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
suppliers, manufacturers,
assemblers, supply, and delivery
centers and logistics that perform
functions such as material
sourcing, processing, and
shipment to buyers of those
materials od an intermediate or
finished products.
A supply chain is the lineup of
companies that market goods or
services
All stages, directly or indirectly,
involved in the fulfillment of a
consumer order have a supply
chain. Not only the manufacturer
but also the shipping providers,
warehouses, dealers, and
consumer themselves are involved
in this supply chain.
ESSENTIAL FEATURES OF SUPPLY CHAIN
MANAGEMENT
INTEGRATED BEHAVIOR
MUTUALLY SHARING INFORMATION
MUTUALLY SHARING CHANNEL RISK AND
REWARDS
SUPPLY CHAIN MANAGEMENT (SCM) INTEGRATES
STAKEHOLDER INTEGRATION BETWEEN THE CLIENT AND
THE PROVIDER
IN PARTICULAR FOR PLANNING AND SURVEILLANCE
PROCESSES, AN EFFICIENT SCM EXCHANGE OF
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
BETWEEN SUPPL CHAIN PARTICIPANTS SHOULD BE RISK-
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


5. Eliminates costs directly
and implicity
6. Supports the shipping at the right spot
with the right goods
7. Enhances asset management and
encourages the effective
implementation of just-in-time
inventory
8. Assists businesses in
responding to the global
dynamic, economic
upheavals, growing market
preferences and associated
disparities.
9. Assists businesses in the
supply chain to reduce
duplication, eliminate risks,
and achieve efficiency.
 Functions of Supply Chain Management
S T R AT E G I C
LEVEL
• Strategic network optimization
involving warehouse, fulfillment
center, and facilities numbers,
locations, and scale.
• Strategic relationships, contact
networks for crucial details, and
technological enhancements such as
cross-docking, exporting directly, or
logistic with third parties (with
vendors, dealers, and consumers)
• Management of inventory life cycles
to optimally combine new and current
goods in the supply chain and
capacity management
• Chain operations for information
technology
• Coordination of the whole corporate
plan with the strategy of supply
TA C T I C A L L E V E L
• Sourcing and other procurement
decisions.
• Decisions on production including the
concept of contracts, schedules, and
plans for the operations
• Purchasing choices including
inventory size, locations, and
consistency
• Inbound activities including retailer transport
• The strategy of transport including
pace, routes and contracting
• Production processes involving materials use
• Competition benchmarking of all
processes including best practices
around the business
• Fees with milestones
• Customer demand and customes habit
focus
O PE RAT I O NAL LE
•The coordinationVofE
theLallocation of daily
output for each production plant in the supply
chain (minute by minute)
• Preparation and forecasting of demand,
alignment of all customers' needs, and
prediction- and provision-sharing with all
suppliers
• In coordination with all vendors, the supply
preparation, including existing inventories
and forecast demands
and shipment receipt
and finished products streaming
• outbound operations, all tasks including
customer efficiency, warehousing, and
transport
• Pledging orders for all retailers, production,
fulfillment center, and other clients on all
restrictions within the supply chain
• All cases of transit disruption from
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
The cost of purchasing raw materials in the hotel
industry is prohibitive. The vast majority of hotel's
consumables are organic. A hotel stores handles
massive amounts of goods at meager prices. Much
of the direct cost of material is spent on these
items. Because of the perishable nature, a bulk
purchase cannot be utilized - the number of
transactions, increases. The concept of
mechanization or automation cannot be wholly
applied due to many different products bought by
a wide range of suppliers across several agencies.
Standardization is not possible in such situations.
As a consequence, transaction costs increase
Material Ordering Costs
Individual agencies often utilize
handwritten indents and transactions
This has a negative impact on
independently. Several hotels do not have
restructuring, increased supply, and
automated entry and sales request.
increased cost. Hotels owned by the same
Consolidating these indents and
business may purchase the sae products
standards take a long time. Because
fro the same vendors aat different rates.
restructuring is commplex, the
The costs of transportation and other
purchasing department places several
associated expenditures have also been
orders for the same products. Except for
reduced substantially. Supply chain
the chain businesses with many units in
management may result in significant cost
the same area, hotels do not take
reductions.
advantage of bulk purchases in the exact
location. Hotels are known to purchase
an excessive nuber of units of various
labels and packaging sizes.
Inventory Handling
The required product forecast is very uncertain.
It turns into a paper tiger even after it is done.
The purchasing department stockpiles large
quantities of goods and does not deliver the best
items to the user departments on time. This is
common problem that lead to higher expenses.
Emergency Purchases
Due to lack of preparation, emergency
purchases are the norm rather than the
exception. Purchases are made on the
spur of the moment at the request of user
departments and are subsequently
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