supply chain management

“NARAN HOTEL”

Sir AHMED HASSAN

ASIM MEHMOOD, M. ANEEQ QURESHI, NASIR KHAN, UMAIR ALI BUTT, ZAKA UL HASAN

30-Oct-15

ContentsIntroduction..................................................................................................................................................3

Flows of Supply Chain:...............................................................................................................................3

Material flow............................................................................................................................................3

Information flow......................................................................................................................................3

New innovation.........................................................................................................................................4

Finance flow..............................................................................................................................................4

Extent of Vertical Integration.....................................................................................................................4

Backward integration..............................................................................................................................4

Framework of Structuring Drivers............................................................................................................5

Competitive Strategy...............................................................................................................................6

Supply Chain Performance.....................................................................................................................6

Efficiency:.................................................................................................................................................6

Responsiveness:........................................................................................................................................6

Supply Chain Drivers..................................................................................................................................7

Logistical Drivers.....................................................................................................................................7

Facilities................................................................................................................................................7

Inventory...............................................................................................................................................7

Transportation.....................................................................................................................................7

Cross-Functional Drivers........................................................................................................................8

Information...........................................................................................................................................8

Sourcing................................................................................................................................................8

Components of Facilities Decision......................................................................................................8

Level of product availability...............................................................................................................8

Inventory Related Metrics..........................................................................................................................9

Average safety inventory.........................................................................................................................9

Seasonal Inventory...................................................................................................................................9

Components of Information Decision....................................................................................................9

Forecasting and aggregate planning......................................................................................................9

Enable Technologies..............................................................................................................................10

Phase - 1......................................................................................................................................................10

Social media............................................................................................................................................10

Smartphone............................................................................................................................................10

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Phase - 2......................................................................................................................................................10

Smart appliances....................................................................................................................................10

Phase - 3......................................................................................................................................................11

Online booking systems.........................................................................................................................11

Electronic point of sale (EPOS)............................................................................................................11

Phase - 4......................................................................................................................................................11

Marketing automation...........................................................................................................................11

Components of Sourcing Decision............................................................................................................11

Outsourcing............................................................................................................................................11

Supplier Selection & Evaluation..........................................................................................................12

Procurement...........................................................................................................................................12

Components of Pricing Decision...........................................................................................................12

Supplier evaluation and selection:............................................................................................................12

Recognize need for supplier selection:.................................................................................................12

Identify key sourcing requirements:....................................................................................................13

Sourcing strategy:..................................................................................................................................13

Identify Potential supply source:..........................................................................................................13

Limit supplier in selection pool:...........................................................................................................13

Methods of supplier evaluation and selection:....................................................................................14

Select supplier and reach agreement:..................................................................................................14

Management and Employee capabilities:............................................................................................14

What Good suppliers does:...................................................................................................................15

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IntroductionIn today’s changing business environment, there is an increased focus on delivering value to the

customer at the cheapest possible costs. One area of the hotel industry that is usually left out in

cost cutting efforts is its logistics and supply chain operations. A well-established logistics and

supply chain management system can help in sustainable competitive advantage.

Manage and operate hotel properties, we should focus on several aspects such as logistics

management, inventory management, information technology, procurement and distribution, lean

supply chain practices.

Customer orders electronically which help to save costs. For example, information technology

has changed the manner in which businesses interact with suppliers and customers. To look

forward we have introduced new way of customer’s ease. For providing them the tablets in each

rooms and Android apps to book rooms at any time through their android devices.

Flows of Supply Chain:

Material flow

The basic requirement for food and beverages need daily. The room cleaning service

equipment’s and products require. The supplier is located in Balakot region. The proposal for

products require prepare by the manager of hotel and he forwards to the MD for approval of

requirement of products and then the proposal forward to the suppliers in city. The major three

suppliers are in city; prepare their quotations and send the filled quotation at their best prices in 3

days. All the materials supplied by the suppliers at the hotel. The quotation has transportation

charges included.

Purchasing process of hotel, including guest rooms and corridors, lobbies, restaurant, laundries,

administrative area, back-of-house, office equipment and interior signage.

Information flow

Three people are working for the forecasting of the project. Finance manager, owner and

marketing manager. Our whole line of products is divided into four segments restaurants, rooms,

transportation & guide and tent services.

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New innovation

We are going to install Tablets and develop Android & Computer application (Windows) for our

hotel that will facilitate the customers in best possible way. Tablets will be installed in every

room and in kitchen and each tablet will have pre-installed application from play store. Also, app

could be downloadable from play store with the limited feature of room booking and the same

application would be install in hotel room tablets that would have more features like catalogue of

food, room services and visiting location (tourist destinies). The application with in the hotel

tablets would have login function of hotel through which each customer can place an order for

their meal, room services and their chosen destiny for visit. The meal order which will be given

by the customers will be display on the tablet in kitchen. So, that chef can prepare meal

according to the customers’ requirements and room service could deliver.

