Hospitality Supply Chain Management

This document discusses key concepts, principles, and processes of supply chain management in the hospitality industry. It evaluates the significance of effective SCM from the perspective of customers, suppliers, distributors, and retailers. It also explores the cross-functional and integrated approach of SCM with other areas of hospitality organizations.

Hospitality Supply
Chain Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Demonstrate key supply chain concepts, principles and processes.................................1
M1. Integration of supply chain concepts, principles and processes for improving the
efficiency................................................................................................................................3
TASK 2............................................................................................................................................3
P2. Evaluate significance of effective SCM from the perspective of customers, suppliers,
distributors and retailers.........................................................................................................3
M2. Critical evaluation the importance of physical, information and financial management5
TASK 3............................................................................................................................................5
P3. Explore cross-functional and integrated approach of SCM with other areas of hospitality
organisation............................................................................................................................5
M3. Evaluate the implications of interrelationships between the supply chain and other
functional areas with the help of theories...............................................................................6
TASK 4............................................................................................................................................7
P4. Evaluate a supply chain strategy within a hospitality organisation.................................7
M4. Critical evaluation of SCM strategy and propose improvements for the same..............8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Supply chain management (SCM) refers to the management of flow of goods and
services by including the processes which modify raw material into final products. It involves
planning and implementation of various plans formed for management of inventory and logistics
(Christopher, 2016). In order to have effective management, organisation formulate strategies
that are beneficial for the entities to achieve their goals and objectives by controlling the costs. It
is one of the main factors for creating competitive advantage. The company chosen in this report
is Starbucks which is an American company dealing in coffee and has a coffeehouse chain. The
headquarter is located in Seattle, Washington, USA. Furthermore, this assignment covers key
concepts, principles, and processes of SCM along with its importance from the point of view of
customers, suppliers, distributors and retailers. In addition to this, cross-functional and integrated
approach of SCM and evaluation of its strategy within a hospitality organisation.
TASK 1
P1. Demonstrate key supply chain concepts, principles and processes
Key concepts of SCM
Supply chain management (SCM) is a concept which emphasises on management of all
the networks which comprises of business processes and activities which are used for
procurement of raw materials, manufacturing and distribution of finished goods. The main aim
of this is to have effective flow of raw materials from the suppliers to the entity in order to
concert them into final goods. For examples, Starbucks can contact the best suppliers of coffee in
UK hospitality industry on the basis of the best prices offered to it. In this way, it can reduce the
overall cost associated with logistics, distribution and logistics.
Principles of SCM
There are seven principles which are followed in SCM that help various parties such as
distributors, retailers and manufacturers in carrying the activities of transferring goods from one
location to another. These have been provided below:
Principle 1- The customers should be divided on the basis of their needs of services and
the supply chain should be planned on that basis (Wisner, Tan, and Leong, 2014).
Principle 2- The logistics network should customised or changed which is capable of
meeting the requirements and profitable for the company.
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Principle 3- There should be continuous identification of demands of market so that plans
can be made accordingly. Supply chain should be adjusted or changed so that resources can be
allocated properly.
Principle 4- All the products should be differentiated according to the need in particular
country.
Principle 5- There should be effective strategies for outsourcing which can cut down the
cost of materials and services.
Principle 6- A supply chain wide technology should be designed covering wide range of
factors such as flow of products, services etc. which can facilitate in decision making.
Principle 7- There should be both service as well as financial metrics which can increase
the value and profitability. For example, Starbucks can use Activity bases costing system for this
purpose.
For example with the help of these principles, Starbucks will be able to adopt suitable
strategies such as market development and many more according to their suitability. This will
prove to be helpful in the growth and development of the organisation. It is going to give positive
results to the entity because of taking into consideration all the basic details such as customers'
preferences, their comments etc. for improving the quality of the products (Copacino, 2019).
Processes
SCM process is the responsibility of the person having the department of the managing
the supplies within the organisation. There are different processes which exist in SCM ad help
the management to administer the raw material through strategies. These are as follows:
Planning- This is the beginning of the whole process which involves creation of long as
well as short term plans. This may include estimation of customer demand, development of
supply chain network etc.
Procurement- This emphasise on purchasing raw material, accessories etc. for making a
whole new product which can be sold to the customers.
Production- This involves different processes through which the raw material is
transformed into final goods. It is the responsibility of supply chain manager to take care of the
materials being used in an optimal manner (Prajogo, Oke and Olhager, 2016).
