Are you a supplier wondering what it takes to sell and supply products to hotels?
First, it is important to understand the supply chain requirements needed specific to the hotel industry.
Supply chain management is a critical element of any company’s success and the hospitality industry is depending on companies to figure out how to get costs down, keep supplies in stock, and ship to them timely. Any supplier company will thrive if they have a valuable product and helps hotels improve their overall efficiency, solves some type of problem and has a reliable delivery method. But, managing a successful supply chain management system is far from easy. That’s where consulting and strategy come into play.
With the help of a qualified hospitality focused business development and advisory service, you can develop a plan that will optimize your supply chain management system for your business to serve hotels. And if you need help strategically planning , contact our team at iDEAL Hospitality Partners Group today!
Definition of Hospitality Supply Chain Management
Hotels need supplies right now – or, at least when promised. They cannot wait weeks or months for a product to arrive. Hotels operate a 24/7 business and guests are depending on being fed, sleeping well and restful and having the services they expect given the room rates they pay.
Think of a hotel like several different businesses under one big roof – restaurant(s), convenience markets, rentable rooms, engineering and repair, sales/marketing, and service providers like guest front desk or concierge, bellman, housekeeping and catering. Supply chain management specifically for the hotel industry is a well-planned, and well-developed, nationwide plan and the process and system for managing the flow of materials and products through a manufacturing or distribution system from initial procurement to final customer delivery. In a nutshell, supply chain management ensures that products meet standards and hotel customer requirements in a timely and cost-effective manner.
In order to manage a successful supply chain, a vendor business must have a clear understanding of their current capabilities and what it takes to serve hotels – are there hurdles to jump? That’s where iDEAL Hospitality Partners Group comes in. We understand hoteliers needs better than anyone, with collectively, more than 200 years experience, we remember when supplies were affordable and supply chain issues did not exist. Those were the days! This is where Supply chain management consulting comes in – our team at iDEAL can help your business develop an action plan and implement the necessary changes to improve your supply chain performance to keep sales flowing.
At iDEAL Hospitality Partners Group, we specialize in hospitality supply chain management, consulting, and strategy development. We use our years of experience to help businesses address all aspects of supply chain management consulting, from planning and execution to problem-solving and optimization. Our team has the expertise and resources to help you achieve your goals, whatever they may be.
We actually test your product in the market during a Fast Track trial period for six weeks. This allows the supplier to understand the marketability of their product and it allows the team at iDEAL to take a run at promoting your product and advising and guiding you along the way to ensure the supplier company is very prepared to sell to hotels. All along the way, we are collaborating on supply chain needs required.
There are a few key elements to a successful hospitality supply chain:
- Planning – Suppliers need to have a clear plan and infrastructure in place before launching their product into hotels.
- Coordination – Supplier relationships, warehouses, distribution, etc. must be managed carefully in order to avoid any disruptions or delays in product shipments.
- Inventory Management – Proper inventory management along with forecasting capabilities allow businesses to reduce costs associated with excess inventory, while still meeting customer demands.
- Transportation Management – Ensuring safe, timely transportation of materials with a strong emphasis on quality assurance is critical for a successful supply chain.
- Communication – Good communication between all involved parties is key for keeping everyone on track. Don’t make delivery promises you cannot keep.
The Application of Supply Chain Management in Businesses
The goal of supply chain management consulting is to ensure that products are easy to order within the hospitality industry. It is important to know who the main / master-type suppliers are in hotels and which departments within the hotel or management company place the orders – and why. Asking hotels to order in a way that is out of the norm is problematic most of the time. There is a huge labor shortage in hotels, and also, because hotels operate 24/7, they rely on systems and suppliers that they know are true to their word.
Receiving the correct quantity ordered is important. Hotel managers and teams are very good at forecasting business expectations and knowing how much of a particular product they will need to service the facility, employees and most especially…their guests.
