Supply Chain Management

Thousands of activities are performed and coordinated within an organization, and every company at least one supply chain relationship with another organization. Research has led to the conclusion that "the structure of activities within and between companies is a critical cornerstone of creating unique and superior supply chain performance" (Lambert, 2005). Successful supply chain management requires integrating business processes with key members of the supply chain, because valuable resources are wasted when supply chains are not effectively managed. Standard business processes enable managers from different organizations in the supply chain to use a common language and link-up their organizations' processes with other members of the supply chain.

Demand management is the supply chain management process that balances the guests' wants and needs with the capacity of the supply chain. Management can match supply with demand and have few disruptions if the appropriate process is already in place. The process is not limited to forecasting, but also includes matching supply and demand and increasing flexibility. An effective demand management system uses any available data to reduce uncertainty and provide efficient flow throughout the supply chain. Marketing requirements and production plans should be coordinated on a corporate level, so that multiple vendors are not delivering the same products for different prices to each hotel location. Instead, cost savings can be found in consolidation of orders.

Supplier relationship management is the process that defines how a hotel interacts with its suppliers. As the name suggests, this is a mirror image of guest relationship management, because a hotel needs to foster relationships with its suppliers too. As in the case of guest relationship management, a hotel will forge close relationships with a small subset of its suppliers, and manage arm-length relationships with others. A contract is negotiated with each key supplier that defines the terms of the relationship. For segments of less critical suppliers, the contract is not negotiable. Supplier relationship management is about defining and managing these contracts. Long-term relationships are developed with a small core group of suppliers. The desired outcome is a win-win relationship where both parties benefit.

Guest relationship management provides the structure for how the relationships with guests will be developed and maintained. Management identifies key guests and guest groups to be targeted as part of the hotel's mission. The goal is to segment guests based on their value over time and increase guest loyalty by providing customized products and services. The Director of Sales works with key guests to improve processes, eliminate demand variability, and non-value added activities. Performance reports are designed to measure the profitability of individual guests as well as the financial impact on the guest.

Customer service management is the impression the hotel gives to the customer. Customer service provides the customer with real-time information on promised reservation dates or room blocks and also room availability for any future dates. The customer service process may also include assisting the customer with making, revising, or canceling reservations. In addition, customer service necessitates resolving any conflicts, problems, or unpleasantness in a timely manner that is to the guest's satisfaction.

The reservation process involves more than making reservations. It also includes all activities necessary to define guest requirements and to design a process that permits the hotel to meet guest requests while minimizing the total cost. This is not just the logistics function, but instead needs to be implemented cross-functionally and with the coordination of key suppliers and guests. The objective is to develop a seamless process from the supplier to the organization and to its various guest segments.

The hotel supply chain is quite slow. The process starts with the guest requesting a specific item or a guest using an item and a low-level employee identifying the need to reorder. The initial guest or employee request is given to the mid-level manager. The mid-level manager will either approve or disapprove the request and if it is approved then it will be given to the general manager. The general manager will determine the vendor who can fill the requested products and either fax an order over, call the vendor directly, or enter the order on the Internet if it is determined that the item cannot be ordered at the corporate level. The majority of products, including housekeeping supplies, breakfast supplies, and maintenance supplies, are ordered in this fashion. After the order is placed the delivery time varies greatly. Food orders and housekeeping supplies are scheduled deliveries, unless a special order has been placed, so they arrive once a week. Maintenance supplies may be ordered from a vendor or require a trip to Home Depot. If purchased locally then there is no wait time but the delivery of non-local items can take from two days to a month depending on the product. The Director of Sales purchases office supplies from Costco on a semi-weekly basis. The corporate office orders all larger purchases, such as furniture, and logo materials. Both of these types of order take anywhere from two weeks to two months.

The hotel's primary function is to provide clean and hospitable lodging for travelers. In addition to the most basic function, the hotel also strives to make each guest feel special and meet his or her needs in any way possible. The ultimate goal of the hotel is to create a pleasurable experience so that each guest will want to return to the specific property as well as other hotels within the chain. The hotel serves many different customer segments. During the weekdays, the primary customers are corporate travelers. On the weekends, holidays, and during the summer months there is a mixed customer base that consists of both corporate and leisure travelers.

The supply chain processes of this hotel are not atypical, however many other hotel chains are beginning to centralize the purchasing function. This change will "strengthen