The Hospitality and Property Management Industries are now embracing Purchasing and Material Management Solutions.

Given a slow-growth marketplace, constant customer demands to reduce prices and shareholder pressure to produce higher margins, cost reduction is an understandable industry focus. The emphasis today is on greater inventory visibility, continuous supply chain improvement, and, to a growing extent,

Transportation, warehouse management and e-Procurement. Many hospitality operations use third-party logistic relationships to lower purchasing costs and improve inventory control of plant maintenance, repair and operating (MRO) supplies.

Traditionally, most segments within the hospitality industry have been comprised of high-volume, fast-moving producers that ship product, as it is packaged or bottled, out to distribution centers or direct to customers. They do not carry sizable backlogs, but instead make to stock based on sophisticated

Forecasting techniques. The effectiveness of these techniques is debatable. The industry is plagued by excess inventory and low turns, yet shortages at the retail level are common. In the past, the degree of automation here and in the back-end supply chain has varied.

As these companies become more brand focused and marketing driven, their supply chains need to become more nimble and flexible to respond to consumer preferences. This in turn requires greater visibility in supplier, customer and consumer relationships. Not only is there increased focus on performance in this area but also, as noted above, there is a shift to outsourcing and the new operating parameters that working with outside companies entails. The complexity of the hospitality industry supply chain is where value is added throughout the system. Reshaping it from a perhaps well-oiled (but not longer efficient) forecast driven machine into a more agile, demand-driven system is not easy. This is illustrated by the fact that even large companies in the hospitality industry often experience stock-outs of eight percent at the retail level, 20 percent on promoted items. Supply chain management is further complicated by the fact that companies are process manufacturers, which means they operate most efficiently when they operate continuously and at capacity, striving for

optimal yields and outputs…a difficult feat when products are changing more rapidly in response to consumer demand.

In today’s business world, e-Business goes hand in hand with supply chain and inventory management. Food & beverage companies have traditionally been

Laggards when it comes to upgrading IT systems and addressing supply chain management. That is changing, however. They are beginning to replace legacy systems, upgrading their information systems, establishing global electronic networks and building e-Business relationships with customers and suppliers.

Interest in supply chain visibility and demand planning is driven by the problems of excess inventory and low turns, and the need for more accurate and timely information on consumer buying patterns and retail chain demands. New technologies like the implementation of Radio Frequency Identification (RFID) can

improve shipment accuracy and lower purchase and order fulfillment costs. More companies are working to provide two-way visibility with customers and suppliers. These initiatives include real-time inventory reporting and capable-to-promise insight with web-enabled order and shipment checking, plus collaborative planning, forecasting and replenishment and demand collaboration.

Most operations don't use a quarter of the data they have sitting in their systems. Often it's scattered among different systems that don't talk to each other, but you can still achieve a lot by focusing on what they're tracking individually.

Clients once implementing a purchasing and material management solutions have been heard to state “The introduction of this type of solution has brought added value to our operations and has resulted in a cost saving of almost 15%. It is effective and highly efficient. Most value their time and appreciate being able to get a job done with the least amount of effort. The solution is typically outstanding and truly indicative of a good, well thought out software program.”