Supply Chain in the Travel Industry
The travel industry is an industry that is in constant change. It is the type of industry that must change with the times, including how it conducts business, how it sells its products and services, and how each link of their supply chain works and connects with the rest of the chain. While each brick and mortar location and travel website are similar to their counter parts, each one has a varying supply chain they use in order to get their product and services to the customer. We will take a look at how a brick and mortar travel agency uses its supply chain, and how changing to a website location can and will affect their supply chain.
Supply Chains
Let's begin by understanding what exactly a supply chain is and what it does for a company. A supply chain, or supply network as it is sometimes called, is a coordinated system of people, activities, information, organizations and resources involved in moving a product or service in a physical or virtual manner from the supplier to the customer (Wikipedia, 2007). Supply chains transform raw materials and components into a finished product that is delivered to the end customer. In this case, the travel agency must be able to connect the airline, hotel, car rental, cruise lines and event tickets to the customer wishing to take a trip to a particular location and meet their individual wants and needs for that trip.
Brick and Mortar Agencies
Travel agencies began years ago by opening brick and mortar locations throughout the United States. They would open up offices located conveniently within the cities around
the country so that many people could utilize their services when planning a trip. A brick
Supply Cha...
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...e added to the chain that include the purchasing of website names, links, and overall creation of their website to be used. And lastly, links need to be made to financial institutions so that the customer can purchase what they want from the website through an electronic means of transferring money, either directly from their own bank or through a credit card.
Summary
In comparing the differences in the supply chains used by brick and mortar locations versus virtual agents, the chains are similar in many ways, yet have great differences as well. Brick and mortar relies upon personal interaction through agents and agreements with their suppliers. Virtual websites pre-purchase reservations and tickets and offer them directly to the customer at a discounted rate, cutting out virtual links of stores and people, but add links of Internet commerce and availability.
The corporation can use its name as its strong base to attract the attention of new customers as well as to make certain that it is holding on to the old ones. Furthermore, economy of scale plays a significant role in this industry. Travelodge has a higher profitability aspect than the single operations (Wilkinson, 2013). If a new competition enters the market, they will find it difficult to compete with Travelodge as setting a proper quality and price regarding the economies of scale takes time. For Travelodge management, the capital intensive industry is tied with the fixed costs which make the entry of any entrant extremely
This website links to a report on the increasing number of travel agents within the past number of years.
A supply chain is a quality network of manufacturers, suppliers ,distributors, warehouses and retailers who by planned and coordinated activities develop products by converting raw materials to finished goods.
As the world’s largest travel agency, American Express offers travel and related consulting services to individuals and corporations around the globe. In fact, American Express Travel Related Services is the largest part of their business and generates around half of the Company's profits. AXI has proved a successful, readily adaptable corporation for over 150 years. In 2000, AXI was organized around three segments: Travel Related Services, Financial Advisors, and the American Express Bank. This case analysis focuses on the Travel Related Services segment.
Royal Caribbean Cruise Ltd (RCCL) has two distinct supply chains which create a unique challenge. Each supply chain is managed by a Provision Master. The first supply chain includes all food, beverage, and lodging inventories that needed for the trips. The second supply chain encompasses “corporate spend” materials, such as office supplies, printing services, hardware and software, printed materials, computer supplies, marine consumables (spare parts, fuel, lubricants, any and all services associated with the ship maintenance and etc).
In business terminology, supply chain is the name given to a network of facilities and distribution options that performs the functions of procurement of materials, their transformation into intermediate and finished products, and then later the distribution of these finished products to customers. Although it may seem that supply chains are only important to manufacturing industries, they exist in service industries also. The actual level of its complexity may, however, vary greatly from industry to industry and firm to firm.
Technology has created a major impact on the way in which all organizations market their products and services. With the development of the internet, companies are now able to economically market themselves on a global level. Even smaller companies that were once not able to capture international business due to the cost factor can now do just that. The Washington Plaza Hotel is no exception. The hotel industry in DC relies heavily on tourism as a major part of its client base. Many of these tourists who visit the city are of foreign nationality. It is important that the Washington Plaza Hotel targets these people when marketing the company. Not only do they target the tourist but they also target the international business travelers that come to the city on business related trips. The hotel's website, which gives detailed information about the hotel's accommodations and services, can be accessed by potential customers all over the world. In addition, the Washington Plaza Hotel has teamed up with such web-based travel services like Orbitz, Expedia, Travelocity, Etc. in order to capture more of the global market. Before the existence of the internet, the global market was not easily reachable. Technology has the greatest affect on marketing for many organizations and certainly for the Washington Plaza Hotel as well as the hospitality industry itself.
