Managing Suppliers in Hospitality Management

This article discusses the importance of managing suppliers in hospitality management and provides insights on how to negotiate with suppliers, manage relationships, and make formal agreements. It also includes a list of suppliers, key performance indicators, and alternative suppliers.

Running head: DIPLOMA OF HOSPITALITY MANAGEMENT
Diploma of hospitality management
(Assessment 2)
Name of student
Name of University
Author note

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Table of contents
Part A.........................................................................................................................................3
List of suppliers......................................................................................................................3
Key performance indicators...................................................................................................3
Alternative suppliers...............................................................................................................4
Comparison with existing suppliers’ provisions....................................................................4
Negotiations managed with the suppliers...............................................................................5
Management of relationships with suppliers..........................................................................5
Part B Conducting negotiations.................................................................................................5
Part C Making Formal agreements............................................................................................7
References..................................................................................................................................8

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Part A
The Grace Hotel, Australia, being a major established and popular hotel is where I
have been working. To manage successful business functioning, it is essential for managing
three different types of suppliers who supply goods and services along with raw materials and
resources like meat, fruits, vegetables, cleaning services, beverages, insurance, etc. for
ensuring successful business functioning and exceptionally good manufacturing and
production processes too (Chen et al., 2015). The hotel falls under the tourism sector and thus
most of the items include food and beverage items, raw materials and resources required for
the production of food, etc.
List of suppliers
Supplier 1: Food and beverage vendors
Products or services provided: the vendors mainly deliver the finished goods, i.e., the
raw materials like vegetables, fruits, meats to the hotel and thus they are considered as major
sources of the supply chain. These are essential for preparing the food items that the clients
require and so consistency of quality for the resources is essential to meet the quality
standards and cater the tastes of people properly.
Supplier 2: Cleaning services suppliers
Products or services provided: These kinds of suppliers are affiliate merchants who
supply cleaning materials, blankets and laundry services. Ferguson et al. (2016) opines that
they are linked with the hotel and for driving the traffic level, they present their products
through banner ads all throughout the affiliates’ network, thus will allow the company to pay
them for delivering the goods at the right time for serving the clients at the hotel efficiently.
Supplier 3: Drop shippers

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Products or services provided: Drop shippers are considered as major suppliers
because they supply the products and services directly to the customers once they have made
purchases from the hotel. It is a cost effective way, though considering the fact that they have
direct connection with the hotel and are liable to provide necessary things that the customers
need. The drop shippers include suppliers like event planners who manage the events at
hotels celebrating the guests’ birthday, wedding ceremony and during other auspicious
occasions.
Key performance indicators
The key performance indicators required to supply the products and services from
each of the suppliers include quality of products and services prepared and provided to the
guests cording to the supplies made available to the hotel by the suppliers. On the other hand,
Annison, (2017) is of the view that the quality of food made and guest satisfaction are
considered as key performance indicators based on the supplies made by the food and
beverage vendors.
The clean and fresh laundry and clothing items along with room decoration materials
are positive signs that the laundry services are provided properly and the cleanliness has been
maintained as well.
The drop shippers, when delivered the products and services directly to the clients,
were checked whether those have been delivered timely or not. Thus, the timely delivery of
products and services to the clients is considered as a major performance indicator here.
Alternative suppliers
The manufacturers are alternatives to vendors who are responsible for researching,
developing and producing the finished goods, i.e., they are associated with the management

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of crops and production that are later supplied to the hotels along with meat for the
production of good quality food items.
The wholesalers and distributors act as alternative to suppliers who purchase materials
in bulk amount from other manufacturers and vendors and sell those to the organisation
directly (Tzamalis et al., 2016).
The independent crafts people, i.e., the farmers and other persons who are engaged
with crop production activities and management of farmyards, have developed smaller scale
of economy and later sold the unfinished good to the hotels or organisations directly.
Comparison with existing suppliers’ provisions
At Grace Hotel, innovation is consistent and thus quality and pricing are important
components contributing to the satisfaction of clients of the company. There were situations
when few of the suppliers, especially those who supply the raw materials like fruits,
vegetables, etc. to the hotel and are used for the purpose of manufacturing and production
processes provided bad quality and stale items. In such cases, it is important to ensure that the
suppliers who are incapable of delivering the right quality and freshest vegetables and fruits
needed to enhance the production process efficiency. According to the opinions of Nychas et
al. (2016), there are certain areas and aspects that are needed to be negotiated with properly
and obtain new suppliers for ensuring smooth business functioning.
The prices of products offered at the hotel automatically get high with the higher
priced supplies provided by the suppliers and this is one of the major reasons, because of
which, clients get unsatisfied. They switch on to some other hotel for getting the products
available at lower prices, which could also make the company face decline in sales and
revenue generation. The existing suppliers demanded higher amount of money, in spite of
delivering low quality goods needed for the production process. The existing suppliers,

