Supply Chain Management In Hospitality Industry PDF

SUPPLY CHAIN MANAGEMENT IN HOSPITALITY INDUSTRY SHIELYN VISAGA LARGUEZA Teacher Supply Chain Management Supply Chain Management as a management of flow of products and services, which - begins from the origin of products and ends at the product’s consumptions.  Full variety of proc...

SUPPLY CHAIN MANAGEMENT IN HOSPITALITY INDUSTRY SHIELYN VISAGA LARGUEZA Teacher Supply Chain Management Supply Chain Management as a management of flow of products and services, which - begins from the origin of products and ends at the product’s consumptions.  Full variety of process such as systems management, operations and assembly, procurement, production plan, order processing, inventory management, transport, warehousing, and customer support are therefore included in the supply chain.  Hence there has been increased interest in logistics and supply chain management practices since performance, determined by actions and decision, improvements on return on investment and greater profitability.  To monitor the supply, related production, distribution, and shipment of products and services.  To maintain and uphold the companies good and tight internal inventories, production, distribution, internal productions and sales. Importance of Supply Chain Management - It increase product quality by regulating production process, minimizing the possibility of recalls and litigation while helping to create a strong customer brand. - By avoiding expensive shortages or cycles of product oversupply, restrictions over shipping procedures will enhance customer support.  List the products or services your company provides that will help the customer achieve their objectives.  Raw materials Importance of  Services Supply Chain Management  Logistics  Manufacturer Improving the Identifying  Distributors potentials allocation and problems availabilit before y to they occur  Example: promise inventory  Using a variety of research methodologies, Trey Research can provide support in the following areas: Optimizing price dynamic/ change Activity 1 Name:__________________ Date: ___________ 1. Define supply chain management? 2. What are the goals of supply chain? 3. What are the importance of supply chain management ? LESSON ll Key Benefits of Supply Chain Management GOD BLESS!!!!! LESSON ll Key Benefits of Supply Chain Management GOD BLESS!!!!! Supply Chain Management – Advantages - Supply chain management plays a very significant role in this era globalization, where firms compete to supply consumers with the highest quality products and meet all their demands. - Industries are heavily reliant on efficient sup - ply chain process. Key Benefits of Supply Chain Management  Assists companies in adapting to the challenges of globalization, economic upheaval, expanding consumer expectations, and related differences.  Assists companies in minimizing waste, driving out costs, and achieving efficiencies throughout the supply chain process.  Assists in achieving shipping of right product to the right place at the time.  Creates better delivery mechanism for products and services in demand with minimum delay.  Develops better customer relationship and service.  Enhances inventory management, supporting the successful execution of just-in- time stock models.  Improvises productivity and business functions.  Minimizes direct and indirect costs.  Minimizes warehouse and transportation costs. The Overall Goal of Supply Chain Management  Goal of SCM software is to improve supply chain performance  Timely accurate supply chain information allows manufacturers to make ship only as much product as can be sold.  * Cost of custom research service depends on project scope Cost Comparison Custom Research Service Trey Research Company A Cost* Cost*  Point out financial Market entry analysis X X benefits to the customer. Industry benchmarking X X  Compare costs of Pricing and brand X X analysis your product or Forecasting and planning X X service with one or Subscription Research more competitors. Service X X Consumer industry X X market reports Online global business X X intelligence database  Our Strengths Durable Global Data goods Finance B2B Consume Services Media r Goods Electronic Researc Industry and Foods and s Trends h Benchmarkin g Technolog Services Network y Markets Trade Machinery Healthcar e Brand intelligence  Key Benefits of Product or Service  Summarize the key benefits provided by the product or service you are promoting.  Example:  Investment in market research is an investment in your product’s success!  Know your customer  Know your competition  Timing is everything  Track and adjust   Submit a research Next Steps proposal  Then, we’ll submit a  Outline the next steps for proposal for your ordering or purchasing your evaluation. products  Begin the research or services.  When the proposal is  Example: approved, we will assemble an  To commission research experienced team to from Trey Research: conduct your research and analyze the  Define the project findings.  First, we’ll meet with  Provide ongoing support you to define your  We will continue to work project. with you after we deliver your report so you get the most value out of the research findings. Activity 1 (Role Play)Contact Information 1. Create a group. 2. Each group has a 6 members. 3. Each group will provide with a script.  Provide contact information for key personnel from your company.  Provide e-mail and Web site information, if appropriate.  