Distribution- This stage is about moving the goods or services from the factory to the
outlet where people can consume them by paying a price.
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Customer interface- It is about assessing the satisfaction gained by the customers from
the consumption of the products. Also, it can provide what more could be done to fulfil their
demands.
For example, Starbucks can use these processes, it make plans which are to be
implemented in the future so that costs can be controlled. With this, Starbucks can save a lot of
unnecessary costs from timely procurement of raw material. In this way, it can use the resources
optimally for creating competitive advantage and strong market position. Furthermore, supply
chain manager can make changes in the current processes of making the final products so that
demands of customers can be fulfilled without any mistakes. Also, the costs of logistics can be
reduced so that more raw materials can be ordered according to requirement (Bai, and et. al.
2012).
M1. Integration of supply chain concepts, principles and processes for improving the efficiency
The concepts, principles and processes of supply chain management have been developed
to help the management for effective flow of goods and services. If these are placed in an
integrated form then supply chain manager can be at the benefit of formulating plans by covering
all the possible aspects of the business. Furthermore, insights of the marketing and customers can
be determined as well as new techniques which can develop the capabilities of suppliers can be
made. The overall impact of using these three in a combined form can provide flexibility and
increase the performance of outsourcing.
TASK 2
P2. Evaluate significance of effective SCM from the perspective of customers, suppliers,
distributors and retailers
The supply chain management is a part of operational management which involve
developing the designs and models by which effective supply of goods can be maintained. The
main motive of supply chain management is to increase high level of satisfaction by improving
the efficiency. The significance of SCM with the perspective of suppliers, customers, distributors
and retailers have been discussed below:
Customers- It help in fulfilling the expectations of customers regarding proper quality
and assortment of products (Fayezi, O'Loughlin and Zutshi, 2012). Furthermore, goods are
delivered and made available at the right location which is approachable. Also, the shops can
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have necessary items which can increase the sales. In the context of Starbucks, with the helps of
effective SCM, it can provide good after sales service in order to provide higher satisfaction to
the customers. For example, if the stock of a particular type of coffee at Starbucks has finished,
then with the use of good SCM, it can replenish quick enough to reduce the loss of sales and
profits. Also, this helps in cutting the purchasing and other costs which ultimately make the
products less expensive. Customers prefer the products which are of high quality but with low
prices.
Suppliers- These are the parties who provide raw material for to the organisations which
are transformed into finished goods which are sold to the customers. If an organisation has
effective SCM, it can make order for the raw materials on repetitive basis. This is beneficial for
the suppliers, as it can have a chance to earn profit and get itself associated with a large company
like Starbucks. There are other suppliers in the market which can be chosen by Starbucks who
offer favourable prices and this has huge contribution of SCM in this. In the context of
Starbucks, suppliers can make strong brand position in the market so that other large firms can
also contact them for providing raw materials (Ellram and Cooper, 2014).
Manufacturers- These are the parties who are involved in the activities of making the raw
material into the final goods through processing from different processes. With the use of
effective SCM, manufacturers can avoid delay in making the products by ordering the raw
materials within the limited time. Apart from this, it helps in it decreases cost of production as
well as shortage of materials can be avoided. The manager of supply chain management of
Starbucks should design SCM in a manner which includes all the network that can meet the goals
of customers. Also, blockage of stock at the warehouse can be prevented which reduce the
storing costs. These costs can be utilised in something productive for making profit and meeting
the goals of the entity. For example, manufacturers of Starbucks coffee can be made to produce
quality product without any delay which can help it managing the additional costs that can be
incurred in case of delay or bad quality.
Retailers- Effective SCM provide number of benefits to the retailers who are selling the
products or services to the customers. Some of these are, the sellers can decrease inventory
lugging costs. Furthermore, the lead time is reduced which make products or services easily
available to the customers. It helps in effective distribution to the retailers. In addition to this,
number of products can be sold at affordable prices by increasing the profit margin. It contributes
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to conserve operational and transportation costs in the retailing market. In the context of
Starbucks, it can have long term and healthy relationship with the retailers through effective
SCM.
M2. Critical evaluation the importance of physical, information and financial management
The physical activities involved in SCM are beneficial for the company to help timely
production of goods by using the raw materials. There are different approaches and concepts
which are applied in this for improving the quality of services. Information is useful in making
decision connected to SCM. With the use of past data, it can compare the costs and make
adjustments accordingly. Furthermore, SCM is also helpful in managing the financial resources
because the costs can be cut and budget are prepared by estimating the data about all current
needs and requirements.