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especially the cleaning service suppliers demanded high rates for the blankets and other
cleaning services provided to the hotel for serving the customers. Due to this, they should be
replaced with other suppliers who could demand reasonable prices for the supplies offered.
The supplies should be reliable and effective enough for ensuring that it could meet
the criteria of hotels and ensure that the guests at the hotel are kept satisfied largely. To
maintain reliability, it is also important for choosing the right suppliers considering the prices
they charge along with the quality of goods they offer, so that it can be checked at earlier
stages about whether the clients’ needs could be fulfilled or not (Grover et al. 2016).
The needs of the organisation, i.e., the Grace Hotel include good quality supplies
available at reasonable prices and loyal suppliers. The organisation also demands fresh items
and so to meet the demands and high expectations of clients, the company needs to purchase
supplies in bulk amounts and keep it stored properly, furthermore maintain enough capital to
make investments and increase the purchasing power too. This would help in keeping
abundant supplies in stocks, furthermore ensure production of food items smoothly along
with other hospitality services needed to serve the guests at Grace Hotel with much ease and
effectiveness.
Negotiations managed with the suppliers
The suppliers are to be negotiated with according to the way the money should be
paid to them in the form of bill paid for by the bank, foreign currency or as bank drafts. The
potential costs incurred while managing the administrative activities, transactions, transport
are considered along with the assessment of risks associated with the existing suppliers. The
suppliers are to be engaged with and form string relationships through proper collaboration,
negotiations, management and skills for performance reviewing (Aung & Chang, 2014). By
replacing the existing suppliers, especially those who supply poor quality fruits, vegetables

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and also are associated with the cleaning services’ providers with newer ones, it would be
easy for getting the best quality services from them along with strengthening of relationships
with hem, which could further ensure service level agreements along with management of
proper suppliers contracts. Negotiations with the suppliers are managed with the checking of
national and international certification bodies that could enable monitoring the quality of the
potential suppliers and their abilities to deliver the right goods at the right time. Setting the
objectives is also part of the negotiations with suppliers considering the price, value for
money, terms and conditions of payment, lifetime costs of products, after sales service, etc.
According to Augustin et al. (2017), prior to negotiations, investments are needed along with
necessary training facilities to facilitate the negotiation process furthermore. Understanding
what actually the suppliers need is important as well by checking whether the supplier runs a
monopoly or not, which could provide a helping hand and allow obtaining various sources
from which the supplies could be made. A negotiation strategy is essential for managing the
negotiations properly, furthermore defend the various statements made for negotiating with
the suppliers effectively too.
Management of relationships with suppliers
Conducting negotiations can help in developing the relationships with the suppliers.
The most important certification body is the International Organisation for Standardisation or
ISO certificate that has set various quality standards used and assessed by companies all over
the world to facilitate global trade activities with the provision of set of standards.
Negotiations are based on researching the actual costs and discover the areas where both the
company and suppliers could be mutually benefited. On the contrary, De Boeck et al. (2015)
states that the multiple suppliers are to be assessed to check which one of them offer the best
quality services at the value for money prices. Providing reference about the clients could
also allow the suppliers to understand the needs of the hotel and how it could serve the

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customers based on which, the supplies should be made accordingly. Negotiations on price
could be done by asking for prices that look higher through exposure of ongoing costs
including various expenditures, consumables, repairing costs, etc. Good prices paid to the
suppliers strengthen the relationships with them while the detailed agreements make the
relationships easier and flexible.
Part B Conducting negotiations
Negotiation 1
Real Negotiation Simulated Negotiation
Supplier details Specialized in delivering good quality fruits, vegetables and
meat
represented by: Yarra Valley Farms
Location Yarraville VIC, Australia
Date 15.12.2018
Nature of negotiation The pricing structure is considered because the supplier’s
demand is high amount of money because of its reputation in
delivering freshest quality vegetables, fruits, etc.
Details Yarra Valley Farms is a major supplier of fresh quality Fruits
and Vegetables that are supplied to hotels and other areas to
serve for commercial purposes.
It has leveraged its professional network and with its strong
brand name and image, a large number of companies within the

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tourism and hospitality industry have been benefited.
Negotiation 2
Real Negotiation Simulated Negotiation
Supplier details Event planner agency managing the events like birthdays,
wedding ceremonies, etc. for the guests by collaborating with
the hotel.
represented by: ID Events Australia
Location Suite 41, Upper Level, Jones Bay Wharf, 26-32 Pirrama Road,
Pyrmont NSW 2009, Australia
Date 20.12.18
Nature of negotiation There are various terms and conditions, because as the event
planner is considered as drop shippers, delivering services
directly to clients after making purchases from the hotel.
Details The entire event is managed by the event planner agency,
though the profit will be shared among the company and the
agency

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Part C Making Formal agreements
Supplier 1 Outcome approved not
approved
Details negotiated
Prices to be paid for the supplies Proper prices should be
paid to keep suppliers
satisfied
Payment terms and conditions Either in cash or as bank
drafts
Intellectual property To maintain the patents,
copyrights, etc.
Supplier 2 Outcome
Details negotiated
Confidentiality Maintaining
confidentiality of the
event planner
Warranty periods Making sure that the
services and products are
arranged according to
the warranty period
Termination and exclusion clauses Right to terminate the
contract in case of any
faulty situations faced

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The suppliers should be contacted with by sending emails and also by engaging in
telephonic conversations and video conferences. Both the parties are to be agreed upon with
for ensuring that the contract meets the legal obligations.
The management contracts in tourism and hospitality allows for operating own
property and even pair up with other hotels by agreeing to a contract, furthermore leverage
the resources and best systems to ensure successful business functioning. The staffs are
trained to build professionalism and unite properly to deliver high performance and ensure
that the hotel runs properly to serve the clients (Nyarugwe et al. 2016).
Contracting parties include ID Events Australia, Yarra Valley Farms that are located
in New South Wales, Australia and are considered as major suppliers with whom The Grace
Hotel has formed contract with. The Risks of loss or damage are low, because of the
management of good relationships with the suppliers, which not only resolves certain
disputes but also manages proper agreements between both parties involved in the contractual
agreement. Signature provisions include signing to the documents and making written
agreements for facilitating the contractual agreement furthermore (Adam et al., 2017).

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References
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Augustin, J. C., Ellouze, M., & Guillier, L. (2017). Microbial risk assessment: integrating and
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