Chapter ll Significance of Supply Chain Management in the Hospitality Industry Six Characteristics of a Hotel Supply Chain  Perishability of products and services render  Presentation and interpretation of the products offered  Inherent complexity of products and services  Uncertainly of demand  Inseparability between service production and the end customer  Tradition sale of tourism service packages Factors Affecting Supply Chain Management in Hotel Industry  Hospitality industry operates somewhat different from other industry  Capital cost of industries are high, with relatively lower operating cost  Distinctive features, such; -- customer centricity -- various styles of management, ect. a. Guest or Costumer are utmost important for the hotel industry; b. Hotel industry costumer oriented as result lot of cost reduction which can be attained through improved upstream functions of supply chain management is lost  Benefits of Supply Chain Management The supplier and the hotel profit from a well- established supply chain, context inn developing proper buying strategies, in relationship between the supplier and the hotel industry  Significant reduction in cost and also helps continuous evaluation and improvement in the buying process  Improvemanagement information to future requirement  The need to Supply Chain Management  Reduce operational cost --- Business Process Management (BPM) --- Total Quality Management (TQM) --- Total Production Maintenance (TPM) --- Lean manufacturing, Just-in- Time ( JIT)  Increase outsourcing requirement --- increase the cost associated with procurement , distribution and logistics, offering scope for substantial efficacy improvement and coordination beyond its production activities  Increasing Transportation cost --- cost account to 5 to 30% of the operating expenses of the company  Important/Objective of SCM  Achieve strategic advantages -- SCM gives competitive edge to the firm by ensuring, smooth and systematic flow of goods, information and funds.  SCM support ERP which integrate other functional areas for performance improvement.  Its supports TQM to meet the quality and delivery needs of the customer as well as supplies for production  Customer relationship management -- which meets customer expectation and bring customer satisfaction and delight. -- SCM also supports e- commerce for buying and selling, increasing strategic competence further. Achieve Cost Control/ Reduction  Reduction all company cost by optimizing the cost of freight and logistics  Identify waste sources to avoid them in the whole supply  Ensure quality in the logistics of warehousing, transport and handling  Decreases Purchasing Cost- retailers depend on supply chains to quickly deliver expensive products to avoid holding costly inventories in stores longer than necessary  Decreases Production Cost – Manufacturers depend on supply chains to reliability deliver materials to assembly plants to avoid materials shortages that would shutdown production  Decreases Total Supply Chain Cost – Manufacturers and retailers depend on supply chain managers to design networks that meet customer service goals at the least total cost. Enhances outsourcing capability  Outsourcing generally reduces the cost of operation of a company.  Anefficient and cost effective SCM system will enable the firm to reap the benefits outsourcing.  Achieve Globalization  Helps to operate across world market  Help to make the product available in existing and new markets at competitive price  Properlydesigned and executed SC make global out sourcing possible  SCM helps to meet global competition successfully.  Better Inventory Management  Eliminate the necessary to stock the items in large quantities.  Ensure availability of goods in right quantity at right price with right quality at the right time.  Systematic inventory management like JIT, ERP etc. can be implemented  Prevent bull whip effect of entire in the entire SC ---- the phenomenon of progressively larger inventories at different stages of supply chain from customer to backwards is called “ Bull Whip Effect”.  Bull Whip Effect Inventory Levels Supplier Producer Distributer Retailer Customer Effect use of Supply and Logistic Resources  Few dedicated suppliers  Dedicated transportation and logistics.  Participation of suppliers in quality improvement, design improvement, value engineering and new product development through design collaboration  Competitive, participative and collaborative pricing with suppliers and logistics providers by sharing benefits mutually.  Reduced Lead Time Design Collaboration  Lead time for product improvement is less.  New product development time is shorter.  Achieve on Time Delivery  Ensure prompt delivery of product and services to customers on time.  Facilitate E- Commerce  Introduction of e- commerce and business gives an entirely new dimension to buying and selling using internet which enhances operational efficiency customer satisfaction.  Boost Customer Service  Customer expect the correct product assortment and quality to be delivered.  Customers expect products to be available at the right location.  Right delivery time- Customers expect product to be delivered on time  Right after sale support- Customers expect products to be serviced quickly. Chapter 3 The Supply Chain Management Process  Supply chain management is a process used by companies to ensure that their supply chain is efficient and cost- effective. A supply chain is the collection of steps that a company takes to transform raw materials into a final product.  How does supply chain management  work? Supply chain management operates by managing procurement, suppliers, manufacturing facilities, dealers, distributors and consumers as they step forward through the production, sales and purchasing processes.  Supply chain needs active management because many variables beyond the reach of the firm, such as gas prices and environmental situations, influence it.  Company acutely aware of those factors, it can manage through them more effectively.  Effective SCM, inventory, production, distribution, sales and vendor inventory are all tightly controlled.  SCM means managing cost at every step and delivering goods to consumers as quickly as possible.  It assumes that every product that is for sale exists because of the various participants in the supply chain  A supply chain manager is a trained professional responsible for five essential components of the chain.  Five Essential Components of SCM  The carefully researched and developed strategy of the supply chain.  The source of the materials used to make the goods to sell.  The efficient production of the manufacturing process in getting the goods ready for the market.  The delivery mechanisms and logistics that move the products to the consumers and distributors.  