(HPC 204)
SUPPLY CHAIN MANAGEMENT IN THE
HOSPITALITY INDUSTRY
WHAT IS SUPPLY CHAIN MANAGEMENT?
Supply Chain Management can be defined as
● the management of flow of products and services, which begins
from the origin of products and ends at the product's consumption.
It also comprises movement and storage of raw materials that are
involved in work in progress, inventory and fully furnished goods.
● is the coordination of a business’ entire production flow, from
sourcing raw materials to delivering a finished item.
This includes material and information flows both up and down supply chain. A full
variety of processes 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.
In today’s changing business environment, there is an increased focus on delivering value
to the customer at the cheapest possible costs. Hence there has been increased interest
in logistics and supply chain management practices since performance is not only
determined by actions and decision, but also the improvements on return on investment
and greater profitability.
The main objective of supply chain management is to monitor and relate
production, distribution, and shipment of products and services. This can be done by
companies with a very good and tight hold over internal inventories, production,
distribution, internal productions and sales.
IMPORTANCE OF SUPPLY CHAIN MANAGEMENT
Supply chain management is important since it can help meet many
company goals. For example, it can increase product quality by regulating
production processes, minimizing the possibility of recalls and litigation
while helping to create a strong customer brand. At the same time, by
avoiding expensive shortages or cycles of product oversupply & restrictions
over shipping procedures will enhance customer support. Overall, supply
chain management offers businesses with several ways to increase their
profit margins, which is particularly relevant for large and multinational
businesses.
Over the last twenty years, the supply chains of manufacturers and retailers have
become ever more tightly linked. In many industries, retail sales trigger
replenishment orders to manufacturers. Manufacturers with a well-tuned,
just-in-time supply chain can automatically restock retail shelves as products are
sold. As collaboration has increased, additional data from supply chain partners has
allowed companies to use advanced analytic tool to further improve results.
Examples include:
· Identifying potential problems before they occur. When a customer orders more
product than the manufacturer can deliver, the traditional response has been
too short the order. This leaves the buyer feeling unimportant and convinced
the manufacturer's service is poor. Manufacturers who anticipate the shortage
before the buyer is disappointed may be able to offer a substitute product or
other incentive to keep the buyer happy.
· Optimizing price dynamically. Seasonal products, particularly fashion products,
have a limited shelf life. Any that don't sell by the end of the season are
scrapped or sold at deep discounts to empty the warehouse. Airlines, hotels,
and other companies with a limited, but perishable product, adjust prices
dynamically to meet demand. While this is more difficult with clothing and
other products where the supply can vary widely, similar forecasting
techniques can improve margins.
· Improving the allocation of available to promise inventory. Today's tools
dynamically allocate resources and schedule work based on the sales
forecast' actual orders, and promised delivery of raw materials.
Manufacturers are able to confirm a product delivery date when the order is
placed, significantly reducing incorrectly filled orders.
SUPPLY CHAIN MANAGEMENT – ADVANTAGES
Supply chain management plays a very significant role in this era of
globalization, where firms compete to supply consumers with the highest
quality products and meet all their demands. Both industries are heavily
reliant on efficient supply chain processes.
Let's take a look at the major advantages of supply chain. The key
benefits of supply chain management are as follows:
➢ 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 products to the right place at the
right time. • Creates better delivery mechanisms 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.
These were some of the major advantages of supply chain
management. After taking a quick glance at the concept and advantages on
supply chain management, let us take a look at the main goals of this
management.
THE OVERALL GOAL OF SUPPLY CHAIN MANAGEMENT
The goal of SCM software is to improve supply chain performance. Timely and
accurate supply chain information allows manufacturers 'to make and ship only as much
product as can be sold. Here are the three main goals of supply chain management:
➢ Improving Efficiency
Efficiency refers to the minimization of waste. Waste can exist in terms of wasted
materials, wasted money, wasted man hours, wasted delivery time, and much more.
Making sure that waste is at a minimum is a key component of supply chain
management.
How does supply chain management reduce waste? By managing production,
inventory, transportation and logistics, supply chain management aims to look for
opportunities to change procedures in order to cut down on waste. For example, by
sharing inventory data with your supplier, and keeping it updated in real time using ERP
software, the business can replenish inventory quickly to keep up with customer
demand,
➢ Improving Quality
Reducing waste isn't the only goal of supply chain management. Making sure that the
product and the customer experience are as positive and as effective as they can be is another
significant goal.
For example, if retailers are able to communicate feedback from the customer to your
company about your product's experience, you'll be able to know what things you can change in
order to improve it. Or, if there's an issue with a supplier for a specific part that a customer has
discovered, you can address that issue with customer feedback and relay those changes back
to that supplier or switch suppliers.
➢ Improving Stability
Supply chain management is also about improving and maintaining overall stability of the
supply chain. Companies can aim to forge and maintain strong relationships with their suppliers
and distributors to make sure that business continues to run smoothly.
There are other aspects to stability, mainly with risk management. By keeping an eye on
the possible risks associated with parts of the supply chain, a business can take steps to
alleviate the risk
