The concept of globalization has gripped the world of today. The constant evolution of the world around us has changed everything from our life styles to country politics. It has also changed the way businesses have operated traditionally. Today, the success of any business is more dependent on the use of elements which have emerged as a result of globalization. Like globalization has affected all, it also has changed many important concepts and theories in a way. For businesses, it has always remained a remained as to how to reach the prospective and existing customers for providing any services.
This branch of management sciences is called logistics. The concept of logistics evolved in the 1950’s. It came into realization due to the increasing complexity with which material and supplies were being transported to the company and from the company to the customers. Logistics is defined as the most effective way to transport the product to the customer as fast as possible with high quality. The quality of the product, services given to the customers, availability of the product, lowest time advantages and a low cost of distribution altogether define logistics.
If the firm uses its strategies and the capabilities of logistics effectively and efficiently then it can gain a competitive edge over other companies of the industry. Capabilities here are defined as a set of knowledge, skills, attitudes and attributes a company possesses which helps them to achieve a high quality and superior performance and to sustain the competitive advantage they enjoy over their competitors (Hoover 2001). These capabilities are essential for the company to adopt as they can prove beneficial. One of the key factors which constitute a part of logistics capabilities is effective management.
Management is the art of managing everything so as to acquire desirable results. Management in the case of customers is also very important. Delivering them the right things in the right quantity and quality at the right time through low cost qualifies for effective management in logistics. If the firm manages the components of the logistics mix efficiently then the firm can sustain its edge in the long run. They also help to increase the value of the company as well as the customers. With the increasing globalization, the components of the logistics mix have evolved to a standard of five factors.
These elements include unitization, transportation, storage facilities, packaging and communications. A correct combination of these components can help the company achieve its goals and objectives. Unitization here refers to breaking down the products into small units also called pellets that can be transported to the clients. Transportation involves the facilities, vehicles, freight charges and other costs in delivering the right product to its end users. Packaging is one of the four factors of marketing. Packaging is the most important component of the mix.
It involves packing the products and supplies in a way that does not cause any damage. Protective packaging is important to ensure that the products remain intact. Storage facilities are the places or areas in which the products are stored for the time being. This case generally happens when the company has a lot of inventory. Products are kept in storage rooms or basements until the time they are delivered to the customers by whatever means. The last but not the least and the most important factor in the mix is that of communication.
Communication is the delivery of messages from the suppliers to the buyers and vice versa. It is of utmost importance that the company has advanced means of communication which are in alignment with the latest technology. This will provide a faster method of keeping track of the client’s orders, suggestions, feedback and complaints. The management of logistics is applied to every industry around especially those which provide services. Almost all the companies whose core business is that of services have a department of logistics. People who specialize in this area are known as logisticians.
One of the flourishing industries in the world today is that of hospitality. It basically involves the food chains, fast food joints, restaurants and hotels. Hotels are an important part of the hospitality industry. Hotels generate a lot of profits and in any country is a major source of boosting the economy. If the country is a tourist site then the main funding of the economy comes from the money generated by these hotels. The hotels are organized in a way that departments are interdependent. They operate and work together to manage the hotels’ large customer base and provide them with the best of all services.
Every hotel has a logistics department which aims at providing the best of the hotels facilities and services to the customers. The services of a hotel range from providing accommodation to food to entertainment to the customers. Therefore, it gets very difficult for the logistics department to take care of the supplies as well as the end products. This is also the reason why logistic management is vague and difficult when it comes to the hospitality industry. For a hotel, the major objective is to satisfy its customers and do nothing to compromise on their tastes and demands.
A bar of soap or a roll of tissue paper is probably the smallest item when it comes to a hotel’s room services. When management works to predict the trends of its usage, it wants the supplies in abundance and therefore, many hotels opt for the Never out of Stock inventory. This means ordering the supplies in large amounts so that the inventory never depletes. The inventory includes in-room products like medical aid boxes, stationary, tissues and other toiletries like soaps, disposable sanitary items, shower caps, toothpastes and other cosmetics.
As many organizations think this is the best solution to their problem of depletion of inventory, it creates other issues like that of storage. Having the never out of stock inventory calls for more storage space. Space is one thing that the hotels don’t lack in and as a result they assign the required rooms to the storage of their supplies. It is because of this additional space advantage that many hotels also dream of having an accessible on demand warehouse dedicated to the purpose of accumulating its items of inventory(Harrison 2003). But in reality, many hotels encounter problems because of their habit of over-ordering these items.
They do so because they are afraid to go out of stocks. This creates trouble for them because hotels often have a little space for storage and more than often they have no warehouses. Also, the staff is inexperienced when it comes to monitor the stock items. This massive ordering of items also weakens the monetary status of the company and they end up paying more money than the usage of these items as they have to be discarded because of their ‘best before’ and expiry dates, this addresses the component of storage facilities in the logistics mix.