The system for managing the return of defective or unwanted products. THE COMPONENTS OF SUPPLY CHAIN MANAGEMENT Plan Return Supply Chain Develop Management Deliver Make  Plan -- initial stage of the supply chain process is the planning stage -- strategy in order to address how the products and services will satisfy the demands and necessities of the customers. -- managing all the resources required for designing products and providing services, a strategy has to be designed by the companies. -- supply chain management mainly focuses on planning and developing a set of metrics.  Develop (Source) -- concentrate on building a strong relationship with suppliers of the raw materials required for production. -- identify dependable suppliers but also determining different planning methods for shipping, delivery, and payment of the product. -- suppliers to deliver the items and services they require to develop their product. -- supply chain managers need to construct a set of pricing, delivery and payment process with supplier s and also create the metrics for controlling and improving the relationship. -- supply chain managers can combine all the these processes for handling their goods and services inventory. -- handling comprises receiving and examining shipments, transferring them to the manufacturing facilities and authorizing supplier payment.  Supplier Development -- huge in the hotel industry, this has positive, conscious steps should be taken to identify committed suppliers who are willing to go by the objectives of the organization, and be involved and appreciate and support the changes of the organizational requirements.  Supplier evaluation and selection -- critical process, supplier’s ability to supply the right goods at the right time with correct specifications has to be reviewed -- contract are awarded after careful negotiations with the supplier.  Supplier Management -- when the suppliers fulfills the obligation by delivering the required goods as per specification it’s the responsibility of the purchase department to ensure suppliers bills are paid promptly, at time good suppliers lost due to the payment delays. -- its very essential to maintain a strong relationship with the supplier hence supplier management has to be strengthened. -- very crucial step in the supplier chain management. -- consideration of this process would contribute towards efficiency and cost saving.  Make -- the third step in the supply chain management process is the manufacturing or making of products that were demanded by the customer. -- product are designed, produced, tested, packaged, and synchronized for delivery. -- SCM schedule all the activities required for manufacturing, testing, packaging and preparation for delivery. -- this stage considered as the most metric- intensive unit of the supply chain, where firms can gauge the quality levels, production output and worker productivity.  Product Development within Hospitality Environment Recognized as the examination of product and services to recognize the probability of improvement, earning as well as thee client satisfaction. This technique in important in changes of existing products to handle discovered opportunities and the modern marketing trends. Consisting of knowledge and the merchandise weakness and advantages, modern marketing tendency which is facilitated by the advanced technology. According to “ KOTLER’S” primary product development, three phases of product such as center product, augmented product and tangible product. Basic level of selling product is known as the central product. Ex. Hilton Hotel Holiday Resort may provide- appointed rooms, excellent dinner and other services for their customers. Ex. Fitness center activities, spa facilities and other packages relevant to the different sports activities. Tangible product can be recognized as the products that can be physical form feel by the client. Ex. Restaurants of International Sea BQ provides sea foods for the customers. Five Major Steps in Product Development Process Generation of Idea Screening process Evaluation of Idea/ Development of Concept Product development/ Business Analysis Commercialization process  Deliver Productare delivered to the customer at the destined location by the supplier. Thisstage basically the logistics phase, where customer orders are accepted, the delivery of goods is planned. Ex. Logistic firms collaborate with a receipt of orders from customers, and establish a network of warehouses, pick carrier, involving the invoicing system to receive payments.  Return The final stage of supply chain management is referred as the return. Defective or damaged goods are return to the supplier by the customer. Companies need to deal with customer queries and respond to their complaints etc. Planner of supply chain need to discover a responsive and flexible network for accepting damaged, defective and extra products back from their customers and facilitating the return process for customers who have issues with delivered product.  Returns Management Speed Visibility Control Post- Sales Service Return Management Defined as the management that invites the manager of challenges and opportunities for inbound logistics. -- Return with the product information and demand for repairable items or re-captured materials. Three Pillars that support return management process: Speed- it is must to have quick and easy returns management and automate decisions regarding whether to produce return materials authorization (RAMs). Visibility- improving visibility and predictability, information, information needs to be captured initially in the process, ideally prior to delivering the return to receiving dock. Control- return management synchronizing material movements is a common issue that needs to be handled. --- producer needs to be very cautions and pay close attention to receipts and reconciliation and update to stakeholders of impending quality issues. --- control points in this process are regulatory compliance, reconciliation and final disposition and quality assurance.  