Royal Caribbean CFO Brian Rice was profiled by the Wall Street Journal about how he is helping to cut costs from Royal Caribbean's supply chain to help the company's bottom line. Cost cutting is especially important these days given the poor operating environment the cruise industry is dealing with.
“I’m still in the learning stages of the supply chain,” says Rice, who was put in charge of that function in September on top of his other CFO duties. “They’re helping me more than I’m helping them [right now].”
Rice's approach is to make sure the supply chain gets the resources it needs, rather than reorganizing or making major personnel moves. Rice cited an example of engineers sometimes having to take photos of ship parts that need to be replaced and email them to the mainland because they can't find the required part in the "obsolete" computer systems.
Rice believes by cutting costs from the supply chain, that should eventually lead to boosting Royal Caribbean's cash flow, which in turn will help trim debt overall.
Because Royal Caribbean has no new ships coming online in 2013, the company is opting to pay down its debt using much of its operating cash flow. Rice says over time, it aims to reduce its debt to about 3.5 times its Ebitda from the roughly five times where it will end this year.
