Application of Logistics and Supply Chain Management in Tourism

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APPLICATION OF LOGISTICS AND SUPPLY CHAIN MANAGEMENT IN TOURISM

LIGINRAJ.T
School of Management Studies CUSAT, KOCHI.22 E-mail:[email protected]

Abstract:In a supply chain, different organisations enter into contractual relationships to supply services, products or goods, and the performance of each organisation depends on that of other organisations in the chain. This concept of a supply chain is also applicable to the tourism product. Tourism can be described as an amalgam of different interests, activities, stakeholders and businesses that are functionally linked together to form a distinct supply chain.A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and distribution of these finished productsThe potential benefit of considering not only individual enterprises but also the tourism value chain becomes evident

Key words: Supply chain management

1.0 INTRODUCTION
1.1 GENERAL INFORMATION Nowadays, the science of logistics and supply chain appears to be very helpful and applicable,especially in the tourist and recreation sector. Broad knowledge as well as practicalexperience in this field can bring a lot of support not only in the creation of the supplychain, its realization and monitoring processes but also in the efficiency analysis or eventendering procedures. It is beyond any question that the process of forming a supplychain in the tourist and recreation sector requires advanced and professional knowledgeof both transportation systems: carriage of goods and passengers.There is no need to emphasize the fact that, in the view of a very competitive andmodern market of tourism and recreation, high quality of enders is still a priority.However, there is one more factor that plays an important and decisive role in this verysector. Strange as it may seem, it is the costs rather than the prices that determine ourchoices when making important decisions. Therefore, in order to gain a strong marketposition, maintain it and leave the competition behind, it is crucial to pay close attentionto the cost analysis in particular links of the supply chain as well as restructuring them. The supply chain comprises the suppliers of all the goods and services that go into the delivery of tourism products to consumers. It includes all suppliers of goods and services whether or not they are directly contracted by tour operators or by their agents (including ground handlers) or suppliers (including accommodation providers). Tourism supply chains involve many components- not just accommodation, transport and excursions, but also bars and restaurants, handicrafts, food production, waste disposal, and the infrastructure that supports tourism in destinations. Supply chains operate through business-to-business relationships, and supply chainmanagement delivers sustainability performance improvements alongside financial performance, b working to y improve the business operations of each supplier in the supply chain. Tour operators haveenormous influence over activities throughout the tourism supply chain, since they direct and influence the volume of tourism, the tourist destinations and facilities that are used. Tour operators can use this to help in promoting general improvements in sustainability performance as part of good commercial practice. In planning actions for sustainable supply chains, tour operators and The Travel Foundation should note that there are examples of good practice throughout the direct supply chain of tour operators as well as in a variety of tourist destinations but these are only implemented by some companies and many others can learn from them. It will be easiest to implement sustainability requirements inaccommodation and most difficult in transport, most visible in excursions and activities while most beneficial to the local economy when this supports food and craft production. Destination sustainability efforts will require wider stakeholder partnerships and if only for this reason will be more time consuming to implement.A secure income stream, with stable contracts and foreseeable contracting conditions including prices is paramount, both to facilitate the necessary investments by the supplier, and to cement the trust in the relationship. Projects require time for companies to build knowledge and develop relationships, and touroperators tend to require a steady and significant volume of operations with a supplier or destination if they are to make a significant contribution and expect changes in local operations

2.0 LOGISTICS AND SUPPLY CHAIN MANAGEMENT
.The market of tourist and recreational services is composed of the following:
y y y y y

hospitality services; catering services; tour operating services; tourism oriented services; recreation oriented services.

Those segments of the market where many different firms, business entities orincorporated companies operate can easily and successfully adopt the premises oflogistics. As a matter of fact the science of logistics combines both theoretical andpractical issues. What is more, all its theories can be easily implemented and confrontedwith reality in order to verify whether the are efficient and applicable in real life.If we took the hospitality services sector in consideration, we would find that Strategies thereare quite a few areas where it is advisable or even necessary to fall back on the science oflogistics. Furthermore, the efficiency and quality of hospitality services can be improvedthrough effective logistics management of the following: hotel management; quality management; information management; marketing. On the other hand, such an approach and division of hotel activities may seem a bitlimited. Therefore, if we looked at the hospitality sector from more detailed point of viewwe could distinguish different processes that take place, such as: supply processes; service production processes; distribution processes; storage and warehousing processes; information transmission processes. The areas listed above should be referred to in search for minimalization of costsand finding best solutions possible in order to gain a strong, competitive and leadingposition in the market.

