put on standby tickets and are in some discomfort (See appendices Figure 6) (Dowlat &
Boodan 2018). Additionally, for individuals who are left stranded, there may be consequences
of pay cuts or job loss.
However, those passengers who opt to use the air bridge incur more expense at $300.00 for a
return trip either way (mytobago n.d.). Notwithstanding, the cost to ship or return goods to and
from the islands is quite expensive, as there is no cargo plane service available. These issues
have received immense criticism from the populace because of the impact on disposable
income, particularly with the lower to middle class.
Furthermore, issues of corruption are constantly being alleged and because most of the
individuals are well connected. Many instances, they just resign their posts and there are no
consequences.
SWOT is a mnemonic that represents the words; Strengths, Weaknesses, Opportunities, and
Threats. It is used to assist strategists within organisations to access ways in which to manage
the SWOTs and enhance performance (Guide to Management Ideas 2003).
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Furthermore, SWOT analysis can be used to educate staff of the necessity for change and solve
problems (Business & Management Dictionary 2007). SWOT can be broken into two
environmental entities, Strength and Weakness for internal evaluation and Opportunities and
Threats to access the external setting. Where weakness assigned ought to be turned into
strengths; threats into opportunities and strengths should be matched with opportunities.
Using a SWOT analysis, the information collected on the PATT indicate there are many
strengths and opportunities which the company can utilise to keep or increase the
organisation’s sustainability (See appendices figure 7). The PATTs major strengths are high
barriers to entry, cost of service and limited competition.
The research done for this project visibly shows the importance of transparency, ethics and
good governance, in tendering processes, to ensure viable and seaworthy vessels are procured.
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If these basic principles are not adhered to, a bullwhip effect takes place creating economic and
cultural distress.
The bullwhip effect is caused by the uncertainty of information flowing upstream and
downstream in the supply chain (Lysons & Farrington 2012) and occurs when demand
inconsistency surges moving up the supply chain. Small fluctuations in demand may generate
huge deviations in upstream sectors. Ultimately, the supply network can have large
disturbances, errors, inaccuracies and volatility as organisations in the supply chain try to
resolve the problems (Slack, Brandon-Jones & Johnston 2013).
Based on the research, the findings in this study indicates an increase in awareness of
inefficiencies in the tendering process, for RoPax vessel procurement. It shall also contribute
significantly to the benefits of society, considering the importance of the sea-bridge to society
as a whole - the citizenry, tourists, private and public companies for goods transport and the
Tourism industry in Tobago.
Administrators that apply the recommendations, will be guided by proper procedures for future
tendering activities and ensure that there is an effective and efficient use of tendering at the
PATT.
Initially, the government should revamp the CTB and the PPP Unit by employing a full
complement of workers. This would ensure that specific authorities could be held accountable
in the event of future failures. These two authorities must adhere to all government policies
and laws to ensure transparency and good governance throughout. These authorities may
require to also undergo some level of change management to understand and accept the new
developments.
Secondly, tendering in public sector procurement is vast and complexed. Currently, PATT uses a
manual tender process however, with the advancements in technology, e-tendering should be
implemented as an alternative and to streamline the procedure. Furthermore, there are also
issues of corruption and prejudice within the system (T&T Chamber 2014) and e-tendering can
eliminate some of these inconsistencies.
Moreover, in this writers’ opinion, one more stage should be implemented in the procurement
process owing to the magnitude of RoPax vessel tendering. An independent team of specialists
should be contracted to access and evaluate the vessel and its components.
If all these recommendations are implemented, suitable vessels would be contracted and
accountability to taxpayers enhanced.
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6. Conclusion
In conclusion, of the several tender processes available, from the findings of this investigation
open tendering appears to be the most appropriate. Specifically, because of complexed work
required to build a RoPax vessel, whereby only suitable contractors should be considered.
If this tendering method is used correctly in conjunction with e-tendering, global contractors
would have easier access to submit bids ensuring higher levels of competition. Thus, providing
the best product at the best price. Which will inevitably negate the bullwhip effect, appease tax
payers and alleviate economic issues in Tobago.
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Appendices
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