SUPPLY CHAIN

MANAGEMENT
IN HOSPITALITY
INDUSTRY
BASIC CONCEPTS
AND OVERVIEW
OF SUPPLY CHAIN
MANAGEMENT
INTRODUCTION
The concept of supply chain management varies from that of the
conventional logistics concept. Logistic generally refers to
operations within one organization's territory and supply chains to
networks of organizations that operate together and coordinate
their actions for business distribution. Traditional logistics also
concentrate on sourcing, delivery, repair, and material control
operations. Management of the supply chain recognizes all
conventional logistics and practices such as marketing,
manufacturing of new products, finance, and customer support.
OVERVIEW OF SUPPLY CHAIN
In today's competitive environment, there is an increasing interest in logistics
and supply chain management techniques since performance is measured not
only by actions and decisions, but also by increases in return on investment and
better profitability. Even though logistic and supply chain are considered
operations management techniques in the hotel and other service sectors, they
may assist in adding value to their properties.
The hospitality business is a broad group of industries within the service
sector encompassing hotels, restaurants, event organizing, theme parks,
transportation, cruise lines, and other tourism-related professions. The hotel
business is multibillion dollar industry heavily reliant on the availability of
leisure time and disposable money.
 The supply chain is very important in the hotel and catering
industries. Employees in this sector must maintain consistent
connections with suppliers and work with a solid ordering system to
enhance customer service. Innovative hospitality chains look beyond
inventory management systems to spend intelligence solutions that
can assist collect, rationalize, and analyze historical and real time
buying data. The development of a supply chain leads to more
excellent knowledge of the whole chain, making the adoption of
common standards more straightforward. It is implicit and apparent
that in the future age of hyper-competition, the foundation of rivalry
in many sectors would center upon supply chain growth.
 What is Supply Chain?

A Supply chain is a network of All stages, directly or indirectly,

suppliers, manufacturers, involved in the fulfillment of a
assemblers, supply, and delivery A supply chain is the lineup of consumer order have a supply
centers and logistics that perform companies that market goods or chain. Not only the manufacturer
functions such as material services but also the shipping providers,
sourcing, processing, and warehouses, dealers, and
shipment to buyers of those consumer themselves are involved
materials od an intermediate or in this supply chain.
finished products.
ESSENTIAL FEATURES OF SUPPLY CHAIN
MANAGEMENT
SUPPLY CHAIN MANAGEMENT (SCM) INTEGRATES
INTEGRATED BEHAVIOR STAKEHOLDER INTEGRATION BETWEEN THE CLIENT AND
THE PROVIDER

IN PARTICULAR FOR PLANNING AND SURVEILLANCE

PROCESSES, AN EFFICIENT SCM EXCHANGE OF
MUTUALLY SHARING INFORMATION INFORMATION BETWEEN CHANNEL PARTICIPANTS IS
NEEDED

EFFECTIVE SCM OFTEN INCLUDES RECIPROCAL CHANNEL

RISKS AND INCENTIVES TO HAVE A COMPETITIVE BENEFIT.
THE LONG-TERM EMPHASIS AND COORDINATION
MUTUALLY SHARING CHANNEL RISK AND
BETWEEN SUPPL CHAIN PARTICIPANTS SHOULD BE RISK-
REWARDS SHARING AND REWARDS-SHARING
ESSENTIAL FEATURES OF SUPPLY CHAIN
MANAGEMENT
THE SUCCESSFUL SCM REQUIRES COOPERATION BETWEEN THE
CHANNEL PARTICIPANTS. COOPERATION REFERS TO THE COMPANY'S
COOPERATION COORDINATED, IDENTICAL, OR COMPLEMENTARY OPERATIONS IN AN
ENTERPRISING RELATIONSHIP, IN ORDER TO ACHIEVE COLLECTIVELY
RECKONED, SUPERIOR RESULTS.

SUPPLY CHAIN IS EFFECTIVE WHERE ALL SUPPLY CHAIN

FOCUS ON SERVING CUSTOMERS MEMBERS SERVE CONSUMERS WITH THE SAME OBJECTIVE AND
CONCENTRATION. A MODE OF POLICY CONVERGENCE HAS THE
SAME AIM AND FOCAL POINT FOR CHAIN MEMBERS

IMPLEMENTING SCM REQUIRES THE CONVERGENCE OF

SYSTEMS FROM THE SUPPLY CHAIN TO PRODUCTION AND
INTEGRATION PROCESS DELIVERY. INTEGRATION CAN BE ACHIEVED UNDER CROSS-
FUNCTIONAL CONDITIONS, BY STAFF OF PLANT SUPPLIERS
AND SERVICES PROVIDED BY THIRD PARTIES.
 Benefits of
Supply Chain Management
1
Builds stronger partnership and support with clients