The computer application will sync all the data from hotel tablets and the app that would be

install in user android device for pre-room booking. The computer would be at reception so that

receptionist could arrange and make bills for the visitors. The software in computer will also be

syncing same time in the server for backup. The financial record of the hotel business would be

accessible only by the manager and owner.

Finance flow

The manager of hotel provides all the financial report to MD at the end of each month. The

purchasing of materials and their bills attached at the report. The limited amount is available at

the hotel as petty cash for immediate purchasing. The large purchasing requires approval from

MD.

Extent of Vertical Integration

Backward integration

Merged with the several tourism companies those are providing tourist on massive level and the

business has links with the airlines and hotels for providing the valuable customers.

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Framework of Structuring Drivers

Efficiency Responsiveness

Supply Chain Structure

Logistical Drivers

Cross-Functional Drivers

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Facilities

Information Sourcing Pricing

Competitive Strategy

Supply Chain Strategy

Inventory Transportation

Competitive Strategy

The hotel management is working on to make them best in the market. The management has a

strategy implement the Tablet and App infrastructure throughput the internet and give the

customize features to the tourists. None of the hotel is that market is providing such a

technological advancement. The hotel management is thinking to implement little technological

advancement in the future but limited customer’s knowledge about the techs is the obstacle for

facilitating in the future.

Supply Chain Performance

Company’s supply chain achieves the balance between responsiveness & efficiency that best

meets the needs of the company competitive strategy.

Efficiency:

An efficient supply chain can enclose its suppliers, manufacturers and dealers to manage orders

and processing to meet a stable and predictable demand at a lower cost.

The technology which the moon rise is going to implement surely effect the business process and

the efficiency of the technology would be directly proportional to the success of business. The

main function of the technology is by providing the accessibility to visitors at their best in ease.

The service availability at any level would be considered at priority level.

Responsiveness:

Even as the hospitality industry is seeing renewed enthusiasm to travel, the Moon rise hotel

management improves responsiveness in order to maximize travel purchases. Leisure travelers

make up the majority of hospitality website or App visit, this gain in overall satisfaction scores is

an important finding, as visitors reporting positive experience

Responsiveness, which involves interactive elements associated with the booking process such as

calendar functionality, room selection, personal information input. When it comes to prioritizing

App development enhancements, streamlining and optimizing the booking process is the area on

which to focus in order to promote booking.

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Supply Chain DriversThe major driver of Supply chain performance consists of three logistical drivers & three cross-

functional drivers. Thus, by considering these factors we have detailed these factors to critically

know the influencing factors and know the business and improve the gap where it lies.

Logistical Drivers

Facilities

The physical location of the hotel is main naran. The tourist visit the area can easily find the

hotel. The hotel facilitates it’s all tourists at their best. The valet parking facility and free wifi

hotspot is available at all times.

Inventory

The hotel hospitality business in Naran maximum runs for 7 to 8 months a year. So, the

inventory management system would be active meanwhile time and it will be consider in the

seasonal inventory. As seasonal inventory anticipate predictable increases in demand that occur

at certain times of the year.

The entire system has the computer application. The inventory management system is referred to

the system application where all the orders are placed pre-transaction. This helps the hotel

management to evaluate the inventory of all or specific products. The raw materials for the

restaurant arranged by the suppliers but they billing requirement arranged from system.

Transportation

Transportation entails moving inventory from point to point in the supply chain. The

transportation is mainly control by the supplier as the area is rough and tough and the danger of

loss in transporting goods s high. The hotel managers pass on that query mainly to the supplier in

which transportation charges are included. This lessens the burden for transpiration of goods

while focusing on other main aspects of the business.

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Cross-Functional Drivers

Information

It is also crucial to daily operations of management information following. Information use for

the following purpose in moon rise hotel:

Coordinating daily activities related to the functioning of other supply chain drivers:

facility, inventory & transportation

Forecasting & planning to anticipate& meet demand

Enabling technology features; as company owner is considering of installing tablets and

development Android application

Sourcing

The hotel has to outsource the suppliers. As the risk in transporting goods is high. Suppliers are

categorized by what they supply. Some have the daily supply contract and some have monthly

delivery contract. Depending on the product perish ability.

The suppliers are located in Balakot area and in Rawalpindi. All were being sorted out by giving

the best price and at negotiating rates. The new system that will be provided by the hotel is in

process. The supplier selection of the new information technology will be provided after the

evaluation of the services they provide and the after sales services.

