Hospitality Supply Chain Execution

• Hospitality businesses require a robust supply chain execution strategy to handle fluctuating customer demands.
• Flexible, agile supply chains enable companies to keep customers happy.
• The correct supply chain planning strategy reduces costs, boosts customer service, and achieves business objectives.

Development of Supply Chain Strategy

• This is a plan for managing the flow of product services, involving analytical and decision-making processes for delivering products and services to customers.
• Customer requirements is about identifying current and potential supply chain needs from the customer's perspective since they purchase finished goods/services.
• Businesses can segment customers based on shared traits to better understand their needs, preferences, and buying patterns.
• Internal capabilities is identifying the hospitality business's supply chain capacity to meet requirements like inventory management and production deadlines.
• Supply chain trends and technology enable businesses to incorporate strategy and sustain innovative processes to meet customer demands.
• Staying updated on supply chain patterns is vital for adapting to changing demands in the hospitality sector.
• Competitive analysis involves assessing the strengths, weaknesses, opportunities, and threats (SWOT) of competitors to see how the business compares.
• Risk management identifies internal and external risks that could affect the business.
• Supply chain risk management involves actions to identify, assess, and mitigate risks within the supply chain.
• It also means deciding what steps to take if there are sourcing shortages or production delays.

Generic Supply Chain Strategies

• These help hospitality businesses be resilient and competitive.
• Buffer management handles supply variability in business operations, helping management navigate challenges without severely impacting operations.

Tactics for Buffer Management

• Time buffer is where supply chains continue to function seamlessly by adding extra time to delivery schedules.
• For example, raw ingredients for a quick-service restaurant are delivered Tuesdays and Thursdays, packaging materials are delivered on Wednesdays.
• Inventory buffer allocates extra inventory for finished goods if there's a sudden surge in demand.
• This is typically done for best-sellers, popular items, and new menu items to satisfy customer curiosity.
• Available storage space must be considered when determining safety stock levels to mitigate the risk of stockouts.
• Multisourcing ensures that the supply chain can efficiently switch between different material sources.
• Multisourcing commonly occurs when the main supplier is unable to fulfill the business's order capacity, thus they would order from a different supplier to satisfy the demand.
• Nearshoring focuses on reducing cycle times for product creation/delivery by using a nearby supplier.
• Nearshoring can be more expensive, but provides quicker lead times for material delivery.

Supply Chain Strategies by Decision Level

• Hospitality supply chain activities are grouped into strategic, tactical, and operational levels for systematic implementation.

Strategic Level Strategies

• Executive support means managers communicate why supply chain initiatives are important ensuring employee understanding..
• A chain restaurant moving to a commissary to convert raw materials into work-in-process inventories streamlines kitchen production.
• Management needs to communicate these benefits, fostering knowledge among employees.
• Implementation of technology for visibility and control ensures better decision-making for the company's welfare.
• Property management systems (PMS) monitor room status in real-time.
• Point-of-sale systems (POSs) help restaurants check item profitability and adjust inventories.

Tactical Level Strategies

• Change management prepares, supports, and helps employees adapt to new operational methods.
• Conveying a clear vision is a must, especially regarding operational changes and should motivate employees about the process
• Employee skills must be developed and reiterated through accountability in delivery of products or services.
• Consistent training shows employees their value and importance to the business's future success.

Operational Level Strategies

• Reduce costs to stay competitive means hospitality businesses need to closely watch the costs of items with short lifecycles that need frequent replenishment.
• Using just-in-time inventory management for fast-moving items like fresh ingredients can help to reduce costs.
• Just-in-time inventory ensures there is enough stock to produce what is needed, when needed.
• The goal of reduced inventory costs is high production volume with minimal inventory and waste.
• Proper forecasting, planning, and scheduling can further reduce inventory costs.
• Application of performance metrics is where key performance indicators (KPIs) are used to monitor supply chain performance in achieving goals.
• Starbucks uses a weekly scorecard to assess third-party carrier performance in costs, service, and productivity.
• The weekly scorecard assesses reliability, responsiveness, sales, inventory planning accuracy, and order lead time versus set targets.
• Analyzing evaluations designs strategies for smoother operations and meeting customer needs.
• KPIs set a minimum standard for supply chain projects, boost openness, cut costs, and improve service.
• Utilizing supply chain management strategies effectively can meet customer demands while maximizing overall efficiency.
• Managers should be aware of the costs/benefits of different supply chain management strategies and proactively adjust so they meet consumer demands.