Hotel inventory

The hospitality sector can sometimes be overlooked when we think of inventory

management. After all, what is their product on offer? For hoteliers, their inventory

are hotel rooms rented each night; for restaurateurs, it is food and beverages that are

purchased or prepared and that do not end up being consumed and paid for by patrons.

Inventory management can be difficult for the hospitality industry because of the

somewhat intangible nature of their product or difficulty associated with tracking it

and stocktaking. However, do not fall into the trap of thinking that it can simply be

forgotten about as this will cost you thousands per year in revenue. Here we consider

some ways in which inventory can be managed better in hospitality environments.

Inventory is one of the resources that are managed by business organizations

and it was first recorded in 1601. The need for inventory control cannot be
overemphasized as it is a means for improving the performance of
manufacturing industries. Inventory can be defined as a record of a business
current assets including property owned, merchandise on hand and the value of
work in progress and work complete but not sold and it is classified as a current
asset because it can be turned into liquid cash within a short period of time.
Inventory has created a great impact on the profitability of the manufacturing
firm which resulted to the deep research of this topic. Effectiveness of inventory
management in a manufacturing company.
Inventory plays a major role in the operation of many businesses and
manufacturing companies. In manufacturing, inventories of raw materials allow
companies to operate independently of their sources of supplies. Day to day
operation are not dependent on deliveries from supplies since stock of the
necessary mateials are maintained and used s needed. Without inventory
control, millions of naira could be lost year because of non accountability of
stocks and inaccurate checks and balances.
The process of control and management of inventory is a very important factor
in the success or failure of any business for example, little stock will result in
stock out which will disrupt the production distribution cycle that is crucial to
the survival of all manufacturing companies while too much stock will tie down
the resources of a company. Poor or inadequate inventory management can
present a serious challenge to the productive capacity of a manufacturing
organization. In addition to raw materials and finished goods, many companies
also maintain items of assets, property, inventories of work in progress, office
supplies, business firms and general operation supplies.

Inventories often constitutes the most significant part of current assets of large
companies. In the public limited companies, inventories are approximately 60%
of current assets on the average. The US Burean of the census stated that
inventory and accounts receivable ate the two largest accounts of equal
magnitude and together they comprise almost 80% of current assets and over
30% of total assets for all manufacturing companies in 1982.

Hotel inventory management

Effective inventory management for hotels involves both revenue management

(creating and managing demand) and yield management (maximising returns). The

investment backing a hotel is tied up in its real estate and the returns can only be

gained from renting out that real estate optimally.

Pricing

By driving prices up during high peak periods and knowing how much to discount

prices by to ensure rooms are rented during low peak periods, hotels can maximise

their return. Through dynamic pricing, businesses can provide discounts and

incentives in a controlled way during different seasons.

Distribution

Hotels generally advertise their rooms through multiple channels, such as online travel

agencies, to optimise reach and promote sales. Distribution management is essential

and this involves calculating the minimum numbers of rooms needing to be sold for

any given period by each channel. In doing so, you then have the ability to make

informed choices regarding reallocation from cancellations or where to list spare

rooms to maximise sales.

Market segmentation

Being aware of your market and the variable preferences, demands and affordability

of different demographics are paramount to understanding how to price and distribute

your room sales across the various channels. Not only does this help in managing your

existing rooms, but it can also allow you to capture more of the market and increase

sales and revenue. Flexibility is an important virtue required of hoteliers and being

able to understand your clientele and adapt to their needs is vital to building loyalty

and guaranteeing profitability.

Restaurant inventory management

Inventory management in a restaurant or bar is exceedingly difficult as stock items

might not be single entities of uniform shape and size that can be easily counted.

However, this is even more the reason for special attention to be paid to inventory

when managing a bar or restaurant. Let us consider some areas of uncontrolled

inventory and how to overcome them.

Snacking on the go

For restaurateurs, food can be a significant area of uncontrolled inventory. This

applies particularly to staff meals where fruit or other food items are quickly grabbed

for consumption on the job. This is indeed generous and will likely go a long way

with staff, however over time, this equates to thousands of dollars not accounted for.

Simply account for it in inventory otherwise there will always be issues and

irreconcilable areas when it comes to stocktaking.

