MISSED DELIVERY APPOINTMENTS, PRODUCTS HELD UP IN CUSTOMS, AND SHORT shipments are disruptions supply chain managers often contend with. But for Royal Caribbean Cruise Lines, any one of these snafus can mean the ship has sailed–literally–without the food, beverages, and supplies critical to its guests’ experience for the next seven days. Complicating daily management tasks for the 34-vessel cruise line operator’s 225-strong sup- ply chain organization is the fact that essential freight must be coordinated to arrive in a foreign port to meet a tight nine-hour loading window. If it doesn’t, the company risks jeopardizing its most important mandate: customer satisfaction. “Ask warehouse employees what our mission is, and they will tell you it is not moving freight, it is all about the guest experience,” says Laura Luff, director of logistics and material control for Royal Caribbean.
That sentiment permeates the hospitality industry, whose bread and butter is delighting the customer. That is why hospitality operators’ capital investments tend to focus on products, services, and systems that enhance the guest experience – and not always on back-end infrastructure that gets those goods to the ships, hotels, restaurants, and other destinations where they are consumed. This is particularly true for small organizations: seven out of 10 of the nation’s 935,000 restaurants are single- unit operations. And, of the 47,590 hotel properties in the United States, 58 percent offer fewer than 75 rooms, according to the National Restaurant Association and the American Hotel & Lodging Association. GAINING VISIBILITY and CONTROL Technology has further differentiated small hospi- tality companies that struggle to manage their supply chains with limited resources and budget from large, multi-unit chains that can afford to invest in solu- tions to gain visibility and control. Many multi-unit chains have begun taking charge of the procurement process, using technology to man- age sourcing back to raw materials suppliers and even buying futures on the commodity market. Myriad business model variations exist among hotels, restaurants, resorts, casinos, and cruise ships.
As a result, sourcing operations can encompass a few hundred or thousands of SKUs. Purchasing in the hospitality industry is further complicated by the fact that many businesses face fragmented management operations – which can include franchisees and indi- vidual owner/operators – as well as managing multiple brands under one corporate umbrella. Common industry sourcing and procurement chal- lenges include maverick local buying, and a lack of centralized processes to ensure that purchases and deliveries meet contracted pricing, brand, and qual- ity standards. Proprietary distributor ordering systems and non-standardized product descriptions also lead to waste. It is not uncommon, for instance, for a chain to learn it purchases the same size ketchup bottles under multiple product descriptions. “That lack of control, coupled with the volume of product that hospitality companies manage, causes them to lose money that should go to the bottom line,” says Pat Welch, COO of Adaco Services, Williamsville, N.Y., a software provider to the hospitality industry. “Companies lose money when they fail to take a pro- active approach to procurement.” Subway Restaurants, along with its Independent Purchasing Cooperative–a procurement group run by franchisees–was an early innovator in the movement to gain control of the sourcing process, and the trend has spread to other large enterprises. Increasingly,
158 Inbound Logistics • July 2007
Powered by FlippingBook