In 1995 Mr. and Mrs Gunes, owners of the Sunny Hotel/Spa and health and fitness Resort set up the Hotel as a family group had business in Izmir Turkey. The Hotel is continuing to grow at an extremely higher rate of 200% during 2000 to 2006.
The owners of the Hotel, Mr. and Mrs Gunes said that secrete with their success is:
"We believe that we have a new viewpoint than that of our rivals. Our emphasis is on our main competency in providing hotel management services. Although it can be difficult to determine one's central competencies and boundaries of a company in the tourism sector, success of the business enterprise enterprise depends on this aspect. Functions that are not in one's primary competencies should be evaluated for outsourcing to other organizations. Recently the Sunny Hotel's owners have thought about outsourcing critical services. The tourism sector has been quickly expanding the circulation of hotel management services; this flow is becoming more significant than the materials movement management for all of us. "
They also believes that, in Travel and leisure sector circulation of materials supports service management but center point of this sector is taking care of the movement of services.
In 2005 Mr Murat Var hired as a purchase supervisor in the Hotel. Mr Murat has an undergraduate and Experts Degree running a business with six many years of working experience as a purchase supervisor in a multinational hotel chain. Soon after joining of Mr. Var, Sunny Hotel has become as the market leader. Interestingly at that time rivals of Sunny hotel was facing problems in their services. The capabilities of the Mr. Var can be guessed from his performance throughout that period.
Mr Murat Var did some organisational changes after getting started with the hotel as a purchase manager. He separated the purchase of goods and services. He says that "The opportunity to increase profits within an organization through more effective purchasing and offer management is greater in the acquisition of services than in goods".
Before Mr Var, the purchasing division of the Hotel was only concentrating on the way to obtain goods and materials, some services were also outsourced by related department immediately. Accounting and money department were dealing the insurance and software support services and personnel training service were established by Human Resources department.
Mr Murat Var consolidated the purchasing of services and materials under purchasing team. He is dealing with eight other purchasing experts. The centralized purchasing office has the responsibility of procurement of services, goods and materials.
New Centralized purchasing section is doing work for the Hotel, 30% of buying cost is reduced and also the customer satisfaction level is increased. Still some problems increased up in adoption of the consolidated system, like the department heads aren't content with their contribution in the purchasing of services and goods, and dealer selection and analysis process has also some problems.
DIFFERENCE IN PROCUREMENT OF SERVICES AND BUY OF GOODS AND MATERIALS
Term purchasing found in British, Chartered Institute of Purchasing and Supply and the American, National Association of Purchasing Realtors may be defined as, the function accountable for obtaining by purchase, rent or other legal means, equipment, materials, components, suppliers and services required by an executing for use in creation or resale. (Lysons, 2000)
Purchasing and offer chain management, 4th edi definition Pp. 1
Procurement is a wider term than purchasing which implies the acquisition of goods or services in substitution for a economic or equivalent repayment. Procurement is totally, a more exact term, it is unsurprising that the word procurement is often supplant purchasing in job titles, such as procurement professionals, procurement realtors and head of procurement. (Lysons, 2006)
Purchasing and offer chain management 6th edi definition Pp. 6
Procurement of services and goods
It is the procedure of identifying, assessing, and acquiring different services and goods which are essential for the procedures of your business. Procurement of services and goods can be carried out by using internal resources or by the procurement system or through consultants. The goal of procurement of services and goods is to get the best quality business services and materials at affordable price. Procurement of services and goods differs from each other due to characteristics of services and goods/Materials.
(http://www. wisegeek. com/what-is-services-procurement. htm)
Characteristics of Services and goods which makes their procurement different:
Services have high customer and real human discussion while goods have suprisingly low in comparison. Services can be customized but standardization of the assistance is extremely hard in two different places.
Services are intangible, can't be touched, seemed and examined however goods and materials are physical in form, which may be seen and handled. Services can not be came back or resold when compared with goods. Services procured are perishable, can't be stored for future uses. On the other hand goods can be stored in significant number for future needs and they may also be transported from one place to another.
Measurement of services is extremely hard in volume, still services can be measured in quality. Where as goods can be measured in quantity. Production and ingestion of goods is not done at same time while services usually are provided for a short while and used at same time.
Physical inspection of goods is required to ensure the quality before delivery however in circumstance of services it isn't possible to judge the quality of service during servicing.
