Chapter 1 Supply

BASIC CONCEPTS AND
OVERVIEW OF SUPPLY CHAIN

MANAGEMENT
Supply chain management differs from
conventional logistics, which focuses on
operations within an organization's territory and
networks, while traditional logistics includes
marketing, product manufacturing, finance, and
customer support.
Overview of Supply Chain
In today's competitive business environment, logistics and supply

chain management techniques are increasingly important for
improving return on investment and profitability. These techniques
can add value to properties in the hospitality industry, which
includes hotels, restaurants, event organizing, theme parks,
transportation, and cruise lines.
Overview of Supply Chain
The hotel and catering industries rely on a robust supply chain for
efficient operations, enhancing customer service and fostering
better understanding of the entire supply chain. Innovative
hospitality chains utilize intelligence solutions to collect and
analyze data, paving the way for future hyper-competition.
What Is Supply Chain?
A supply chain is the lineup of companies that market goods or

services.
A supply chain is a network of suppliers, manufacturers,

assemblers, and logistics installations that perform tasks like
material sourcing, processing, and shipment to buyers for
intermediate or finished products.
The supply chain encompasses all stages involved in fulfilling a

consumer order, including manufacturers, shipping providers,
warehouses, dealers, and consumers themselves.
Essential Features of Supply Chain Management
Integrated Behavior
Supply chain management (SCM) integrates stakeholder

integration between the client and the provider.
Information
Mutually Sharing information
In particular for planning and surveillance processes, an efficient

SCM exchange of information between channel participants is
needed
Mutually sharing channel risk and rewards
Effective supply chain management (SCM) involves risk-sharing

and reward-sharing, promoting competitive advantage through
reciprocal channel risks and incentives.
Cooperation
Successful SCM necessitates cooperation among channel

participants, involving coordinated operations in an enterprising
relationship to achieve superior results collectively.
Focus on serving customers
Supply chain is effective where all supply chain members serve

consumers with the same objective and concentration. A mode of
policy convergence has the same aim and focal point for supply
chain members.
Integration process
SCM implementation necessitates system convergence from supply

chain to production and delivery, achieved through cross-
functional conditions, plant supplier staff, and third-party services.
Partners to build and maintain long-term relationships
Successful partnerships aim to merge channel policies to reduce

duplication and overlap, enhancing efficiency and cost-
effectiveness. Clear cultures and management strategies facilitate
this integration.
Benefits of Supply Chain Management
1. Builds stronger partnershipsEliminates costs directly and implicitly and support with
clients
2. Provides better distribution processes, with less delay, for demanded goods and
services
3. Increases efficiency and functions for companies
4. Lowers shipping and warehouse costs
5. Eliminates costs directly and implicitly

Benefits of Supply Chain Management
6. Supports the shipping at the right spot with the right goods
7. Enhances asset management and encourages the effective implementation of

just-in-time inventory models
8. Assists businesses in responding to global dynamics, economic upheavals,

growing market preferences, and associated disparities
9. Assists businesses in the supply chain to reduce duplication, eliminate risks, and
achieve efficiency
Functions of Supply Chain Management
Strategic level
Strategic network optimization involving warehouse, fulfillment center, and

facilities numbers, locations, and scale.
Strategic relationships, contact networks, and technological advancements, such as

cross-docking, exporting directly, and logistics with third parties, are crucial for
success. Strategic Level
Management of inventory life cycles to optimally combine new and current goods in
the supply chain and capacity management
Strategic level
• Strategic network optimization involving warehouse, fulfillment center, and facilities

numbers, locations, and scale.
• Strategic relationships, contact networks, and technological advancements, such as

cross-docking, exporting directly, and logistics with third parties, are crucial for success.
• Management of inventory life cycles to optimally combine new and current goods in the
supply chain and capacity management. Strategic Level
• Chain operations for information technology.
• Coordination of the whole corporate plan with the strategy of supply.