Components of Facilities Decision

Currently the hotel provides its visitors free Wi-Fi hotspot, laundry service, transportation

arrangement for visiting areas and valet parking. The new system planning will require little time

and will start in the next season. This will affect the visitors mind surely in the positive manner.

As the strategic point of considering the availability of product facilitation will provide best

communication and accessibility.

Level of product availability

The natural resource is immense in that area. Especially trout fish which is even highly

demanding by the tourists. The fish catching is cheap, needs little expertise. The price of the fish

is 3500 PKR and it is available at all times. The hotel manager strictly views the inventory

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management system and manages all the products with their little abundance. So, when the

customers’ demands it could be available as Table ready meal.

Inventory Related Metrics

Average safety inventory

Stock held by the hotel management in excess of its requirement for the lead time. The food

items and wood for burning are always in excess quantity. So that customers cannot get any

problem at any time.

Seasonal Inventory

The inventory management system would be active meanwhile time and it will be consider in the

seasonal inventory. As seasonal inventory anticipate predictable increases in demand that occur

at certain times of the year.

The entire system has the computer application. The inventory management system is referred to

the system application where all the orders are placed pre-transaction. This helps the hotel

management to evaluate the inventory of all or specific products. The raw materials for the

restaurant arranged by the suppliers but they billing requirement arranged from system.

Components of Information Decision

To interact with the customers and suppliers company has created website. Tourists can take full

guide map for northern areas and can contact to hotel management for management of their trip

plan. The team assist every customer. Even for the product buying company place it’s tender

online and on newspaper and all the suppliers send their quotations via email. The further

advancement is encouraging by the hotel owner and the team for development is working on the

idea what should be considering at first.

Forecasting and aggregate planning

Our official forecast is based on the result of current year and previous year sales record and also

the PTDC tourist visit locations In Pakistan gives the detail record on which we predicted the

10% improvement in next year of tourist visit which directly affect the business revenue. The

marketing manager is engage in online activities of hotel web and Facebook promotions. The

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daily orders which hotel receive are followed closely and are used as a basis for logistic

projections.

Enable Technologies

Information Technology has managed to encompass many aspects of computer technologies

invented in the past couple decades. Considering the technological aspects of today’s world with

the vision of future advancements and providing accessibility to users for getting much more

time for their other life activities. Hotel owner come up with the idea for developing the

emergence of technological software’s and gadgets at single platform of their hotel. Few

products and services already have been implemented and some are in the development phase.

Phase - 1

Social media

Facebook is a popular platform for check-ins and reviews of restaurants and hotels. Attractive

images are usually the most popular type of post, so we already have this opportunity to share

beautiful and interesting photos of food and facilities available at restaurants. The hotel

Facebook page interacts with thousands of people around the world.

Smartphone

Hotel location markup is registered with google maps and bing maps to facilitate the tourist and

can find the hotel location easily. This feature can also assist them to Check in on mobile apps,

check maps and make extra requests.

Phase - 2

Smart appliances

Lighting, temperature, blinds, alarms, TV, radio and room service will all be controlled from a

single tablet device, or from a single app that guests can download and login to from their own

device.

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Phase - 3

Online booking systems

As by looking the current hotel industry with the high ranking have Online bookings which is

widely spread in the hotel industry, with many restaurants also beginning to accept them as

their popularity increases. This makes essential to have an online booking service, which also

requires a well-designed, mobile-friendly website and mobile applications with a simple

interface. Taking into consideration the hotel management has decided to develop App and

Tablets installation in every room.

Electronic point of sale (EPOS) 

Introducing in next year Customer relationship management (CRM), inventory management,

information on capacity, reservations, stock, transportation facility and more are accessible at the

touch of a button. This affords greater mobility and adds another level of convenience for the

customer and for the hotel.

Phase - 4

Marketing automation

This tool will allow hotel to send personalized emails to customers and prospects based on their

activities and personal information. This would boost brand name of the hotel and effectively

improve the customers’ interaction with the place.

Components of Sourcing Decision

Outsourcing

In outsourcing hotel will outsource few business functions such as laundry service, fisheries

transport, tent and application and website developer for the hotel. Outsourcing provides core

competencies for the hotel. There is differential competitive edge for the hotel owner as none of

the hotels are providing the Android facility in the whole area and it will increased business

flexibility and its response time will improve.

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Supplier Selection & Evaluation

The hotels have already few suppliers for the raw materials but the new development of app and

technological gadgets require. The hotel will prepare RFP for the suppliers in the IT industry to

get RFQ from all. Hotel has already built setup for checking the supplier criteria and evaluate

them under certain standards..

Procurement

Procurement practices are used to focus on how purchasing is done, how the product is received

from suppliers, building relationships with vendors and managing the procurement process by

identifying opportunities and managing internal operations. The importance has been placed on

reducing costs during purchasing which leads to the best costs and value to customers.

