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Supply Chain Costs of Hotels


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In the tourism supply chains, hotels are believed to be a key player serving accommodation services, also foods and beverage. Mostly hotels also collaborate with their suppliers and travel agents. Therefore, hotel managers have to recognise their supply chains. Hence the operations of the hotels can be smoothly run. One of the things that hotel managers may do in the supply chain management is to control their supply chain costs.

Before managing and control the cost of hotel supply chains, ones should understand what constitute the “Supply Chain Costs of the Hotels”. Considering supply chain cost as the cost of working with other firm in  the supply chain, supply chain costs of the hotels can be classified as following.

1. Fright logistics costs

Logistics costs of the hotels are those costs related to the movement of the goods in and out of the hotel. Such fright logistics costs including:

  • Transports of inputs e.g., foods, beverages, equipments.
  • Storage of foods and beverage (raw, WIP,  and finished ones), equipments, beddings, other materials
  • Reverse logistics e.g., waste disposals, returning products
  • Communications related to logistics activities

2. Purchasing costs

To order the right products from the suppliers, hotels have to identify the right suppliers, then communicate with such suppliers. These activities generate the costs for the hotel as following:

  • Costs of finding the right suppliers/agencies e.g., communication costs, costs related to auctions, opportunity costs of finding the right suppliers/agencies.
  • Communication costs during the ordering process, tracking and tracing as well as returning.

3. Transaction costs

In the supply chains, costs are sometime hidden and difficult to quantify. Such costs are transaction costs according to Coase (1991) and Williamson (2010). Transaction costs incur when firms interaction with other firms as what happen in the supply chain transactions.

  • Hidden costs due to the complexity of dealing with suppliers/agencies.
  • Cost of making, revising the contract.
  • Cost of switching the suppliers
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