Another component is that of transportation. Hotel management often is faulty when it comes to estimating the time of the delivery of supplies. The transit time is undermined on many occasions. This also creates issues in the costs involved which get higher as the time of the transit of these items increases. This needs to be managed very professionally since a long delay from the origin of the supplies to the destination which is the hotel can threaten the replenishment of Never out of Stock items. Many unpredictable factors are involved when it comes to replenishment of these items.
In a case of depletion of inventory the hotels try to buy stuff from the local markets. The stuff available there is an imitation of what they usually get supplied and therefore by doing so they risk the expectations and anticipations of their customers. In doing so, the corporate identity of the company is also put at stake(Miller 2003). The issue can be conquered with success if the logistics department at the hotel orders the items in large quantities. Bulk buying has always remained a favorable practice to be followed.
Ordering the inventory in bulk two times a year is better than ordering the same items in small quantities twice every month. This bulk buying saves a lot of money on freight. Also, freight related costs decrease since the hotel does not have to pay additional charges on administration and customs. In short, the transportation component can be best handled if the logistics is handled effectively. Hotels have been seen fighting over lowering the costs by contacting different manufacturers or suppliers of their inventories and yet they fail to realize the potential that lies within an effectual management of the logistics.
Packaging plays an important role as a component in the logistics mix. The smooth operation of every operation requires careful examination of every aspect involved in the process. From the time the shipment leaves for its destination till the time the item is received, all that is with the items is the protection which the packaging provides. The package determines the safety of the items and the exact location of its destination. Unitization is also a very part of the mix. A unit is a certain standard or volume of the quantity of the product that is to be delivered to the consumer.
Units combined together form one large unit known as a pallet or units can be subdivided into smaller units for the ease of handling and management known as the consumer packages. Most of the products in the hotel industry move in the form of units. This makes the distribution of the products easier and is also easy on the part of supply chain. The purpose of using these units as a source of easy distribution is to ensure proper handling and storage of these products. They also help in alleviating the costs involved in handling and also reduce damage as lesser individual handling is involved.
There are various types of designs which can be adopted to suit the requirements in the best manner possible(Larson & Halldorsson 2004). A very important component without which a lot of things aren’t possible is communications. Communications is supposed to be the most crucial component of all. Communication has always remained the most important item in anything and everything. Logistics too is incomplete without the element of communications in it. Communication is the exchange of messages between two parties for the sake of some purpose.
In this case, communication is the passage of messages from the customers to the clients for the objective of placing their orders and other related tasks. For the purpose of communication, a medium is also required. A medium is a way through which the message is carried out to the intended party. Traditional media like phones and fax are there in all the companies. With the advancement of technology, now there are other media too through which one can communicate. For example: the internet. An effective management of this component is required as this is the primary source of every action taken by the hotel.
The hotels can also outsource these works to the Hotel Logistics companies which excel at such tasks. These firms/companies provide the best storage facilities by warehousing and superior distribution services and freight management by lowering the costs and charges involved in transportation. They can be contacted through the internet. Popularity of e-commerce has now enabled the hotels and their procurement departments to contact such firms via internet and place their order on the web sites. They also provide solutions to these companies for their different requirements.
From food to beverages, from cosmetics to toiletries, from in-room to bathroom products, they are in charge of providing all stocks as are wished for by the hotels. The frequency of use of items in the hotels varies from hotel to hotel. Some hotels place their orders on a weekly basis on any day so as to receive their supplies the following day while other hotels demand a delivery of inventory items twice a week. Some hotels even place orders once a month because of their low usage of these products. This variation of placement of orders is also dependent on regions(Lambert 2008).
Hotels in countries which attract a lot of tourists have a higher frequency of placing orders than those which aren’t tourist spots. Also, underdeveloped countries have a low rate of frequency with which the orders are placed(Nathalie & Jahre n. d). Above discussed are the logistics involved in the hotel industry. It also discusses how to manage these components effectively. Now the question arises: how are the effective management of these components and a wise use of their combination is beneficial to the business. The answer is simple and lies within.
All these activities of managing the logistics effectively add value to the business as well as to the customers. Increased customer satisfaction increases the loyalty of the customers. Positive marketing is also an outcome associated of this loyalty. This in turn, attracts new customers and widens the customer base of the hotels. It is evident from the above discussion that a strategy must be selected which combines these components in a way that provides best results to the customers. If any company learns to handle its logistics effectively then there is no way that the company is not ahead of the competition it faces in the industry.
Courtney from Study Moose
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