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3 Tips for Placing the Customer at the Center of Your Hospitality Supply Chain

Michael Wilson | May 17, 2017

Category: Hospitality

We hear it often, but it’s important to reiterate: whatever the customer wants, they get. Those words are never as true as they are in hospitality management. Customers want what ...

We hear it often, but it’s important to reiterate: whatever the customer wants, they get. Those words are never as true as they are in hospitality management. Customers want what they want, and there should be a supply chain plan in place that supports those needs.

But what happens when your hospitality supply chain isn’t flexible enough to provide for the customer? Never fear, though. Here, we’ll give you examples of customer experiences — bad and good — and how with the right supply chain, it’ll all work out.

1. Logistics Management

For many hotels, poor information flow can be a deathblow when it comes to maintaining and improving the supply chain. As a 2013 UNLV paper points out:

“One of the biggest challenges with information technology at the Four Queens and the Venetian/Palazzo is the poor flow of information which ultimately affects areas of the hotel’s supply chain in areas of costs, flexibility, and delivery of goods and services. These days many hotel companies are beginning to understand the role information technology plays in the coordination between different parts of the supply chain and the impact on supply chain performance.”

Customer preferences are even more particular now than they were nearly twenty years ago. Good customer service ensures that each guest can have his stay meet his or her specific interests.

To ensure proper logistics management in the hospitality industry, businesses need to take steps to ensure efficient transportation and order pick-up. Some ways to improve logistics management are implementing a vendor compliance program and choosing products that work with staff and facility effectively. If streamlined correctly, these changes can lead to higher revenue, transportation cost reduction, and cost structure improvement.

An example a company with efficient logistics management is the Hilton hotel chain. Working out of a single Beverly Hills office and six regional affiliates, the chain’s procurement system deals with suppliers that then negotiate warehousing and delivery. With the control of the chain, hotels can save up to 15%, reduce error, increase speed, and implement just-in-time strategies. 

2. Inventory Management 

As we mentioned before, the popular Mexican chain restaurant Chipotle couldn’t keep up with the demand for its Carnitas, pork option for its meals. Customers wanted the meat, but the restaurant couldn’t provide. Aside from the long lines at the restaurant, customers complained the most about the missing meat. The reason? Problems with inventory management.

Inventory management, when done right, helps you keep the right diversity and number of products on hand in your hospitality supply chain.

At the Venetian Hotel in Las Vegas, for example, inventory management is designed to monitor usage and communicate with internal and external consumers, using a 72-hour forecasting system. Its inventory management system tracks sales, monitors available supplies, and communicates with suppliers in real-time.

3. Green Supply Chain

In 2015, 20 of the United States’ most popular restaurant chains received F grades on their food supply chains because they used antibiotics in their products. The scorecard, assigned by the organization Friends of the Earth, highlights businesses that don’t use antibiotics and promotes transparency in the hospitality supply chain.

Ethical, eco-friendly, and healthy products and services are important to consumers and will only become more important. Green supply chain optimization helps businesses improve the sustainability of their procurement manufacturing and distribution. 

At the DoubleTree Hotel, for example, management has seen an increased guest demand for eco-friendly products and processes. To meet demands the hotel has since dropped its energy consumption by 32% and landfill rates have fallen from 92% to 37% since 2006. To green its supply chain, the DoubleTree has purchased 900,000 kWh of renewable power to offset some of its electricity use and sources two-thirds of its products from a 500-mile radius. These small changes have not only helped the hotel cut costs, but have also improved customer satisfaction.

As technological advances in big data and AI continue to push large companies to refine and enhance supply chain management practices, the hospitality industry — already dealing with thin margins — must adapt and learn from industry leaders and leverage optimal resources to stay viable.

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