Strategies in hospitality supply chain management

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-Tanisha Saxena

In the hospitality industry, particularly in the Hotel/Restaurant/Café (HoReCa) sector, effective supply chain management in distribution is paramount for ensuring seamless operations and customer satisfaction. From sourcing ingredients and beverages to coordinating delivery schedules, every aspect of the supply chain must be meticulously managed to meet the demands of fluctuating consumer preferences and maintain quality standards. Utilizing advanced technologies like inventory management systems and predictive analytics enables businesses to optimize inventory levels, minimize waste, and streamline logistics processes. Additionally, fostering strong partnerships with suppliers and distributors fosters reliability and flexibility, allowing HoReCa establishments to adapt swiftly to market changes and enhance overall efficiency in their distribution networks. We speak to leading distributors and experts in the supply chain management to understand the situation better.

Puneet Chhabra, entrepreneur and Founder of HoReCalogy, enlightens, “Supply chain management within the HoReCa sector is a continuously evolving landscape, intricately tied to the dynamics of supply and demand. As global travel increases, so does the expansion of the hospitality industry, leading to a greater complexity in managing supply chains. Take, for instance, the scenario of a G20 meeting at a five star hotel where a specific type of fish, basa from Vietnam, is suddenly required due to a last-minute menu change and an increase in the number of guests. This exemplifies the dynamic and robust nature of supply chain management in the hospitality sector, which must seamlessly accommodate various culinary styles such as bulk cooking, à la carte, and banquet preparations.”

He further adds, “Within this domain, supply chain management encompasses the meticulous planning and orchestration of all activities related to sourcing, procurement, conversion, and logistics. It is imperative to adhere to strict timelines, temperature controls, and deadlines to ensure seamless collaboration among suppliers, intermediaries, third parties, and consumers, ultimately achieving supply chain completion. Detailed documentation is essential, covering aspects such as batch numbers, scan codes, ingredient origins, and adherence to food safety regulations mandated by bodies like the FSSAI. The challenges posed by the COVID-19 pandemic have further heightened the complexity of supply chain management. Implementing rigorous SOPs, ensuring temperature control, and facilitating contactless distribution have become imperative considerations in navigating the post-pandemic landscape. Despite these challenges, a concerted effort to polish and refine supply chain practices ensures resilience and adaptability within the ever-evolving HoReCa sector.”

The HoReCa (Hotels, Restaurants, and Catering) sector annually contributes over USD 78 billion to the economy, representing more than 7 percent of the nation’s GDP. Despite its substantial impact, the industry faces challenges including a shortage of skilled labor, high customer acquisition costs, and funding constraints.

Shammi Kapoor, owner of Kapoor agencies, highlights, “In Delhi, commercial activities are heavily regulated, with designated areas like MCD zones where supply is restricted without specific permission, a cumbersome process particularly challenging for smaller supply chains. Additionally, operational costs have escalated over time, prompting small and medium-scale distributors to seek products with higher profit margins. When considering the distribution of frozen foods, it’s worth noting the narrow profit margins, typically ranging between 8-10%. Moreover, the infrastructure demands are significant, including costly cold storage facilities starting at a minimum of 6-8 lakhs, alongside ongoing expenses like electricity. Consequently, many distributors, especially those operating on a smaller scale, hesitate to venture into the frozen foods market.”

He further explain, “While distributors with robust systems, including cold storage and temperature-regulated vehicles, capitalize on the trend and thrive, not all are suited for this niche. Consistency is paramount in distribution, as illustrated by the experience with Britannia’s cheese distribution, where fluctuating demand led to unforeseen challenges for distributors without adequate infrastructure. Ultimately, success in distribution hinges on navigating the dynamics of demand and supply.”

Effective supply chain management is paramount in navigating the complexities of distributing frozen foods in Delhi. Given the perishable nature of these products, maintaining a seamless flow from supplier to consumer demands meticulous planning and coordination. Small and medium-scale distributors face the dual challenge of managing inventory levels to minimize wastage while ensuring timely delivery to meet fluctuating demand. Investing in advanced inventory management systems and real-time tracking technologies can enhance visibility and streamline operations, enabling distributors to adapt swiftly to market dynamics.

Jasneet Sahni, founder of Lanterns and Pikkle, explain, “Managing the supply chain in the frozen foods segment poses significant challenges, particularly in regions like India where access to Compressed Natural Gas (CNG) is not ubiquitous. Maintaining the precise temperature required to preserve frozen goods is essential, yet without reliable CNG availability, ensuring consistent refrigeration becomes a formidable task. Moreover, the high prices and limited options for air cargo further exacerbate the difficulties. The need for stringent temperature regulation throughout the transportation process adds complexity and cost, as alternative modes of transport may not offer the same level of temperature control. Consequently, companies operating in the frozen foods segment in India face a daunting challenge in effectively managing their supply chain to ensure product quality and freshness while navigating logistical constraints and rising transportation costs.”

To address the challenges of managing the supply chain for frozen foods in India, several potential solutions can be explored. Diptikant Nayak, Director of Sahil enterprises dealing in cheese, cold cuts and sea foods, suggest,“Firstly, investing in alternative refrigeration technologies, such as solar-powered or battery-operated refrigeration units, can mitigate the reliance on CNG and provide more flexibility in transportation. Additionally, optimizing transportation routes and modes by leveraging a combination of road, rail, and sea freight can help reduce costs and mitigate the impact of limited air cargo options. Collaborating with logistics providers to negotiate better rates and streamline processes can also contribute to more efficient supply chain management.

Furthermore, implementing advanced tracking and monitoring systems to closely monitor temperature throughout the transportation process can help ensure product integrity. Lastly, investing in local cold storage facilities strategically located near distribution centers can help minimize the need for long-distance transportation and reduce reliance on expensive air cargo. By adopting these measures, companies operating in the frozen foods segment can enhance the resilience and efficiency of their supply chain operations in India.”

In the ever-evolving landscape of food distribution, the cold chain emerges as the unsung hero, especially for dairy products post-pandemic. As consumers pivot towards packaged items, the integrity of the cold chain becomes paramount, preserving not just the freshness of dairy goods but also their nutritional value and safety. Manufacturers, as custodians of quality, bear the mantle of ensuring that these perishable delights maintain their promise of long-lasting goodness through meticulous cold chain management. It’s not just about delivering dairy—it’s about delivering confidence and satisfaction, one chilled link at a time.

Shedding light on the importance of proper cold chain management in place, Kulvir Singh, a prominent distributor and HoReCa sales consultant says, “Cold chain management is crucial in the distribution of dairy products, especially in the post-pandemic era where consumer preference for packaged items has heightened. Maintaining a seamless cold chain ensures that dairy products retain their freshness, nutritional value, and safety from farm to table. With heightened concerns about hygiene and food safety, consumers increasingly rely on packaged dairy items, emphasizing the importance of maintaining optimal temperatures throughout the distribution process. Manufacturers bear the responsibility of ensuring that perishable dairy products maintain long-term consistency through rigorous cold chain management, which not only safeguards product quality but also maintains consumer trust and satisfaction.”