Hotels are cost conscious because they have to be to remain profitable and also because the majority of the products they order is resold in some fashion, so wholesale costs are expected. The team at iDEAL Hospitality Partners Group can do a competitive analysis so that the supplier understands pricing strategies to consider.
If you are a manufacturer and a distributor, that’s likely a positive. If a company’s product is highly desirable, hotels will go out their standard ways of ordering, and order direct through a supplier, knowing that there is not another markup to incur since a secondary distributor is involved. They understand the value of dealing direct with a manufacturer.
One of the most important aspects of the consulting work we do at iDEAL, is the identification and assessment of supply chain risks. iDEAL has a responsibility to hotels, management companies, owners and brands. As trusted advisors, iDEAL will assess through the eyes of a hotel what potential risks may lie ahead. During he Fast Track Program, this is a key component that we explore. We never want a supplier company to start trying to sell goods to a hotel without going through the ‘what-if’s’ and ask the supplier company questions we know a hotel will ask. After all, iDEAL’s team is hospitality veterans. They have been around the hotel block a time or two.
By understanding potential problems before they become major problems, and being PRO-ACTIVE rather than RE-ACTIVE, iDEAL positions the supplier company in the best position possible to boost sales in hospitality. Or, at times, iDEAL may recommend the company needs more time and resources to develop viable, long term supply chain program before going all-in to prospecting hotels. Nothing will sink a supplier faster than the inability to keep their word on deliveries.
Challenges and Opportunities in Supply Chain Management
As hotel brands and management companies continue to expand globally, the need for efficient and coordinated global supply chains becomes increasingly apparent. Some supplier companies are not set up to serve international customers. That’s not a deal breaker for a customer always, but if the success rates of sales and availability of the product are amazing, global supply chain solutions may be a hot topic and will require consideration and potential expansion.
Supply Chain Issues Will Be Irrelevant if Sales are Low
A well-executed sales and supply chain management strategy can help organizations achieve their hospitality sales goals by ensuring that the right products and services are delivered to the right customers in a timely and cost-effective manner.
The first step to developing supply chain plans is to understand sales goals and expectations. Selling products and services is complex and key stakeholders are at every turn. It’s vital to understand how brand standards work, how those items are contracted and available through group purchasing organizations, how the ordering process takes place, the management companies role on behalf of the owner, and knowing when and how owners get involved. Sometimes hotels can make decisions to order products at the hotel level, and oftentimes, they cannot make those decisions.
The team at iDEAL makes it their business to teach companies how decisions are made and expected timelines from the interest state to the order stage. Supply chain metrics cannot be fully developed until their is clear data that shows expected sales if a supplier is new to the hotel market.
A number of key elements should be included in any supply chain management (SCM) strategy, including:
- Identification of target markets and customer segments – select service, full service, economy, luxury, boutique hotels all have different needs
- Assessment of manufacturing production capabilities and capacity utilization of suppliers
- Development and implementation of strategies to optimize procurement and distribution channels – gaining a GPO contract is one ultimate goal at iDEAL for our suppliers. GPO’s play a critical role in supply chain and endorsement of goods and services.
- Implementation of inventory control and ordering systems
- Measurement and analysis of performance indicators to track progress and adjust policies as needed. Fill rate requirements are standard in the hotel market.
- Monitoring and evaluation of supply chain management (SCM) strategy implementation to continuously improve results
In today’s hospitality world, maintaining a healthy and efficient supply chain with a robust sales pipeline is more important than ever. A poorly managed supply chain and not having experienced and specific hospitality business development teams can lead to slow to grow sales, with longer timelines required for boosting revenue. Many supplier companies are turning to iDEAL Hospitality Partners Group team to guide them and become the sales team, as agent for the supplier.
If you are interested in becoming a professional supply chain manager, Supplier Inquiry Form, or if you have already begun selling to the hotel industry and are managing your own supply chains successfully, but want to increase sales and improve your skill set, we are here to help you and can customize a plan.