3.0SUCCESSFUL SUPPLY CHAIN RELATIONSHIPS BETWEEN COMPANIES AND THEIR

SUPPLIERS ARE DEVELOPED AND IMPLEMENTED ACCORDING TO A DEFINED SERIES OF STEPS:
1. 2. 3. 1. To establish a sustainable supply chain policy and management system. To support suppliers in reaching Sustainability G oals, including raising awareness onsustainability issues amongst suppliers and demonstrating why sustainability performance isimportant To integrate sustainability criteria into suppliers¶ contracts and preferentially contract suppliers that meet those criteria.Business benefits from adopting good practices for tourism supply chain management includeretention of clients, as there they increasingly expect responsible behaviour even from those not willing to pay for it; increased revenue; reduced costs a improved operational efficiency, nd remaining competitive to assess and respond to risks and opportunities in the market; · management of risks and staying ahead

2. 3.

4. 5. 6. 7.

of legislative requirements; enhanced staff performance, achievement of better recruitment and staff retention, as satisfied staff are a key asset; protection of the core assets of the business (environment and culture); and enhanced brand value, reputation and market share, protecting image and status, particular for companies publicly quoted on stock markets.

4.0 TOURISM SUPPLY CHAN LINKS:
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 1.Energy & water supplies 2.Infrastructure, services & 3.resources of destinations 4.Furniture & crafts 5.Cultural, social & sports events 6.Excursions & attractions 7.Ground operations* 8.Customers Ground transport 9.Marketing & sales 10.Tour operating* 11.Accommodation 12.Catering, food & beverages 13.Laundry 14.Food production 15.Waste recycling & disposal

5.0 SUSTAINABLE SUPPLY CHAIN ADVANTAGES
Working with suppliers to integrate sustainability into the supply chain can benefit tour operators, suppliers, customers and destinations. From a financial standpoint, improved sustainability can lower costs through greater operating efficiency, reduced waste generation, and reduced consumption of energy and water. Sustainability practices can also lead to increased revenue and shareholder value by generating more repeat business and attracting new business from customers that value good and social performance. A strong positve i reputation as a company that cares about sustainability issues, coupled with improvements to the quality of the tourism experience provided to clients, can result in increased customer satisfaction and loyalty, strengthened brand value, enhanced public and marketing opportunities, and ity better acceptance by local communities in destinations. Good performance and a high -quality, sustainable product can also help a tour operator reduce the risk of conflict or problems with suppliers, governments, staff and local communities, and improve its status as a respected partner in destinations. This may mean enhanced access to key business resources such as capital, the ability to develop products to meet growing market demand, improved relationships with governments, and a motivated and loyal staff. The costs and benefits of integrating sustainability criteria into the supply chain will vary for each company, depending on: Purchasing and contracting arrangements with suppliers; Availability of alternate suppliers in key destinations;

Suppliers¶ current levels of sustainability performance and potential for change; Barriers to sustainability, such as external factors A company¶s main sustainability and operational concerns and Resources available to implement and promote sustainability throughout the supply chain

6.0INTEGRATING SUSTAINABILITY INTO THE TOUR OPERATORS SUPPLY CHAIN:
As intermediaries between tourists and tourism service providers, tour operators bring together a variety of tourism-related services to form a complete holiday package, which is then marketed to customers either directly or through travel agents. Each package generally consists of accommodation (often including some food provision), transport both to and from the destination, ground transport within the destination, and events or activities such as excursions and social activities. Because most of the goods and services included in a holiday package are provided by a supply chain of subcontracted companies, organizations and agents, tour operators are not always in direct control of the environmental and social impacts of those products. Yet, consumers increasingly expect the companies they buy from to ensure that their products provide not just quality and value-for-money, but also safeguard environmental and social sustainability. Companies must take responsibility for ensuring the sustainability of all the inputs that go into their products. For tour operators, who offer products comprised almost entirely of contracted goods and services, this means that effectively implementing sustainability policies requires working closely with suppliers to improve sustainability performance throughout the life cycle of a holiday package. The benefits of promoting a sustainable supply chain Working with suppliers to integrate sustainability into the supply chain can result in a number of benefits for tour operators, suppliers, customers and destinations. From a financial standpoint, improved sustainability can lower costs through increased operating efficiency and reduced waste generation. Sustainability practices can also lead to increased revenue and shareholder value by generating more repeat business and attracting new business from customers who value good environmental and social performance. A strong positive reputation as a company that cares about sustainability issues, coupled with improvements to the quality of the tourism experience provided to clients, can result in increased customer satisfaction and loyalty, strengthened brand value, and enhanced publicity and marketing opportunities. Good performance and a high quality, sustainable product can also help a tour operator reduce the risk of conflict or problems with governments, staff and local communities, and improve its status as a respected partner in destinations. This may mean enhanced access to key business resources such as capital, the ability to develop products to meet growing market demand, improved relationships with governments, and a motivated and loyal staff.