Stagnant ordering systems

A big area for constant improvement is the ordering system which comprises the

software and the ordering practices. Keeping orders stagnant over time without basing

them on real data of consumer trends is a sure way to increase wastage and decrease

the bottom line. A useful rule of thumb is to look at the previous six weeks of sales

and use that as a gauge for future orders, making sure that it is consistently adapted for

fluctuations.
In this article, we have briefly looked at some key components of inventory

management for those in hospitality. Of course, as with any industry and the

management of inventory, there is invaluable software available to make the task that

much easier. Seek out tools that can help as managing inventory is the cornerstone of

business success.

An inventory management facility can thus be deployed as a potential tool and

mechanics for managing as well as keeping track of input/output assets, cash inflows

and outflows and basically all the transactions that are taken within the hotel vicinity.

Bomah

Currently, the hotel is having problems in managing the existing stock that is used as

input. Difficulty in allocating, controlling, managing and directing the usage of the

available resources within the hotel premises. As a result, this has led to accumulation

of losses in both the short and long run, misallocation of the available resources and

above all unexpected expenses without a defined positive profit margin

hotel has got problems due to the way they handle their businesses. The hotel incurs

huge losses daily due to miscalculation and mismanagement of resources for example

the accountant has a lot of work which is done manually and therefore not effectively

completed for example taking records of food consumed and the issuing of resources

sometimes the receptionist also fails to fully account for the client’s needs like

breakfast, lunch, and dinner because he/she is concentrating on paperwork and

documents.
Our hotel inventory system will ensure that all the hotels services and goods are

indicated for both the accountant and receptionist to use. The accountant will have all

the stock available with in the hotel stone indicated down so that the hotel does not

run out of stoke which limits services. The system will compute all the items sold and

get the price income of the day. For the receptionist the system will indicate all the

available rooms and resources for the clients which will enable he/she to budget for

the charges per clients stay and fine for those who miss use the rooms.

The Literature on inventory management practices reviewed identifies effective

inventory management practices as determinants of hotels’ performance model. Hotel

performance could therefore be improved if effective levels of inventory management

practices are improved. In this section our system compares its proposed performance

in hotel management to the other writers’ views on hotel inventory management

system.

Morris (1995) stressed that inventory management in its broadest perspective is to

keep the most economic amount of one kind of asset in order to facilitate an increase

in the total value of all assets of the organization, human and material resources. In

large organizations with hundreds and thousands of employees, Hotel Management

systems can be used to tag and track employee uniforms and have those sent to

laundry (Collingnon, 2005). Hotel management technologies can also be used for in-

room assets so that hotels can make sure all the services are offered to customers in

their allotted guestrooms. Collingnon (2005) explains that hotels can manage lost and

stolen garments, linens and sheets using this system. It also facilitates in providing

efficient laundry services to customers by reducing the “laundry bill discrepancies”.

Inventory management

To reduce stock outs and improve performance, businesses should employ category

management practices and automatic replenishment programs such as continual

replenishment planning or vendor-managed inventory (Basuroy, S., Mantrala, M., and

Walters, G. (2001). To implement category management practices effectively, proper

shelf space allocation must be a priority as the amount of inventory on display may

stimulate demand. Borin et al. (1994) recognizes the effects of shelf space allocation

on stock outs and operating costs and proposes an optimization model for the joint

product assortment and shelf space allocation decision and shows that ignoring the

effects of stock outs can yield less than desired results. Eroglu et al. (2011) posits that

shelf space management has a direct effect on shelf stock outs and suggests that

managers should allocate shelf space not only on the basis of case pack quantity but

also on consumer demand. Deloof (2003) established that shortening inventory

conversion period is a precursor to increasing stock out costs and will eventually

result in loss of sale opportunities hence poor performance.

Financial management.

On the role of effective inventory management on the performance of businesses,

Sushma & Phubesh (2007) in their study of 23 Indian Consumer Electronics Industry

firms established that businesses’ inventory management policies had a role to play in

their profitability performance. Lazaridis & Dimitrios (2005) in their study of 131

companies listed in the Athens Stock Exchange showed that mismanagement of

inventory will lead to tying up excess capital at the expense of profitable operations
and suggested that managers can create value for their firms by keeping inventory to

an optimum level. Also, Rajeev (2008) in his study of 91 Indian Machine Tool SMEs

to evaluate the relationship between inventory management practices and inventory

cost established that effective inventory management practices have a positive impact

on the inventory performance of businesses and also have an eventual effect on the

performance of businesses.

