supply chain management

1. Course : BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT
Subject Code : HM 5
Subject Description : Supply Chain Management
Semester and SY : Second Semester, SY 2023 - 2024
Title : CHAPTER 3: The SUPPLY CHAIN MANAGEMENT PROCESS
Main Topic : SUPPLY CHAIN MANAGEMENT PROCESS
Presenter : ROLAND JUANERIO, ALYSSA PANITERCE, ANGEL AMOTO,
MARICAR CADAJAS AND KRISTINE JOY TAYAB
Chapter 3: The Supply Chain Management Process
Chapter Objectives:
At the end of this chapter, the student must be able to:
1. Understand how does supply chain management work;
2. Explain and discuss the components of supply chain management;
3. Understand supplier development;
4. Explain the product development within hospitality environments;
5. Explain returns management; and
6. Discuss the implementation of supply chain management in hotel industry.
Supply chain management is a process used by companies to ensure that their
supply chain is efficient and cost-effective. A supply chain is the collection of steps that a
company takes to transform raw materials into a final product.
How does supply chain management work?
Supply chain management operates by managing procurement, suppliers,
manufacturing facilities, dealers, distributors and consumers as they step forward through
the production, sales and purchasing processes. The supply chain needs active
management because many variables beyond the reach of the firm, such as gas prices
and environmental situations, influence it. When a company is acutely aware of those
factors, it can manage through them more effectively. With effective SCM, inventory,
production, distribution, sales and vendor inventory are all tightly controlled.
SCM means managing costs at every step and delivering goods to consumers as
quickly as possible. It assumes that every product that is for sale exists because of the
various participants in the supply chain. A supply chain manager is a trained professional
responsible for five essential components of the chain:
• The carefully researched and developed strategy of the supply chain.
• The source of the materials used to make the goods to sell.
• The efficient production of the manufacturing process in getting the goods ready
for the market.

2. • The delivery mechanisms and logistics that move the products to the consumers
and distributors.
• The system for managing the return of defective or unwanted products.
• The manager works to prevent shortages and reduce costs through these five main
elements, which has a direct impact on profits.
THE COMPONENTS OF SUPPLY CHAIN MANAGEMENT
https://www.tutorialspoint.com/supply chain management/images/scm_process.jpg
I. Plan
The initial stage of the supply chain process is the planning stage. We need to
develop a plan or strategy in order to address how the products and services will satisfy
the demands and necessities of the customers. In this stage, the planning should mainly
focus on designing a strategy that yields maximum profit.
For managing all the resources required for designing products and providing services, a
strategy has to be designed by the companies. Supply chain management mainly focuses
on planning and developing a set of metrics.
II. Develop (Source)
After planning, the next step involves developing or sourcing. In this stage, we
mainly concentrate on building a strong relationship with suppliers of the raw materials
required for production. This involves not only identifying dependable suppliers but also
determining different planning methods for shipping, delivery, and payment of the product.
Companies need to select suppliers to deliver the items and services they require
to develop their product. So, in this stage, the supply chain managers need to construct
a set of pricing, delivery and payment processes with suppliers and also create the
metrics for controlling and improving the relationships.
Finally, the supply chain managers can combine all these processes for handling
their goods and services inventory. This handling comprises receiving and examining

3. shipments, transferring them to the manufacturing facilities and authorizing
supplier payments.
Supplier Development
Supplier Identification: Generally, supplier base is huge in the hotel industry, this
has its positives, conscious steps should be taken to identify committed suppliers who
are willing to go by the objectives of the organization, and be involved and appreciate and
support the changes of the organizational requirements.
Supplier evaluation and selection: Supplier evaluation is a critical process,
supplier’s ability to supply the right goods at the right time with correct specifications has
to be reviewed. Contracts are awarded after careful negotiations with the supplier.
Supplier management: After the suppliers fulfills its obligation by delivering the
required goods as per specifications it’s the responsibility of the Purchase department to
ensure suppliers bills are paid promptly, at times good suppliers are lost due to the
payment delays. Therefore, its very essential to maintain a strong relationship with the
supplier hence supplier management has to be strengthened.
Supplier development and improvement: It’s a very crucial step in the supplier
chain management. A careful consideration of this process would contribute towards
efficiency and cost saving.
III.MAKE
The third step in the supply chain management process is the manufacturing or
making of products that were demanded by the customer. In this stage, the products are
designed, produced, tested, packaged, and synchronized for delivery.
Here, the task of the supply chain manager is to schedule all the activities required
for manufacturing, testing, packaging and preparation for delivery. This stage is
considered as the most metric-intensive unit of the supply chain, where firms can gauge
the quality levels, production output and worker productivity.
The Product Development within Hospitality Environments
Product development can be recognized as the examination of product and
services to recognize the probability of improvement, earnings as well as the client
satisfaction. This technique is important in changes of existing products to handle
discovered opportunities and the modern marketing trends. It could provide the much
better quality for the product and the client satisfaction. Product development process
should be consisting of knowledge on the merchandise weaknesses and advantages,
modern marketing tendency which is facilitated by the advanced technology.
According to the Kotler’s primary of product development, three phases of product