Components of Pricing Decision

Pricing and economies of scale

The manager and owner of hotel have meetings fortnight in which they discuss the pricing of

services that hotel is providing and the rates that offer by the setup.

Supplier evaluation and selection:Supplier evaluation and selection play an important role in any business. The most efficient and

operational supplier are those which can provide those products or services that can fulfil

business requirements. The main Question raised that on what basis any firm can evaluate and

select the supplier.

Recognize need for supplier selection:

First any firm should figure out its requirements and related needs and then focus on which is the

most appropriate suppliers that can fulfill firm’s requirements in best appropriate manner and

how the supplier handle and tackle the situation in complexity. We have select different supplier

for our hotel like for food tablets etc. we have four supplier in which one supplier is going to

supply us tablets with best quality and cost effective then two suppliers for back up or for

emergency and one supplier is an active and responsible for supplying all the food that was

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coming from Balakot to Naran. Then we have a supplier for Rawalpindi who is responsible for

supplying all the woods, room services material and housekeeping materials.

Identify key sourcing requirements:

We will need to fully grasp the requirements which might be important to the purchase and what

those things that customers preferred to have it and how we can select supplier according to his

performance of delivery, quality and cost efficiency. We associate our hotel with different tourist

companies that are our internal customers and they recommend our hotel to the tourists which

are supposed to be our external customers.

Sourcing strategy:

Then we have sourcing strategies in which we have short and long term contracts with our

supplier like we have short term contract with our food suppliers and long term contracts with

our tablet supplier, wood supplier and housekeeping supplier and grocery supplier. Our suppliers

are active and almost every time they deliver products and services in time that we need.

Identify Potential supply source:

Then in identify potential supply sourcing how we recognize our sourcing and suppliers that can

meet our standards in cost, quality and delivery performance. We get our products and services

related to hotel from single and multiple sources. Like we have one supplier for tablets and three

supplier for food in which two are back up suppliers and we source the food from one active

supplier if in emergency our first supplier are failed to deliver products then we source the food

from our back up multiple suppliers to fulfill the requirements. Our supplier for food, grocery,

housekeeping and woods are meeting our standards. They fulfill our desired requirements and

match our conditions related to our hotels in terms of quality deliver and cost. Our suppliers are

supposed to be high capabilities suppliers because their reputation is very good in Naran like we

got the information of these suppliers easily from different hotels that are in Naran.

Limit supplier in selection pool:

In this we have select different suppliers on the basis of their past performance and experiences

and how they can give us less financial risk. We have get all this information that are related to

supplier performance in terms of delivery, cost and services etc. from different hotels that are

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existed in Naran. On the basis of this we select limited suppliers in our list that can fulfill our

requirements in efficient and effective way.

Methods of supplier evaluation and selection:

When we get all the information regarding our suppliers then on the basis of that information we

have make evaluation of our suppliers like in terms of quality ,price , delivery , supplier

capabilities and does supplier have potential to make long term relation, how they can manage

the order in best possible manner and we also evaluate our suppliers from the information that

we have attain from each suppliers related to the products and services, some time we visit to

each suppliers to get the information related to our business supply, we have obtain information

related to that suppliers from different hotels who are associate with them. On the basis of these

things we evaluate our suppliers then select them.

Select supplier and reach agreement:

After getting all the appropriate information of the suppliers who can provide us products and

services in long term and short term or in any emergency situation, we have decided to select

them and have make an agreement according to our requirements like our tablet supplier is from

Rawalpindi because of the low cost and our food supplier and wood supplier which are from

Balakot we have make an agreement with them on the basis of food quality, quantity and lead

time and replenishment time. On this basis we have make a final agreement with our supplier.

Management and Employee capabilities:

We have one manager in our hotel who has done his bachelor in hospitality and he is responsible

to manage all the internal and external issues that are related to our hotel .Then we have different

employees who have done with their high school (F.A).Our manager give training to all the

employees like how to receive the customers, how to greet the customers, how to facilitate them

in best possible manner etc. Our hotel main focus is how we can give quick and good service to

our employees in terms of having a food, taking a room on rent etc. Then we have a proper get

up for our employees and manager in the hotel. Our employees are much capable and willing to

fulfill the requirement of the customers in an efficient way.

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What Good suppliers does:

As we already know that every firms focus on efficient supplier who can provide quality

products without any kind of defects and provide quick services according to the particular

needs. Supplier should know about the business products and He should figure out what would

be the financial position of the firm/business either firm are capable to pay the money in time or

not. Then he should show his responsiveness to the firms/business’s need. He should deliver

products or services time to time and reducing the lead time between place order and delivery

time so that he can make his good image and reputation in the market.

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