Supply Chain Management in Hospitality

Unit 1: Supply Chain Management Overview

• This unit provides an overview and background of supply chain management in the hospitality industry, focusing on lodging and food service, and will take approximately 18 hours.
• The unit covers topics like what is supply chain management, its importance, supply chain processes, elements, and the five stages of supply chain management with applications in the hospitality industry.
• Upon completion of this unit, students should understand supply chain management, trace its processes, examine its role and importance in the hospitality industry, and discuss its enablers.

Introduction to Supply Chain

• The concept of a supply chain has existed for a long time for instance raw ingredients are sourced from different suppliers to create things such as chocolate cake.
• Supply chain management is relatively new, starting in the 1980s.
• Improvements in transportation and communication, like the internet, have made raw material sourcing more efficient worldwide.

What is Supply Chain Management

• It involves planning and coordinating people, processes, and technology to create value.
• Managers should harmonize business operations with the external environment to deliver the right product, at the right price, and at the right time for profit.
• The Institute for Supply Management defines it as designing and managing seamless, value-added processes across organizational boundaries to meet customer needs, integrating people and technology.
• The Supply-Chain Council defines it as managing supply and demand, sourcing, manufacturing, warehousing, order management, and distribution to the customer.
• The Council of Logistics Management defines it as the systemic coordination of business functions and tactics within and across companies in a supply chain to improve long-term performance.

Importance of Supply Chain Management

• Lower inventories are achieved by reducing the time it takes to replenish inventory
• Businesses can reduce inventory costs and improve profitability by streamlining the supply chain.
• Higher productivity results when a large amount of output is produced with little input.
• Higher productivity translates to higher profits through more goods and services with examples like equipment producing 10 tons per hour.
• Improved profitability occurs when a company effectively uses its resources to generate revenues exceeding expenses through reduced costs increased turnover, productivity, and efficiency
• Shorter lead times in supply chain management means less inventory, less risk of shortage, and reduced quality risk, improving productivity. Lead time represents the time from the start of a process to its conclusion.
• Greater customer loyalty comes from customer satisfaction, positive experience, and overall value from goods and services, leading to repeat business and increased spending.