Post-Sales Service Postservice comprises selling spare parts, installing upgrades, performance inspection, maintenance and repairs, offering training & education and consultation. Growing demands of the clients, high volume of after sales service proves to be profitable business Consumables in Hospitality Regardless of how large or small your hotel is, just imagine how bad it would be you could not supply your guess with breakfast because you have run out of supplies. Same applies to restaurants. A bar that run out of wine or beer will suffer by customers going elsewhere, and once they have done that, it is hard to get them to return to your establishment. Successful businesses are built on loyal customers bases, but this will not happened with yours if you keep letting customers down. Food and drinks are an important part of any hotel stay, and eating out is often part of consumer’s vacation’s. Obligations with food and drink, and effective chain supply management is the way to do it. Implementation Supply Chain Management in Hospitality Industry Concept have been developed to understand how the successful implementation of logistics and supply chain management can be achieved. Hotel industry logistics and supply chain activities are grouped into tactical strategic and operational levels to help create a more systematic approach by focusing on how implementation will happen from higher level, linking that to long term goals and finally how these results translate in the short- term. Tactical Level Executive support – implementation of logistic and supply chain management focuses on steps that are taken at a higher level for successful implementation. --- During tactical stage of implementation there is 100% executive support and buy in from senior managers and having the right people in the place who understand the value logistics and supply chain implementation will bring to their properties.  Visibility and control- important to have visibility and control to implement logistics and supply chain practices to help make better decisions --- Understand the decisions made by vendors and suppliers to help managers make well-informed logistics and supply chain decisions. Benchmarking- goal of benchmarking during logistics and supply chain implementation is to enhance operational effectiveness Creative solutions and risk taking- solutions and willingness to take risk logistics and supply chain implementation is important since lot of focus has been placed on reducing cost and increasing margins wherever possible. Strategic Level Change Management– strategic implementation of logistics and supply chain management is linked to the long-term benefits over a period of time. Management plays a big part in logistics and supply chain implementation in different areas, from making change and to the hotel industry during implementation, it I important for manager to think and act in real time to help enable innovation and change, as people will always challenge the process. Think Lean and Green- started in the automative industry, it can be used in any business process like int h hotel industry Hotel managers need to use lean strategies when logistics and supply chain implemented immediately instead of later. --- identify the service value stream focusing on design layout, development, procurement, and distribution process strategies. Top talent and accountability – implementing logistics and supply chain management in any company, it is important to be to sustain the implementation, which involve building a solid foundation that includes top managers to drive the process with deep expertise in logistics and supply chain function and business skills. Right information technology- important and integral part of every business process, when implementing logistics and supply chain management in the hotel industry, it is done at the speed of light.  Operational Level Cost- operational level of logistics and supply chain management implementation focusses on decisions that are related to how make the tactic approach happen in the short term. Simplifying complexities- important logistics and supply chain implementation for hotel managers to manage strategies to eliminate complexities that do not add value to the organization. Right- applying key performance indicators(KPI’s)to logistics and supply chain operations during implementation is vital to help monitor how well supplies and vendors re meeting set targets, which helps improve top and bottom line performance. Risk management- considering risk management is critical during logistics and supply chain implementation for hotel managers in order to evaluate risk associated with implementation in their strategy.  Right metrics Applying key performance indicators(KPI’S) to logistics and supply chain operations during implementation is vital to help monitor how well suppliers and vendors are meeting set targets, which helps improve top and bottom line performance. Ex. Starbucks –created weekly scorecard to monitor third party carrier performance Cost, services, and productivity to create conspiracy, improve costs, and help serve customers better, as well as ley foundation for future logistics and supply chain initiatives. Risk Management Critical during logistics and supply chain implementation for hotel managers in order to evaluate risk associated with implementation in their strategy. Managers should have good understanding of the benefits involved with sharing risk information across the network. Chapter 4 Strategic Sourcing Simplifying Complexities Important in logistics and supply chain implementation for hotel managers strategies to eliminate complexities that do not add any value to the organization. Functions are broken down into different areas based on which areas matter the most in the supply chain. Segmentation helps hotel managers easily identify the relationship between costs and price with suppliers and helps negotiating better prices. Procurement Management  Cost, part of hotel business profitability efficiency.  Revenue stream generation as well as best quality.  Important for the beds you purchase to comfortable. Strategic Sourcing