Characteristics of Services and goods are almost opposing to one another. So these characteristics make both types of procurements different. In Sunny Hotel the strain is on procurement of services and from characteristics it is known that the service procurement is more complicated.
Principals of resource chain management, wisner, pp 39-40
Purchasing and offer chain management 4th edi definition Pp. 10-11
Purchasing and supply chain management 6th edi definition Pp. 3-9
Alternative services which hotel can outsource
Currently the management of Sunny Hotel is outsourcing Security, Cleaning, Animation, Insurance, Software support, Staff training and Food safe-keeping & delivery services. Furthermore to these services Hotel management can truly add values to their services by outsourcing these services listed below.
Provision of medical service is vital for customers who go to the Hotel. It may build the image of Hotel and can assist in getting client satisfaction. In hotel industry, injuries and traumas can be took place unexpectedly, because it is the part of our life. It really is good to outsource medical staff to ensure customers health in any emergency. The real reason for outsourcing of medical service is the fact, if management hire regular services of a medical team it will cause more cost in terms of medical accessories and machineries. So a higher level medical service can be contracted from a medical service provider company.
Leisure time facilities
Hotel management can outsource the service of providing a high-quality free time facility, which range from the entertainment provision, sports and gym facilities. When guests have free time they can spend their amount of time in doing offers like Snooker, badminton, going swimming, tennis games and etc. a fitness hall and trainer can provide mental relaxation by providing customers fruitful suggestions and instructions to boost their health insurance and physical fitness. Outsourcing this service can result in good impact of hotel and ultimately help to have more business.
The outsourcing of this service can increase the quality of laundry service which is currently provided in the Hotel. A hotel must have a top course laundry service to guarantee the customers satisfaction. It is one of the essential needs of customers, which should be dealt with properly.
Advertising and marketing
A third party can deal the marketing and offers regarding the Hotel very effectively, because marketing and advertising campaign needs professional experts and new suggestions to attract the customers. If hotel management make use of marketing personnel, it will cause more cost, and the required level of expertise can't be fulfilled credited to limited sources of the Hotel in marketing and offers.
Language can be a hurdle for customers as well for professionals of the Hotel. A lot of the foreigners can not understand the vocabulary used there and may cause communication problem. A good translation service will definitely boost the confidence degree of customers. Contracting this service is more appropriate than in house servicing.
Procuring the transfer services or shuttle service of a third party is vital for Sunny Hotel. A lot of the guests do not have their personal vehicle when they travel to long distances. So provision of shuttle service from international airport to Hotel and smart versa, will suddenly leave a great impact on guests. Deal out of this service and getting a comfortable and dependable service will have a good change in the Hotel prices.
Maintenance of electric, mechanical and other repairable products can be an important part of any Hotel. Providing non-stop heating in winter and air conditioning in warmer summer months is not possible with out a reliable maintenance service. It is good to have a outsourced service for maintenance of different home appliances and equipment used in the hotel to acquire satisfied customers. For instance when there is a power problem took place in your kitchen it ends in disturbance in every other services. Therefore well looked after equipments are extremely important to have a great deal in other services.
Catering service should be provided in very decent way in Hotels like Sunny Hotel. Providing food and comfortable environment during incidents, seminars and get-togethers can be outsourced to truly have a professional quality wedding caterers service, that will definitely lead to entice more customers.
Centralized purchasing and purchasing efficiency
Centralized purchasing is in which a single purchasing department, usually located at the firm's corporate and business office, makes all the purchasing decisions, including order amount, price plan, contracting, negotiations and distributor selection and analysis. (wisner, tan, leong, 2009)
[ Wisner, Tan, Leong, 2009, p62]
Centralized purchasing department is a good way to combine entire purchasing of an organization in a single department. It has significant advantages over decentralized purchasing.
In centralized purchasing the best advantages is of economies of scale. Products comes in a bulk variety, which leads to low cost and develops strong romantic relationships with suppliers.
Centralized purchasing is an inexpensive purchasing technique, where buyers have capacity to bargain on the price tag on the commodity they may be purchasing. Among the great things about centralized purchasing is, it can help to prevent the duplication of attempts and functions, which causes reduce the cost of purchasing.
Due to specialization of work, experience and skills of buying workers a good quality of product and service can be procured on acceptable price. It reduces unwanted procedures mixed up in purchasing and lower the transport cost. Another good thing about centralization is co-ordination of activity, which results in increase of skills of personnel and a better supplier marriage. Centralized purchasing division has capability to understand difference in dealer abilities, to allow them to concentrate on Standard suppliers. Centralized office of purchasing helps you to raise the purchasing efficiency, because purchasing department sets certain specifications for sale of goods and services and have professional personnel for purchasing.
