Hotel Logistics

Hotels normally tackle their logistics inhouse. However, as major 3PL companies start offering hotel supply chain solutions, the hospitality industry might start reconsidering its options.

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By  Sarah Campbell Published  May 29, 2006

|~|hotel_logistics2.jpg|~||~|A bar of soap is probably one of the smallest stock items in a hotel. However, making sure that an adequate stock pile is constantly available by predicting peaks and troughs in occupancy and usage, can often lead to storage problems when working to maintain a never out of stock (NOOS) operation. Space is premium in hotels, and this is often seen in the inadequate room allocated to store stock items. What many hotels need, or dream of, is a separate warehouse, dedicated to storing stock items that can be accessed on demand. International logistics provider Kuehne + Nagel foresaw this problem when it entered the niche market of hotel logistics in 2000. KN Hotel Logistics is a dedicated unit set up to provide an integrated, single-source supply chain for hotel amenities. The company supplies a full range of in-room products, including cosmetics and toiletries, shower caps, laundry bags, sewing kits and coasters from its regional operation in the Jebel Ali Free Zone in Dubai. A common, and costly, problem KN Hotel Logistics has seen in the hotel industry is over ordering. A hotel orders too large amounts because they are afraid of running out of stock. The hotel does not have the space to actually stock these goods, nor does it necessarily have the experience to monitor stock levels and trigger replenishment shipments. Such ordering of too much material can also weaken cash flows, as large quantities of products may have to be discarded due to past “best before” dates. “Hoteliers often underestimate the transit time for flying the freight in from overseas, which is not cost-effective; if not managed professionally, the long transit times from cargo origin to the hotel can, for example, threaten NOOS. Overall, replenishment lead times are influenced by many unpredictable factors,” says Achim Glass, vice president Hotel Logistics from Kuehne + Nagel. One way in which KN Hotel Logistics claims hotels have tried to overcome these problems is to buy imitations from the local marketplace. This dilutes corporate identity and guest expectations are not met. KN Hotel Logistics conquers these obstacles by bulk ordering and storing amenities at its Jebel Ali distribution centre. By importing several full container loads per year rather than two consolidation shipments per month the company is able to realise cost savings on freight and freight-related costs such as customs clearance and administration. “The cost-optimal distribution of luxury amenities is of absolute importance for every hotel operator. Hotels can spend months selecting the right manufacturer or amenity supplier and fighting over costs, while enormous potential for costs savings lies buried in the way they handle logistics,” explains Glass. From its operation in the Jebel Ali Free Zone, KN Hotel Logistics provides freight management, warehousing and distribution services to hotels across the region. Its hospitality e-commerce solution enables hotel procurement departments to place individual orders via the internet. “Our customers are the procurement divisions of international hotel companies and amenity distributors. We tackle the difficult task of ensuring that all amenities, from cosmetics to room, food & beverage accessories to textiles, are never out of stock. We have different solutions for different requirements. These range from regular seafreight replenishment from a centralised warehouse to worldwide supply chain co-ordination, including stock level supervision, picking and packing, as well as automated replenishment,” says Glass. Services supplied by KN Hotel Logistics include a logistical survey of the hotel site, setting up receiving gateways and following up with suppliers, customs clearance, transit to warehouse, deconsolidation at warehouse and inventory management, delivery to hotel receiving ramp, and delivery to room, with unpacking, installation and recycling services. The frequency of use varies from hotel to hotel, with some hotels placing an order every Friday in order to receive their replenishment every Saturday morning, while others require a delivery twice a week or on a monthly basis. UAE hotels tend to have a higher order frequency while hotels placing their order in other GCC countries order bi-monthly or monthly. “Larger hotel chains even go a step further. In co-operation with German amenity supplier [Guenther Guest Supplies] we enable a luxury hotel chain’s respective locations across the Middle East to place their orders directly via the internet. This e-commerce solution is unparalleled in the market. Hotels have real time stock visibility and their orders go directly to the picking and packing station in the warehouse. Processes are very lean and automated, which results in enormous costs savings for all parties involved. The KN Hotel Logistics e-commerce solution is of particular benefit to chains with several properties in the same region,” explains Glass. In addition to its amenities logistics, KN Hotel Logistics also assists with hotel openings and refurbishment projects, by providing freight management and logistics solutions for FF&E goods, as well as vendor management and installation. The company also assists with mock-up rooms for pre-opening. “A mock up room usually consists of up to 30 different items that are sourced from all around the globe,” says Glass. “Often hotel operators request their suppliers to ship the product by courier to destination. The challenge lies in fine-tuning these shipments to ensure that hotel operators can expect to find a fully furnished mock-up room waiting for them to deadline,” he concludes. ||**||

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