Steps toward integrating sustainability into the tour operators¶ supply chain Based on the experiences of its members in working with their suppliers to improve the sustainability performance of their supply chains, the Tour Operators¶ Initiative has developed a methodology for tour operators seeking to integrate economic, environmental and social sustainability criteria into their choices of service suppliers and their contracts with those suppliers. The key components of this methodology include: 1)Establisha sustainable supply chain policy and management system For a tour operator, effectively integrating sustainability into its supply chain will require the establishment of a coherent company policy and accompanying management system that set clear targets and actions for economic, environmental and social performance. Basing this system on already existing internal processes will help keep down the costs of implementation and promote integration within a company¶s overall operations. Key elements of a successful sustainable supply chain policy include: - A sustainability action plan for improving the economic, environmental and social sustainability performance of suppliers and integrating the implementation of the policy into existing company management systems; - A baseline assessment of tourism service suppliers, to assess strengths and weaknesses in their current performance on sustainability, determine priority targets and actions, identify areas for improvement, and generate a baseline against which to measure progress over time and review and modify the sustainable supply chain policy and action plan; and - A system for monitoring and reporting on progress (as measured against the initial baseline), to ensure that goals have been achieved, identify any potential problems at an early stage, promote transparency, and share results internally and among external stakeholders. 2) Support suppliers in reaching sustainability goals Tour operators are well-placed to support suppliers in improving their economic, environmental and social performance. As tour operators deal directly with potential customers, they understand their clients¶ growing demands for high quality and sustainability. They also often have access to technology and information that smaller suppliers may have difficulty obtaining on their own. Because tour operators deal with a wide range of different suppliers, they can more easily gather information on a variety of best practices and facilitate the sharing of experiences amongst suppliers. There are a number of ways that tour operators can help enable their suppliers to improve their sustainability performance and meet set sustainability criteria and targets. The appropriate mix of support measures for each company and supplier will depend on data collected during the baseline assessment and the approach that the company has chosen to adopt for implementing its sustainable supply chain strategy. Possible support measures include: - Raising awareness on sustainability issues amongst suppliers and demonstrating why sustainability performance is important; - Providing technical support to suppliers on how to improve their sustainability performance, particularly in areas that have been identified as priorities; and - Offering incentives to sustainable suppliers by recognising and rewarding improvements on key environmental, social and economic issues. 3)Integratesustainability criteria into suppliers¶ contracts Fully integrating sustainability issues into a tour operator¶s business practices will require altering the way purchasing choices are made and suppliers¶ contracts are written. Including sustainability criteria in suppliers¶ contracts highlights the impor tance of sustainability issues to

the tour operator¶s core business and ensures that priority issues are addressed with suppliers from the start. Sustainability criteria can be incorporated into suppliers' contracts to set both minimum performance standards that all suppliers of a particular type must meet and further optional criteria that they are encouraged to achieve. Performance against sustainability criteria will need to be monitored and assessed as part of regular reviews of suppliers and improvements can be rewarded by preferentially contracting suppliers that meet the sustainability criteria.

7.0 CONCLUSION
Supply chain management is all about creating better relationships. Supply chain exists in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm.

8.0 REFERENCES 1.M.Sigala,2008,http://www.conservation.org/documents/CI_ecotourism_supply_chain_ management downloaded on 01/01/11 2.Anonymouswww.globalreporting.org/guidelines/sectors/tourop.asp 01/01/11 3.Richard Tapper,Tourism Supply Chains-A report Foundation downloaded on

from LeedsMet for The Travel

4 Anonymous. http://www.development.lk/news.php downloaded on 31/12/10 5.Anonymous http://www.managementhelp.org downloaded on 31/12/10 6.Anonymous http://www.heacademy.co.uk downloaded on 31/12/10 7.Anonymoushttp://www.icrtourism.org downloaded on 01/01/11

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