TASK 3
P3. Explore cross-functional and integrated approach of SCM with other areas of hospitality
organisation
Cross Functional Approaches to Supply Chain Management refers to those approaches
in the organisation which are followed in order to make the working processes of the
organisation to be effective and more good. For example, with the help of formulation of
different teams it will be possible to make improvement in the management of supply chain
management process of the company. There are different team members chosen from different
departments so that it could not prove to be much difficult to complete the tasks which are
provided to them in an effective manner (Christopher and Ryals, 2014). The formation of such
teams is related to the achievement of some specific goals or objectives that could help in
upliftment of the organisation as well. Teaming helps in leveraging organisational resources
while utilising the expertise of their team members so they could perform in an effective manner
for the improvement in the quality of their services, products, raw materials and many more.
These implementation of these approaches are done in order to make reduction in the overall cost
reduction, time reduction, cross boundary ownership of targets and problems, innovation with
the help of which the achievement of goals and objectives of an organisation could be done in an
effective manner. There are different purposes for which the establishment of Cross Functional
Teams is done in the organisation as such general projects, commodity, product development,
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product development, process improvement, quality assurance, strategic alliance, supplier
assessment and many more for the growth of organisation such as Starbucks.
In the implementation of this approach, it could be done that different individual from
different department could be chosen as at the time of carrying out a particular project there are
different tasks which are important to be completed by the team members so due to this reason
and for effective completion of the project, the use of this kind of project is being done in the
organisation such as Starbucks.
Integrated Approach to Supply Chain Management refers to the approaches with the
help of which alignment is created among the different functional areas of the business or the
business processes and also throughout the supply chain of the organisation so as to improve the
effectiveness level of the performance of tasks of the organisation. As with the help of this
mechanism, it will be possible for Starbucks to organise many plans for the business as with this
approach will help the company to make coordination in between the different functions of the
organisation in an effective manner as the supply chain management is itself a strategy that could
help in the achievement of integration could be done. There are different types of decisions
which are managed efficiently and effectively in the supply chain which have been strategically
planned in the supply chain. There are four major decisions which are taken into consideration in
the supply chain management of the organisation such as Starbucks which are location,
transportation, inventory and production which are important for an organisation (Devika,
Jafarian and Nourbakhsh, 2014).
Starbucks with the help of considering these four aspects will be able to make
improvement in the overall processes of their business and this will also provide the company
with competitive advantage over their competitors. This will also help in providing the company
with better output as compared to the earlier perspectives. So with the help of application of both
of these approaches in the working of Starbucks it will be possible to make improvement in the
overall processes of the organisation resulting in improvement in productivity and profitability of
the organisation.
M3. Evaluate the implications of interrelationships between the supply chain and other
functional areas with the help of theories
The improvement in the relationship in between the different individuals covered in the
supply chain and the organisation could be improved. There are different theories and concepts
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which are developed for the effective working of the organisation. For example, the Network
Based Approach is one of the important approaches which is being used in order to make
improvement in the overall relationship in between the different individuals covered in the
supply chain. It is also important for the organisation such as Starbucks to focus on relationship
with the people covered in the supply chain as the survival of the organisation is not possible. So
with the help of good relationship in between the supply chain and functional areas of
organisation, it will be possible for the company to achieve their goals and objectives in the most
efficient manner. The implication also includes about the proper working of the organisation,
good brand image, efficiency in the working, better employee organisational relationships,
fulfilment of social objectives as well and many more that could be attained with the help of
interrelationships with supply chain management (Spence and Rinaldi, 2014).
TASK 4
P4. Evaluate a supply chain strategy within a hospitality organisation
There are different strategies and also their uses are different for improving the supply
chain management of Starbucks. So out of all the strategies, the most important is to Embedding
Sustainability in Supply Chain Operations. The following strategy is based on the concept of
Triple Bottom Line Approach according to which the main focus of the organisations is required
to be on three main aspects of the economy which are Environmental, Social and Economical
Aspect. These have been discussed below with reference to Starbucks:
Social aspect- This is related with the people working in the organisation who belong to
the society in which companies operate. The business activities should be for the community at
wider context. Employment should be provided to the candidates who live in the local areas.
With reference to Starbucks, it should make strategies which can increase the production of the
services so that better services can be provided to the people out there in the organisation.