Tactical level
• Sourcing and other procurement decisions

• Decisions on production including the concept of contracts, schedules, and plans
for the operation
• Purchasing choices including inventory size, location, and consistency
• The strategy of transport including pace, routes, and contracting

Strategic Level
• Competition benchmarking of all processes including best practices around the

business
• Fees with milestones

Operational level
• Preparation and forecasting of demand, alignment of all customers' needs, and prediction- and provision-
sharing with all suppliers
• The task involves the daily allocation of output for each production plant in the supply chain on a minute-by-
minute basis.
• In coordination with all vendors, the supply preparation, including existing inventories and forecast demands
• Inbound activities including retailer transport and shipment receipt
• Production processes involving materials use and finished products streaming

Strategic Level
• Outbound operations, all tasks including customer efficiency, warehousing, and transport
• Pledging orders for all retailers, production, fulfillment center, and other clients on all restrictions within the
supply chain
• The plan involves addressing transit disruptions from manufacturing to supply levels and ensuring consumer
payment through insurance provider retention of business losses.
Factors Affecting Supply Chain in Hospitality Industry
• The hotel's customer or guest is referred to as "GOD." When it comes to

strict uniformity, it may be difficult at times. Customer satisfaction is
critical in the hotel industry. This has a detrimental impact on supply
chain management. Customer-related activities including food and
beverage production and service, housekeeping, and front office
administration are critical in the hotel industry. Accounts, buying, supply
chain management, and revenue records are pushed to the sidelines.
Strategic Level
Factors Affecting Supply Chain in Hospitality Industry
• Different management systems, including hotel operators, franchisees,

and chain hotels, impact supply chain management, causing asset
disputes and varying handling.
Strategic Level
Challenges of Hospitality Industry Related to Supply Chain
Raw material cost - the hotel industry faces high raw material costs due to
organic consumables and meager prices. Bulk purchases are insufficient,
increasing transaction costs. Mechanization and automation are not fully
applicable due to diverse suppliers, resulting in increased transaction costs.
Strategic Level
Material ordering cost - Hotels often use handwritten indents and

transactions independently, leading to long consolidation times. Restructuring
is complex, and hotels often place multiple orders for the same products.
Excessive purchases of different labels and packaging sizes negatively
impact restructuring, supply, and cost. Supply chain management can lead to
significant cost reductions. Strategic Level
Inventory handling - Inventory handling is crucial in managing uncertain

product forecasts, leading to stockpiling, delayed delivery, and higher
expenses due to delayed delivery of best items to user departments.
Strategic Level
Emergency purchases - Emergency purchases are common due to lack of

preparation, often made at user department requests and formalized by
completing necessary paperwork.
Strategic Level

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BASIC CONCEPTS AND

OVERVIEW OF SUPPLY CHAIN

In today's competitive business environment, logistics and supply

A supply chain is the lineup of companies that market goods or

A supply chain is a network of suppliers, manufacturers,

The supply chain encompasses all stages involved in fulfilling a

Supply chain management (SCM) integrates stakeholder

In particular for planning and surveillance processes, an efficient

Mutually sharing channel risk and rewards

Effective supply chain management (SCM) involves risk-sharing

Successful SCM necessitates cooperation among channel

Focus on serving customers

Supply chain is effective where all supply chain members serve

SCM implementation necessitates system convergence from supply

Partners to build and maintain long-term relationships

Successful partnerships aim to merge channel policies to reduce

3. Increases efficiency and functions for companies

4. Lowers shipping and warehouse costs

5. Eliminates costs directly and implicitly

7. Enhances asset management and encourages the effective implementation of

8. Assists businesses in responding to global dynamics, economic upheavals,

Strategic network optimization involving warehouse, fulfillment center, and

Strategic relationships, contact networks, and technological advancements, such as

• Strategic network optimization involving warehouse, fulfillment center, and facilities

• Strategic relationships, contact networks, and technological advancements, such as

• Chain operations for information technology.

• Coordination of the whole corporate plan with the strategy of supply.

• Sourcing and other procurement decisions

• Purchasing choices including inventory size, location, and consistency

• The strategy of transport including pace, routes, and contracting

• Competition benchmarking of all processes including best practices around the

• Fees with milestones

• Inbound activities including retailer transport and shipment receipt

• Production processes involving materials use and finished products streaming

• The hotel's customer or guest is referred to as "GOD." When it comes to

• Different management systems, including hotel operators, franchisees,

Material ordering cost - Hotels often use handwritten indents and

Inventory handling - Inventory handling is crucial in managing uncertain

Emergency purchases - Emergency purchases are common due to lack of

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