Like many other places in the world, the African hospitality industry is a mixture of extreme competitiveness and volatility. I cannot think of another industry that needs high supply chain management efficiency for survival.
Although the hospitality industry relies heavily on supply chain management, it often goes under the radar because it is a service based industry. Nonetheless, supply chain management is its bread and butter.
In this article, we will explore the role of the supply chain in the success of hospitality businesses across the continent.
1. Cost reduction
It’s no secret that the hospitality industry has a very slim profit margin. In Africa, indirect expenses such as energy generation and security further threaten these margins. With a robust supply chain department, businesses can get the best prices on supplies.
Remember that because of the high competition level, these businesses often cannot transfer the cost to their customers. So, they have no choice but to deal with it internally.
The procurement team may help through the economics of scale model or strategic collaborations with certain partners. Cost reduction in the operations aspect of the hospitality business takes a lot of pressure off the business.
2. Efficient collaboration, better customer service
More than most businesses, the hospitality industry is all about giving the customer as great an experience as possible. But many times, they cannot do it alone.
Think of McDonald’s or any other fast food, for instance. They make the meals but are seldom able to produce the drinks that go along with them. This spurs the need for drink partners who can help provide customers with an enriching experience.
The same applies to the hotels and travel and tourism businesses. The hospitality industry in itself is limited in what it can offer the customer. However, strong partnerships empower them to do so much more.
3. Inventory management and coordination
Think about it: from the foods, drinks, bedding, and so many others, there is probably no industry that deals with as much inventory as the hospitality industry. There is also probably none that deals with a diverse range of inventories.
The flow can be a very tedious process and requires experts to manage it. And despite all of these, the customers must never notice any of it. The supply chain has to estimate the demands at every given period correctly.
This will ensure the inventory is well stocked and there are no disappointed customers. Unlike the e-commerce businesses across Africa, it is challenging to decline a customer’s request because it is out of stock.
Experience counts for a lot in the hospitality industry. This is primarily because of the industry’s direct interaction with its customers.
Like any other industry, when managed properly, it could help to prevent losses, damages, and errors. With robust inventory management, these businesses can also ensure quality standards are consistently met.
4. Vendor management
These include onboarding, negotiating, requesting, monitoring, and payments. The supply chain has to ensure the vendors are always on their best behaviour. Any delays or errors could spell a lot of negativity for the business.
When vendors are under control and treated well, it will mean success for the hospitality business. And supply chain does a good job of keeping everyone at bay.
The role of supply chain management in the hospitality industry cannot be overemphasized. You would be hard pressed to see a successful hospitality business without a robust supply chain department. Though many of them may use different titles, the functions are the same.
Obinabo Tochukwu Tabansi is a supply chain mastro and writer with a decade of experience working in different facets of the supply chain. Today he is living his passion for writing on all things supply chain. His blog, Supply Chain Nuggets, is Africa’s fastest-rising supply chain blog, helping professionals, business owners, and curious minds navigate the supply chain complexities on the continent.