2 Provides better distribution processes, with less delay, for

demanded goods and services

3 Increases effiency and functions of companies

4 Lowers shipping and warehouse costs

 8. Assists businesses in
5. Eliminates costs directly responding to the global
dynamic, economic
and implicity upheavals, growing market
preferences and associated
disparities.
6. Supports the shipping at the right spot
with the right goods
9. Assists businesses in the
supply chain to reduce
7. Enhances asset management and
duplication, eliminate risks,
encourages the effective
and achieve efficiency.
implementation of just-in-time
inventory
 Functions of Supply Chain Management
O PE RAT I O NAL LE
S T R AT E G I C TA C T I C A L L E V E L
•The coordinationVofE
theLallocation of daily
LEVEL output for each production plant in the supply
• Strategic network optimization • Sourcing and other procurement
chain (minute by minute)
involving warehouse, fulfillment decisions.
• Preparation and forecasting of demand,
center, and facilities numbers, • Decisions on production including the
alignment of all customers' needs, and
locations, and scale. concept of contracts, schedules, and prediction- and provision-sharing with all
• Strategic relationships, contact plans for the operations suppliers
networks for crucial details, and • Purchasing choices including • In coordination with all vendors, the supply
technological enhancements such as inventory size, locations, and preparation, including existing inventories
cross-docking, exporting directly, or consistency and forecast demands
• Inbound activities including retailer transport
logistic with third parties (with • The strategy of transport including
and shipment receipt
vendors, dealers, and consumers) pace, routes and contracting
• Production processes involving materials use
• Management of inventory life cycles • Competition benchmarking of all and finished products streaming
to optimally combine new and current processes including best practices • outbound operations, all tasks including
goods in the supply chain and around the business customer efficiency, warehousing, and
capacity management • Fees with milestones transport
• Chain operations for information • Customer demand and customes habit • Pledging orders for all retailers, production,
fulfillment center, and other clients on all
technology focus
restrictions within the supply chain
• Coordination of the whole corporate
• All cases of transit disruption from
plan with the strategy of supply manufacturing level to supply level, and plan
for consumer payment through retention of
business losses by the insurance provider
 • The hotel's customer of guest is referred to as 'GOD'.
When it comes to strict uniformity, it may be
difficult at times. Customer satisfaction is critical in
the hotel industry. This has a detrimental impact on

Factors supply chain management. Customer-related

activities including food and beverage production

Affecting
and service, housekeeping, and front office
administration are critical in the hotel industry.
Accounts, buying, supply chain management, and
Supply Chain revenue records are pushed to the sidelines.
• Management systems of different types, such as hotel
in Hospitality operators, franchisees, chain hotels, and so on, are
various control systems that have varied implications

Industry on the supply chain management. These factors add

to the specific difficulties with assets that are often
disputed and handled differently.
 3. Current market trends indicate that computerized
Factors property management systems are utilized but solely for
the front office administrations and reservation.
Affecting Interconnections across office operations, whether in the
hotel front office, back office, or buying process, are

Supply Chain rare in the most hotels. In other words, all activities are
customer-driven , ensuring that significant cost savings

in Hospitality may be realized by improving upstream supply chain

management. As a result of the above, some problems

Industry unique to the hotel sector may emerge.

CHALLENGES OF HOSPITALITY INDUSTRY RELATED
TO SUPPLY CHAIN

• RAW MATERIAL COSTS

• MATERIAL ORDERING COSTS
• INVENTORY HANDLING
• EMERGENCY PUCHASES
Raw Material Costs Material Ordering Costs

The cost of purchasing raw materials in the hotel Individual agencies often utilize
industry is prohibitive. The vast majority of hotel's handwritten indents and transactions
This has a negative impact on
consumables are organic. A hotel stores handles independently. Several hotels do not have
restructuring, increased supply, and
massive amounts of goods at meager prices. Much automated entry and sales request.
increased cost. Hotels owned by the same
of the direct cost of material is spent on these Consolidating these indents and
business may purchase the sae products
items. Because of the perishable nature, a bulk standards take a long time. Because
fro the same vendors aat different rates.
purchase cannot be utilized - the number of restructuring is commplex, the
The costs of transportation and other
transactions, increases. The concept of purchasing department places several
associated expenditures have also been
mechanization or automation cannot be wholly orders for the same products. Except for
reduced substantially. Supply chain
applied due to many different products bought by the chain businesses with many units in
management may result in significant cost
a wide range of suppliers across several agencies. the same area, hotels do not take
reductions.
Standardization is not possible in such situations. advantage of bulk purchases in the exact
As a consequence, transaction costs increase location. Hotels are known to purchase
an excessive nuber of units of various
labels and packaging sizes.
Inventory Handling Emergency Purchases

The required product forecast is very uncertain. Due to lack of preparation, emergency
It turns into a paper tiger even after it is done. purchases are the norm rather than the
The purchasing department stockpiles large exception. Purchases are made on the
quantities of goods and does not deliver the best spur of the moment at the request of user
items to the user departments on time. This is departments and are subsequently
common problem that lead to higher expenses. formalizes by the completing the
necessary paperworks.
Chapter Summary
Supply chain management can be described as managing the flow of goods and services that starts from
the origin and ends at the consumption of the product. It also involves the movement and storing of raw
materials, inventory, and professionally equipped materials. The principal purpose of supply chain
management is to track and link the product and service production, delivery, and shipping. Companies
that possess very strong sticks, manufacturing, distribution, internal manufacture, and sales will do this

Management of the supply chain tends to lead to a company's financial performance. Integrated behavior,
reciprocal knowledge exchange, mutually managed risk and benefits, cooperation, customer service,
integration processes, and stakeholders are important aspects of supply chain management to establish and
sustain long-term relationships. it meant to maximize differentiation, boost profits, and enter new markets
for leafing businesses utilizing the supply chain. The aim is to promote competitive advantage and
shareholder value
Chapter Summary
The Strategic level, tactical level, and operational level are the three major roles of supply chain
management.

In hospitality sector, supply chain management is somewhat different from other sectors. Capital costs for
industries are high and operational costs are relatively low. For the hospitality industry, customers loyalty is
paramount. This adversely impacts the management of the supply chain. The various control systems have
different effects on the management of the supply chain. In most properties, interconnections between
office processes directly impact and are related to the purchasing process. In other words, all the efforts are
customer-driven, which ensure that much cost savings can be accomplished by strengthening upstream
control of the supply chain.

Room material prices, sourcing materials, product manipulation, and emergency acquisitions are different
problems in the hospitality sector in the field of the supply chain.
THANK YOU!!
PROF. ROWENA C. ASAÑON