4. such as center product, augmented product and tangible product. Basic level of the every
selling product is known as the central product. For a good example, Hilton hotel holiday
resort may provide well-appointed rooms, excellent dinner and the other services for their
customers.
Augmented product can include the excess services and value added services
which might give their customers. For an example, fitness center facilities, spa facilities
and the other packages relevant to the different sports activities. Tangible products can
be recognized as the products that can be in physical form feel by the client. For a good
example, restaurant of Intercontinental Sea Bq provides sea foods for the customers.
Product development process five major steps can be diagnosed.
✓ Generation of Idea
✓ Screening process
✓ Evaluation of Idea / Development of Concept
✓ Product development / Business Analysis
✓ Commercialization process
Idea technology process may be considered a result of market research. It might
be the confirmation of a requirement of a product or service predicated on existing
consumer need. Inside the screening process, ideas may be gathered from media,
customers and employees. By, using those ideas, the expected competition for the
merchandise may justify based on the market trends. Income, cost as well as the
expected earnings may recognized in the idea evaluation step. Market research may be
important with regards to this step. In this step, the expected first customers may illustrate
theoretically. In the merchandise development step, physical production and making
process can do and the selling price could also determine. Not merely will that, evaluation
of the merchandise also be done. As the last step, the production marketing campaign
process may be achieved in the commercialization process.
IV. Deliver
The fourth stage is the delivery stage. Here the products are delivered to the
customer at the destined location by the supplier. This stage is basically the logistics
phase, where customer orders are accepted and delivery of the goods is planned. The
delivery stage is often referred as logistics, where firms collaborate for the receipt of
orders from customers, establish a network of warehouses, pick carriers to deliver
products to customers and set up an invoicing system to receive payments.
V. Return
The last and final stage of supply chain management is referred as the return. In
the stage, defective or damaged goods are returned to the supplier by the customer.
Here, the companies need to deal with customer queries and respond to their complaints

5. etc. This stage often tends to be a problematic section of the supply chain for
many companies. The planners of supply chain need to discover a responsive and flexible
network for accepting damaged, defective and extra products back from their customers
and facilitating the return process for customers who have issues with delivered products.
Returns Management
Returns management can be defined as the management that invites the merger
of challenges and opportunities for inbound logistics. A cost-effective reverse logistics
program links the available supply of returns with the product information and demand for
repairable items or re-captured materials. We have three pillars that support returns
management processes. These are as follows:
Speed - It is a must to have quick and easy returns management and automate decisions
regarding whether to produce return material authorizations (RMAS) and if so, how to
process them. Basically, the tools of speed return processing include automated
workflows, labels & attachments and user profiles.
Visibility - For improving the visibility and predictability, information needs to be captured
initially in the process, ideally prior to delivering the return to the receiving dock. Most
effective and easily implementable approaches for obtaining visibility are web-based
portals, carrier integration and bar-coded identifiers.
Control- In case of returns management, synchronizing material movements is a
common issue that needs to be handled. The producers need to be very cautious and
pay close attention to receipts and reconciliation and update the stakeholders of
impending quality issues. In this case, reconciliation activates visibility and control all over
the enterprise. The key control points in this process are regulatory compliance,
reconciliation and final disposition and quality assurance.
Post-Sales Service
Now that the ordered shipment is over, what is the next step? The post sales
service in supply chain tends to be an increasingly essential factor as businesses offer
solution instead of products.
The post sales services comprise selling spare parts, installing upgrades,
performing inspection, maintenance and repairs, offering training & education and
consulting.
Presently, with the growing demands of the clients, a high volume of after sales
service proves to be a profitable business. Here, the services are basically heterogeneous
and the value-added services are different from those provided prior to sales service.
Consumables in Hospitality
Regardless of how large or small your hotel is, just imagine how bad it would be if