Juan & Mertinez (2002) in their study of 8872 small and medium-sized Spanish firms

also demonstrated that managers of firms can create value by reducing the number of

days of inventory. Effective inventory management processes helps increase

operational efficiency of firms; improves customer service; reduces inventory and

distribution costs; and enables businesses track items and their expiration dates

consequently balance between availability and demand (Pandey, 2004).

According to (Atrill, 2006), Prudent inventory management requires the analysis of

the costs of maintaining certain levels of inventory as there are costs involved in

holding too much stock and there are also costs involved in holding too little hence the

need to put in place an effective stock management system to ensure reliable sales

forecasts .As Ross et al. (2008) observed, the Economic Order Quantity (EOQ) model

is an approach of determining the optimal inventory level that takes into account the

inventory carrying costs, stock-out costs and total costs which are helpful in the

determination of the appropriate inventory levels to hold. Grablowsky (1984)

observed that large businesses rely more on quantitative techniques, such as EOQ and

linear programming, to provide additional information for decision-making, while

small firms make use of management judgment without quantitative back up.
Decision making management

Inventory Management plays a decisive role in the enhancement of efficiency and

competitiveness of business enterprises. Therefore, there is increased need for

business enterprises to embrace effective inventory management practices as a

strategy to improve their competitiveness (Rajeev, 2008). Effective inventory

management entails holding an appropriate amount of inventory. Too much inventory

consumes physical space, creates a financial burden, and increases the possibility of

damage, spoilage and loss. On the other hand, too little inventory often disrupts

business operations, and increases the likelihood of poor customer service (Dimitrios,

2008).

In the hotel industry, Collingnon (2005) suggested that in many luxury and upscale

hotels, hundreds of thousands of dollars of assets such as “valuable paintings, high

end furnishings, electronic equipment and fine china and silverware” can be tagged

rather than protecting them 24/7. While saving on the costs of maintenance, these

technologies can also reduce the costs of labor. Smart RFID tags can be used for

auditing activities by tracking revenue-generating equipment by making sure value

items are rightly placed. It also facilitates in tracking items that may need servicing,

repair or replacement (Collingnon, 2005 & Patnaik,

2004). While protecting the assets and tracking the inventory through RFID

technologies, hotel organizations can focus on providing efficient and effective

service to its customers.

Information management
In the past, researchers apart from hotel industry have stated that RFID technologies

can be used to identify the “available inventories” and provide information of the

assets in organizations (Kok et al., 2008; Hau & Ozer, 2007 & Atali et al., 2006).

While inventory and system user errors do occur quite frequently, there are not many

studies that have identified them. While the traditional inventory management

methods presume to have 100% reliable information, in actual fact most hotels have

only uneven guesstimates of actual inventory. In hotel or lodging literature there are

very few studies that focus on implementing RFIDs for asset and inventory

management. According to Iwin (2006) hotel management system facilities the

sharing of information, presentation and how it can be used affirmatively to maintain

on going and external inventory management to which a hotel embraces its crucial

long term success.

Database record management

According to sawyer (2000) utilities are variety of sophisticated technologies to store

and retrieve data efficiently. It provides easy access to data and provides data security

(such as data authentication). Gerald (1999) defines a Database as a collection of data.

Some of the tasks, using a computer system, are to store and manage data. To handle

these tasks, a specialized computer system known as Database Management System.

(DBMS) is needed. A DBMS stores, processes and retrieves data. A database is a pool

of data that has been edited and is shareable between application systems linking data

stored in different files together to ease access. The simplest way to reduce the

incidence of inconsistent data is to eliminate unnecessary duplication of data. This

term implies that data should be stored as a common pool shared between application
systems. This pool of data sharable between applications is the enterprise database.

Data which is unnecessary duplicated is redundant in the sense that duplication adds

no information; hence we use the term non redundant in the database. A collection of

non-redundant sharable data between different applications is database.