Centralized purchasing, http://dictionary. bnet. com/definition/centralized+purchasing. html, accessed on 7th of may
Service purchase by Purchasing Department
It is a benefit for a business to possess centralized purchase division for purchase of services. That is a sensible way to fortify the purchasing through a consolidated section.
Centralized purchasing section reduces the personnel management problems and wastage of individual resource. Purchase of services differs from goods because of its characteristics, so centralized department for purchasing is a simple and more appropriate way of purchasing services. The properties of services make its procurement little bit difficult from goods. More recently the majority of the hotel management are following the centralized purchasing approaches for services. The personnel cost definitely reduces because of mingling of most purchasing at a single platform. The upsurge in efficiency of services and overall flexibility in services are also features of purchasing department.
Purchasing office compares the services with other rivals and buy best service according to the needs and needs of the office.
(http://www. wisegeek. com/what-is-services-procurement. htm)
Other ways to boost purchasing Efficiency:
By adopting E- Procurement organizations can improve purchasing efficiency. E- Procurement is the procedure of procuring the assistance and goods by using internet and making purchase using online systems. It is utilized to hook up procuring company and provider in an efficient way. E- Procurement includes question and answers, bids, charges by mailing email to numerous suppliers and getting sound offers from different suppliers.
It is an prepared way to talk to the suppliers, which develops better relationship between procuring group and supplier. This technique allows management to investigate and set rates and
makes sure that new price offered is more reasonable than previous one. E procurement is a standardized way of procuring which is straightforward system to learn, so group do not have to spend more price on having a high skilled personnel.
E procurement, http://www. epiqtech. com/e-procurement. htm, utilized on 08 may 2010
Better marketing communications between purchasing department and other departments of an organization can cause improvement of purchasing efficiency. In Sunny Hotel, this issue is raised following the centralized purchasing team. So a committee can be form which comprises of purchasing personnel and department minds to deal the lack in communication during collection of supplier and investing in a service
When purchasing services, evaluation of past performance of the company should be considered which instantly improve the efficiency and reduce the price tag on that service and finally a good quality service can be provided. Feed back of customers is also important in purchasing of services.
Supplier selection standards for procurement of services
Current Company selection requirements of Sunny Hotel is dependant on same strategy which is used for supplier selection of goods. So management of the Hotel need to see more things while selecting a supplier. Which might lead to having better suppliers for services.
Financial capability and capability
When selecting a dealer for provision of services, financial ability of that company is highly recommended. The Sunny Hotel management should take in to account the strength of supplier, meaning; financial resources, human resources, scientific resources and degree of ability to cope with variation in demand of services. Flexibility in services is often found therefore the supplier should be able to offer with variety and variant in services.
This is an essential measure for choosing the supplier, which is not followed in the Sunny Hotel so far. Stability means provision of service in scheduled time. So something should be supplied when it is needed or at least when it is promised. If a promised service is not given at right time it is worthless for customers. For example, in case a shuttle service will not reach in time to airport, it'll cause an irreparable damage to the reputation of the Hotel
A quality service is fundamental thing in Hotel like Sunny Hotel. A good quality service may encourage customers to go to again. While selecting provider this factor should be a a key point.
Health, safeness and environmental issues
In selecting distributor Health and safe practices issues are also an important thing. If a company is not following the health and safeness legislation then this ends in sudden incident and hygienic issues. In current period, environmental regulations are essential to check out, customers should know that how strictly hotel management is putting into action the laws and rules related to environment.
Theories of resource chain management related to the Services
A determination over a protracted time to interact to the mutual advantage of both parties, writing relevant information and the risks and rewards of marriage. These relationships require a clear knowledge of expectations, available communication and information exchange, common trust and a direction for future years. Such arrangemenst are a collaborative business activity that does not involve the formation of legal relationship.
According to CIPS (Chartered Institute of buying and Supply), E-Procurement is utilising the web to operate transactional aspects of requisitioning, authorising buying, receiving and payment processes for the required services or products. (Lysons, 2006)
Purchasing and supply string management 6th edi definition Pp. 186-187
The CIPS assertion indicates that, the local business managers concentrate on E-Procurement which plus they cover subsequent areas of purchasing process.
Requisition against agreed deal, Authorisation, Order, Receipt and Repayment.
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