Furthermore, with the SCM strategies, Starbucks can increase the efficiency of its operations that
can increase the profit and sales (Laszlo and Zhexembayeva, 2017).
Economic aspect- The SCM should be designed in such as way that contribute to the
profitability of the organisations which ultimately help the economy. All the services in SCM
should be carried in a way which reduce the cost of carrying the raw materials. There are number
of hurdles which can increase the costs associated with the movement of input with a view to
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enhance customer satisfaction. In this way, Starbucks can increase the profit and retain its
customers for a long time. It is beneficial for developing brand image as goods or services are
supplied in a timely manner which can make them readily available.
Environmental aspect- It is related to nature which is being harmed by all the people
living in the country. There should be efforts by the organisations to protect it by contributing a
percentage of profit in for the betterment of society. The strategy for SCM can assist Starbucks
in having the goods or services in a cost effective manner. With a suitable strategy for SCM, it
can reduce various costs associated with production as well as storing at warehouse etc. In this
way, the profits can be increased which can be contributed to help the society in making its
condition better.
As with the help and consideration of these three aspects, it will be possible to make
improvement in the overall level of processes of the organisation and the sustainability of the
organisation as well. In the current period of times, the society is mostly concerned about the
three aspects which are the environmental protection, fulfilment of social obligations and
providing high quality products and services to their customers and along with this, the
consideration related to providing fair wages and salaries to their employees is also taken into
consideration which is also an important aspect that helps in the measurement of growth and
success of an organisation as well.
M4. Critical evaluation of SCM strategy and propose improvements for the same
The Embedding Sustainability in Supply Chain helps a company to conducting activities
in a manner which is also contributing to the economy of the country. With its use, it can
improve the quality of goods due to which higher customer satisfaction can be provided. Also, it
is helpful in making the condition of the society better. Therefore, organisation can be acceptable
by the customers. This can provide number of other benefits such as higher profit, better quality,
increased quantity etc. In nutshell, it can help the company to attain desired results.
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CONCLUSION
From the above report, it has been concluded that Supply chain management is an
important part of an organisation which is responsible for the flow of goods and services. There
are suppliers who provide raw materials which are used for transforming them into final
products. It is included in operational activities which should estimate the costs associated with
production, storage, transportation etc. The increase or decrease in these costs are the outcomes
of effective SCM which can be lower down with the use of effective strategies. Furthermore,
there are different principles, processes and concepts which can be applied for improving the
SCM so that desired quality can be achieved in the goods. Apart from this, there are different
information, physical etc. which can be used in managing the activities in a better way. There are
different approaches which can be used by the manager for meeting the goals and objectives of
the company.
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REFERENCES
Books & Journals:
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Wisner, J.D., Tan, K.C. and Leong, G.K., 2014. Principles of supply chain management: A
balanced approach. Cengage Learning.
Copacino, W.C., 2019. Supply chain management: The basics and beyond. Routledge.
Prajogo, D., Oke, A. and Olhager, J., 2016. Supply chain processes: Linking supply logistics
integration, supply performance, lean processes and competitive
performance. International Journal of Operations & Production Management. 36(2).
pp.220-238.
Bai, C., Sarkis, J., Wei, X. and Koh, L., 2012. Evaluating ecological sustainable performance
measures for supply chain management. Supply Chain Management: An International
Journal. 17(1). pp.78-92.
Fayezi, S., O'Loughlin, A. and Zutshi, A., 2012. Agency theory and supply chain management: a
structured literature review. Supply chain management: an international journal. 17(5).
pp.556-570.
Ellram, L.M. and Cooper, M.C., 2014. Supply chain management: It's all about the journey, not
the destination. Journal of supply chain management. 50(1). pp.8-20.
Christopher, M. and Ryals, L.J., 2014. The supply chain becomes the demand chain. Journal of
Business Logistics. 35(1). pp.29-35.
Devika, K., Jafarian, A. and Nourbakhsh, V., 2014. Designing a sustainable closed-loop supply
chain network based on triple bottom line approach: A comparison of metaheuristics
hybridization techniques. European Journal of Operational Research. 235(3). pp.594-
615.
Spence, L.J. and Rinaldi, L., 2014. Governmentality in accounting and accountability: A case
study of embedding sustainability in a supply chain. Accounting, Organizations and
Society. 39(6). pp.433-452.
Laszlo, C. and Zhexembayeva, N., 2017. Embedded sustainability. In Embedded
Sustainability (pp. 116-140). Routledge.
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