In addition to the change in behavior of consumer, many companies or retailers change the sales channel combinations. The greatest impact of the Web-bases electronic revolution has occurred in companies adopting the click-and-mortar approach. Click- and-mortar is one the strategy used by the companies or retailers that they continue to conduct their business in the physical locations and have added the electronic commerce component to their business activities. According to one study, 37% of United States retailers are selling through a combination of the internet, in stores and catalogs. This represents a growing demand for the business-to-customer package delivery service.
Ferdows, K., Lewis, M., & Machuca, J. A.D., 2003. Zara. Supply Chain Forum: International Journal, 4(2), 62-66.
Zappos creates a supply web, to maintain sales growth and for the ease of customers. It increased zappo’s sale of products in the online-market; thus, improving the revenue and yearly profits. On the other hand Zappos supply chain was not as effortless as the linear process of placing orders with its suppliers, stocking inventory and shipping orders to the customers. Zappos brought 6pm- a discount online retailer, so the 6pm dot com website sold a product that was in the Shepherdsville warehouse, exactly in the same way as the Zappo’s website.The products were stored in the same way for both sites, even though these two websites shows different
Supplier power within the hotel industry is limited primarily due to the abundance of hospitality product providers. Hotel furnishings and amenities are available within a broad market, providing hotel owners with the freedom to choose products that specifically meet their personal standards and requirements. This places the burden on suppliers to increase product attractiveness for hoteliers. Hotels can often also be substantially large and purchase in bulk, making them very valuable customers for suppliers.
Lee, H. L. (2004, October). The Triple-A Supply Chain. Retrieved April 29, 2014, from ftp.software.ibm.com website: ftp://ftp.software.ibm.com/software/emea/dk/frontlines/Tripple_supply_chain_Havard.pdf
Sustainable supply chains (SSC) are a process, which employ purchasing policies and procedures that assist sustainable development at the centers of tourism. This aspect of tourism is particularly vital to implementing feasible tour operator practices. The final tourist product featured in both glossy brochures and enticing websites must be considerate of viable sustainable supply chain management to create long lasting destinations for the consumer. This report will discuss the benefits and drawbacks of SSCs, and attempt to assess how SSCs are used as a popular management tool in the tourism industry. “Sustainable supply chain management (SSCM) encapsulates the trend to use purchasing policies and practices to facilitate sustainable development at the tourist destination.” (Font and Tapper et al., 2008, pp. 260--271). To expand on this, there is an expectation that Supply Chain Management “emphasizes the logistics interactions that take place among the functions of marketing, logistics, and production within a firm and those interactions that take place between the legally separate firms within the product- flow channel.” (Pulevska-Ivanovska, L, 2007: 11) This definition encompasses the three main components of supply chain management: marketing, logistics and production. According to Dr Xavier Font, the tour operators’ product depends on 3 major sections: accommodation, transport and activities. (Font, X, 2011: 260) Supply chains vary depending on the nature of product and/or service. (‘UNEP’ 2013: 273) The diagram below illustrates the three main areas of impact: economy, society and environment.
I will be discussing the use of e-commerce in a “brick and click” organisation. Click organisations are E-commerce sites, like Tesco paly.com, Argos, and amazon. The reason why they are called click is because you have to click to interact with the online store. A brick organisation is your store in the high street, like Gamestation M&S. But the Brick Organisation tends to also have an online website so they can be there for customers 24/7, for example Tesco.
In recent years, business tourism has become increasingly prevalent and prevailing in the tourism industry. There are large quantities of significant changes which have far-reaching implications for all consumers and suppliers of business travel such as consumption patterns, great developments in transport and communications technology, and the world´s political and economic changes related to tourism industry. All these developments have brought large effects on business travel as well as the main challenges to this sector for the coming years. Every day, tens of thousands of people are beginning or ending their business trips all around the world, while numerous conferences or exhibitions are being held globally, so business tourism is a