If you are a hotel owner operator, or a third-party management company, you probably know that managing supplies for the hospitality industry is not a walk in the park. The supply chain for the hotel industry has unique challenges, including seasonal demand changes and handling of perishable goods. To overcome these challenges, hotel owners and managers must adopt solid supply chain management strategies and efficient cost-saving techniques to optimize operations.
Cost Reduction Strategies
The process of centralizing and consolidating purchasing entails funneling all purchasing-related activities into one unit. The purchasing unit negotiates contracts, selects suppliers and manages the acquisition of supplies for various departments.
Here are some strategies for reducing costs and optimizing the supply chain through consolidation and centralized purchasing.
- Use of technology to manage procurement: Adopting the latest technology and digital solutions enables you to maximize efficiency and reduce costs across every stage of the supply chain, from procurement to inventory management. By streamlining operations and enhancing visibility, these tools empower purchasing teams to make faster, data-driven decisions that reduce waste, cut expenses and strengthen overall supply chain performance. For instance, incorporating cloud-based enterprise resource planning software can help the purchasing unit monitor inventory levels in real time. As a result, the purchasing department can make informed and timely decisions to avoid overstocking or running out of stock. Excess stock increases operational costs through surplus inventory carrying expenses, while running out of stock may lead to revenue loss through missed sales opportunities.
- Supplier alignment and process streamlining: Supplier alignment leads to improved transparency and communication. The purchasing department and the suppliers can easily express their needs, concerns and expectations. The approach enhances decision-making and eliminates order errors, as both parties are always on the same page. Streamlining the supply chain process improves resource utilization and transport expenses. It also helps ensure the timely delivery of critical supplies and reduces lead times. By integrating a transportation management system, the purchasing department can plan, execute, and optimize outgoing and incoming inventory movement.
- Optimizing costs and improving competitiveness: Consolidated and centralized purchasing increases your bargaining power with suppliers. You can also negotiate payment terms that are in line with your hotel’s cash flow. Additionally, buying supplies in bulk gives you the advantage of economies of scale and discounts, leading to substantial savings and improved market competitiveness.
Inventory Management: Reducing Costs
There are several smart ways through which hotels and hospitality service providers can manage their inventory and reduce costs. They include:
- Use of cloud-based property-management system: PMS is a hotel ERP software. According to Hotel Technology News, PMS ranks as the most significant technology in the hotel industry, and 80 percent of investors expect it to increase in importance. A cloud-based PMS allows for the automation of all tasks, from housekeeping and inventory management to reservations. A scalable PMS eliminates the need for physical hardware, maintenance services, or additional IT staff. You can also integrate all departmental operations for easy accessibility and monitoring, reducing staffing costs and saving time.
- Integrating an automated inventory tracking system: You can also integrate an automated inventory tracking system into your PMS. This will allow you to monitor and control stock levels in real time and receive alerts when new supplies are needed. You can also use data from previous months to forecast demand accurately. Past data will help you to adjust supplies accordingly during high or low seasons.
- Installing a channel manager: Most PMSs have an in-built channel manager, while others require you to adopt a separate system. Channel manager allows you to automate inventory management using data from online travel agencies and your facility’s own websites. According to a European Hotel Distribution study, 45.1 percent of overnight stays were generated in real-time via online channels. These statistics underscore the importance of a channel manager in managing last-minute cancellations and automatic relisting of rooms in real time. This helps to avoid losses that may arise from last-minute cancellations.
Leveraging Technology for Supply Chain Efficiency
Technology is a vital pillar in developing robust and adaptable supply chains for hotel owners and investors. As a hotel owner, you can reduce the risk of losses and maintain enhanced operational efficiency and customer satisfaction by leveraging the following technologies.
- Internet of Things: IoT can help you transform your entire supply chain through real-time data. According to research, IoT technology has helped hotels to provide personalized services to their guests, thereby enhancing their experience. Moreover, IoT devices such as RFID tags help to improve operational visibility. You can monitor supplies and assets, thereby reducing downtime and optimizing logistics.
- Artificial intelligence and machine learning: Machine learning and AI can give you insights into market trends, guest behavior, booking trends, and past performance. You can then use the information to predict future demand. The insights will help you adjust food and beverage stock levels to match the expected demand changes.
- Robotics and automation: Drones and robotic process automation are dependable technologies in supply chain operations and hotel delivery processes. With drones, you can track shipments in real time. Drones also offer cost-effective, fast, and convenient delivery services. RPA software bots help reduce costs and save time as they can automatically perform numerous tasks like booking, scheduling, and revenue management.
The Role of Analytics and Data in Supply Chain Optimization
Analytics enables you to correctly identify seasonal fluctuations, predict demand patterns, and optimize the supply chain. In the hospitality industry, analytics play the following roles in supply chain optimization.
- Managing hotel booking channels: Most hotels rely on bookings from several online channels, such as OTAs and their websites. Data analytics can help you interrogate different mediums to determine the quantity of bookings from each channel. The responsible department can then use this information to determine which channels work best or need a push.
- Inventory management: You can track your supply and determine consumption trends over time using data and analytics. This will assist you in maintaining a balanced inventory. As a result, you mitigate the risk of running out of inventory or having excess inventory at any time.
- Demand forecasting: Data analytics has become instrumental in analyzing customer behavior patterns. Real-time data can help you accurately forecast demand. Demand forecasting is critical for inventory management and implementation of room pricing strategies.
The global hospitality industry is becoming increasingly competitive. Hotel owners must strengthen their supply chain to remain above water. A sure way to ensure an effective supply chain is to incorporate technology to streamline operations and adopt smart cost-cutting measures. It’s also advisable to seek the services of a credible Inventory and logistics service provider.
Nick Fryer has over a decade of experience in the logistics industry, spanning marketing, public relations, sales enablement, M&A and more at 3PLs and 4PLs including AFN Logistics, GlobalTranz, and Sheer Logistics.