9. Describe what supply chain is and what it does in the hospitality industry.
Discuss the features, benefits and functions of supply chain management.
Enumerate the challenges of the hospitality industry related to the supply chain.
10. What is Supply Chain?
It is a network of suppliers,
manufacturers, assemblers, supply
and delivery centers and logistics
installations that perform functions
such as material sourcing, processing
and shipment to buyers of those
materials of an intermediate or
finished product.
It is also a lineup of companies that
market goods or services.
11. Benefits of Supply Chain Management:
Builds stronger partnerships and support with clients
Provides better distribution processes, with less delay, for demanded
goods and services.
Increases efficiency and functions for companies.
Lowers shipping and warehouse costs
Assist businesses in the supply chain to reduce duplication, eliminate
risk, and achieve efficiency.
12. Key Elements of effective Supply Chain Management:
1. Strategic Sourcing:
Sourcing high-quality products and services at the best possible price
is essential to the success of the hospitality industry. By working with
reliable suppliers, businesses can ensure that they have access to the
products and services they need to meet customer demand.
2. Inventory Management:
Effective inventory management is crucial in the hospitality industry as
it helps to reduce waste, lower costs, and improve customer service.
3. Logistics and Distribution:
The efficient and timely delivery of goods and services to customers is
critical in the hospitality industry. By optimizing logistics and distribution,
businesses can ensure that customers receive their orders quickly and at
the lowest possible cost.
13. Key Elements of effective Supply Chain Management:
4. Technology Adoption:
The use of technology, such as automated inventory management systems, can help
businesses streamline their supply chain processes and improve efficiency.
5. Collaboration:
Collaboration between different members of the supply chain, such as suppliers,
distributors, and customers, can help businesses to identify and overcome challenges,
leading to improved customer service and increased competitiveness.
14. Key Functions of Supply Chain Management:
o Procurement: SCM involves sourcing and purchasing raw materials, food, beverages,
linens, furniture, equipment, and other supplies required for hotel and restaurant
operations. Efficient procurement practices help in obtaining high-quality products at
the best possible prices.
o Inventory Management: Managing inventory levels is critical in the hospitality industry
to prevent overstocking or under stocking of supplies. Proper inventory management
ensures that items are available when needed, reducing waste and storage costs.
o Supplier Selection and Relationship Management: Selecting reliable suppliers and
establishing strong relationships with them is vital. Good supplier relationships can
lead to better pricing, timely deliveries, and access to quality products.
15. Key Functions of Supply Chain Management:
o Quality Control: Ensuring the quality and safety of food, beverages, and other
supplies is a top priority in the hospitality industry. SCM involves quality checks and
inspections to meet regulatory standards and customer expectations.
o Cost Control: Controlling costs is essential to maintaining profitability. SCM helps in
monitoring expenses related to procurement, transportation, storage, and waste
management.
o Distribution and Logistics: Efficient distribution and logistics are essential for
delivering products to hotels, restaurants, and other hospitality establishments. SCM
helps in optimizing delivery routes and reducing transportation costs.
16. Key Functions of Supply Chain Management:
o Sustainability: Many consumers today are concerned about environmental
sustainability. SCM can help the hospitality industry source sustainable products and
reduce waste through practices like recycling and energy-efficient operations.
o Demand Forecasting: Predicting customer demand for different products and services
is essential for proper inventory management. SCM uses data analysis and historical
trends to forecast demand accurately.
o Menu and Beverage Management: SCM can help restaurants and bars optimize their
menus and beverage lists by analyzing product popularity, costs, and profitability.
17. Key Functions of Supply Chain Management:
o Vendor Negotiations: Negotiating contracts with suppliers is a critical function of SCM.
Skilled negotiators can secure favorable terms and conditions, leading to cost
savings.
o Risk Management: Identifying and mitigating risks, such as supply chain disruptions
due to natural disasters or geopolitical issues, is an important aspect of SCM in the
hospitality industry.
o Compliance and Regulation: Staying compliant with industry regulations and health
standards is crucial. SCM helps ensure that all products and services meet legal
requirements.
o Technology Integration: Utilizing technology, such as inventory management software
and automated ordering systems, can streamline supply chain processes and
enhance efficiency.
18. Challenges of Hospitality Industry Related to Supply Chain
1. Raw material cost
2. Material ordering costs
3. Inventory handling
4. Emergency purchases
20. Gain a conceptual appreciation of the business activities that drive supply chain
operations.
Exercise a high-level understanding of activities involves in a supply chain planning
and sourcing.
Identify the basic concepts of demand forecasting and inventory management.
21. Supply chain operations can be categorized into four main types, each representing a
distinct aspect of the supply chain management process:
PLAN
SOURCE
MAKE
DELIVER
22. PLAN: Categories of Supply Chain Operations
The preparation phase is the beginning of the supply chain operation. We need to build a road or
map or approach to deal with how goods and services meet consumer’s requirement and needs.
The planning phase applies to all activities required in the other categories to plan and
coordinate the operations.
23. A. Forecasting
The demand prediction is the foundation of any business toward proper planning to
satisfy consumer demand. Predictions are made up of four primary factors to assess
the market conditions. They are the following variables:
1. Supply- this refers to the total demand for goods on the market
2. Demand- this refers to the amount of product available.
3. Product Characteristics- this refers to the product features that influence demand.
4. Competitive Environment- this refers to the actions of product suppliers in the market.
24. B. Aggregate Planning
The next step is to establish an overall supply strategy to satisfy the demand for the
commodity, as demand prediction is established.
1. Use production capacity to meet demand
2. Use varying levels of total production capacity
3. Use inventory and work-in-progress inventory
25. C. Product Pricing Planning
The use of prices can affect demand over time in businesses and whole supply chains.
It tends to increase sales or gross profit depending on how the premium is used.
D. Inventory Management Plan
Inventory management is a group of strategies that are used to control inventory levels
in various supply chain organizations.
26. Three Kinds of Inventory Plan
1. Cycle Inventory:
It refers to the portion of inventory that varies as goods are received, used, and
reordered according to a regular schedule or cycle. It represents the ongoing
replenishment of inventory based on expected usage patterns.
Purpose: The purpose of cycle inventory is to ensure that an organization maintains
a consistent flow of products to meet regular, recurring demand. It is often
associated with planned, routine inventory replenishment.
27. Three Kinds of Inventory Plan
2. Safety Inventory:
Safety stock, also known as buffer stock, is a reserve of inventory held to protect
against uncertainties in demand or supply. It acts as a safety net to prevent stock
outs during unexpected fluctuations or delays.
Purpose: The primary purpose of safety stock is to ensure that the organization can
meet customer demand even when demand exceeds expectations or when supply
chain disruptions occur. It provides a buffer against variability.
28. Three Kinds of Inventory Plan
3. Seasonal Inventory:
Seasonal inventory refers to additional inventory held in anticipation of seasonal
demand patterns. It is used to prepare for increased demand during specific periods,
such as holidays or peak seasons.
Purpose: The purpose of seasonal inventory is to position products in advance of
expected increases in demand, allowing the organization to capitalize on market
opportunities and customer preferences during seasonal peaks.
29. SOURCE: Categories of Supply Chain Operations
The next phase is creation or procurement after planning. Concentrate primarily on
maintaining a close partnership with suppliers of essential raw materials.
30. A. Procurement
It is the acquisition procedure used by an organization to obtain the required
products and services.
Five Procurement Activities:
1. Purchasing
2. Consumption Management
3. Vendor Selection
4. Contract Negotiation
5. Contract Management
