Choosing suppliers

A common challenge faced by many small, family ran accommodations is choosing the right suppliers. Sometimes the sales persons are not interested to do business with small hotels simply because of their small size or they might charge them excessively, only to compensate for the small size of the accommodation.

As a small hotel owner puts it: “finding the right supplier ends up being too expensive and too time consuming for me, and more often than not I do not receive after-sale support that was promised”.

So, what can you do in order to solve this common supply related problem of small, family ran and owned accommodations?

Actually, there are several things you can do in order to address those issues:

  • Join the professional associations of small hotels or associations of family accommodation providers. Those associations usually have large memberships - this will strengthen your negotiating positions and you will be able to get goods and services you need under much better conditions
  • Develop strategic partnerships with your trusted suppliers – sign long-term contracts with your most reliable suppliers. This way you will be able to plan your business expenses well in advance and the long-term commitment will motivate supplier to offer better rates and terms for their goods and services. It’s a win-win situation for both parties
  • Build a personal relationship with your suppliers, visit them sometimes in their office – this can result with a better service and lower prices
  • Choose only competent suppliers, suppliers which are committed to high standards and which are in control of their products, and also suppliers which are in good financial health
  • If necessary, use supply management software to keep track of all the records important for your business. These records usually include lists of all your suppliers, different cost categories and they often include features for easy analysis of your business costs. This way you can stay organized and make well informed business decisions
  • Location of the supplier is an important factor in choosing a supplier. If you are a small hotel owner, then you should prefer local suppliers who are able to respond promptly to all of your demands. If you have a problem with hotel plumbing, electrical installation or maybe your hotel Wi-Fi is broken you cannot afford to wait very long time for your supplier to respond and to fix those problems, especially during the high tourism season.

   Managing supplies

Quality management of supplies is especially important in the hospitality industry because most of the hotel consumables are of perishable nature, they are difficult or impossible to store in a warehouse and one cannot take advantage of the economies of bulk purchase in the hospitality industry. This is especially emphasized in running small hotels which are additionally susceptible to the previously described problems due to their small size. Keeping the costs of transactions, costs of product purchase and costs of inventory are most important features of the quality management of supplies in any hotel and especially in a small, family owned and operated accommodation.

According to some researchers (i.e. Arend and Wisner, 2005*) supply chain management (SCM) and SMEs might not be a good fit, mainly because:

• Small businesses do not implement SCM appropriately
• SMEs do not use SCM to complement strategic focus and
• SMEs are not freely choosing to pursue SCM

However, since tourism product is a complex product which involves large number of suppliers, in order to ensure smooth running of day to day business small accommodation establishments should at least try to implement some basic principles of supply chain management.

*Arend, R.J. & Wisner, J.D. (2005). Small business and supply chain management: is there a fit? Journal of Business Venturing, 3, 403-436.