6. you could not supply your guests with breakfast because you had run out of supplies.
What happens if you use all of your beers and have none to replace them? When evening
meals are due, how embarrassing it would be to say you can only offer half the menu
because you do not have the products to complete all the meals shown.
The same applies to restaurants. Not being able to fulfill their menu looks really
bad and will stop customers returning. A bar that runs out of wine or beer will suffer by
customers going elsewhere, and once they have done that, it is hard to get them to return
to your establishment.
Successful businesses are built on loyal customers bases, but this will not happen
with yours if you keep letting customers down. Food and drink are an important part of
any hotel stay, and eating out is often part of consumer’s vacations. It is vital that you can
fulfil your obligations with food and drink, and effective chain supply management is the
way to do it. Without it, there would be no foods in restaurants and no beer or wine in
bars, and that will basically kill the hospitality that your venture should be providing.
Your establishment also needs to have enough clean bed linen to be able to
change it when required, and an ample supply of things such as table napkins, cutlery
and crockery. This might all seem very obvious, but you would be surprised by how many
hotels fall down in these areas.
Implement Supply Chain Management in Hotel Industry
Different concepts have been developed to understand how the successful
implementation of logistics and supply chain management can be achieved. For the hotel
industry logistics and supply chain activities are grouped into tactical, strategic and
operational levels to help create a more systematic approach by focusing on how
implementation will happen from a higher level, then linking that to long-term goals and
finally how these results translate in the short-term.
1. Tactical Level
Executive support-The tactical level of implementation of logistics and supply chain
management focuses on steps that are taken at a higher level for successful
implementation. It is important that, during the tactical stage of implementation there is
100% executive support and buy-in from senior managers and having the right people in
place who understand the value logistics and supply chain implementation will bring to
their properties. Managers need to take a lead in communication and making sure all
employees understand why the initiatives are essential to the company’s business
strategy.
Visibility and Control-It is important to have visibility and control to implement logistics
and supply chain practices to help make better decisions. The hotel environment has
seen an increase in the need for visibility and control to understand the decisions made
by vendors and suppliers to help managers make well-informed logistics and supply chain
decisions. This helps hotel managers make important decisions on parts of costs in areas
of transportation and shipping.

7. Benchmarking-This goal of benchmarking during logistics and supply chain
implementation is to enhance design and operational effectiveness. It is important for
hotel managers to measure set targets against results in the different areas of operation
like order filling, transportation, and vendor compliance. Hotels can use information from
benchmarking to improve processes and make better decisions.
Creative solutions and risk taking-The goal of developing creative solutions and
willingness to take risk during logistics and supply chain implementation is important since
a lot of focus has been placed on reducing costs and increasing margins wherever
possible. This helps focus on negotiating better costs and focus is placed on the
customer’s demands.
2. Strategic Level
Change management-The strategic level of implementation of logistics and supply chain
management is linked to the long-term benefits over a period of time. Change
management plays a big part in logistics and supply chain implementation in different
areas, from making changes to the whole process or fixing issues with vendors. With the
fast pace of the hotel industry during implementation, it is important for managers to think
and act in real time to help enable innovation and change, as people will always challenge
the process.
Think Lean and Green-Even though lean started in the automotive industry, it can be
used in any business process like in the hotel industry. Hotel managers need to use lean
strategies when logistics and supply chain is implemented immediately instead of later.
Since lean is focused on the end user, the main focus during implementation is to maintain
profitability, save money, and add value that fulfills customer needs. During the lean
implementation phase, it is important for managers to identify the service value stream
focusing on design layout, development, procurement, and distribution process
strategies.
Top talent and Accountability-When implementing logistics and supply chain
management in any company, it is important to be able to sustain the implementation,
which involves building a solid foundation that includes top managers to drive the process
with deep expertise in logistics and supply chain functions and business skills.
Right information technology-Today as information technology has become an
important and integral part of every business process, when implementing logistics and
supply chain management in the hotel industry, it is important to have the capabilities of
ensuring that most company decisions are done at the speed of light. With the right
information technology, the hotel can communicate information on supply chain and
demand changes easily in areas of inventory, distribution, transportation, and logistics
management, since the accurate information is produced due to the analytical and

8. visibility capabilities to make efficient business decisions quickly.
3. Operational level
Costs-The operational level of logistics and supply chain management implementation
focuses on decisions that are related to how to make the tactic approach happen in the
short term. Today hotel costs associated with logistics and supply chain strategies have
placed the emphasis on increasing efficiency and reducing total costs to stay competitive
(IBM, 2009). During implementation, cost need to focus on purchase and inventory costs.
It is important to monitor purchase costs with products that have a short life cycle and
have to be replenish frequently, since hotels usually buy too many stock-keeping units
(SKU) for the same use.
Simplifying complexities-It is important in logistics and supply cha implementation for
hotel managers to manage strategies to eliminate complexity that do not add any value
to the organization. It is important that logistics and supply chain functions are broken
down into different areas based on which are matter the most in the supply chain. This
segmentation helps hotel managers easy identify the relationship between costs and
price with suppliers and helps negotiating better prices.
Right metrics-Applying key performance indicators (KPI’s) to logistics and supply chain
operations during implementation is vital to help monitor how well supplier and vendors
are meeting set targets, which helps improve top and bottom line performance. Starbucks
created a weekly scorecard to monitor third party carrier performance in areas of costs,
service, and productivity agreed upon with their partners. Applying KPI’s to operations will
help create transparency, improve costs and help serve customers better, as well as lay
the foundation for future logistics and supply chain initiatives.
Risk management-Considering risk management is critical during logistics and supply
chain implementation for hotel managers in order to evaluate risk associated with
implementation in their strategy. Managers should have a good understanding of the
benefits involved with sharing risk information across the network.