ALS2033
SERVICE LOGISTICS
SEMESTER FEBRUARY
SESSION 2016/2017
CASE STUDY
CASE STUDY no: 2 [SUNNY HOTEL]
NAME OF LECTURER (TUTORIAL): MS ROSMAIZURA BINTI MOHD ZAIN
LECTURE & TUTORIAL GROUP: L3T2 / G4
Group Members / Programme / Matric No.AZIZATUL NADA BINTI ISHAK SHAIRAZI / SAL / A15A0076
MUHAMAD AIZAT BIN MUHAMAD SUKOR / SAL / A15A0385
KAUTSAR BINTI HAFIZI / SAL / A16A0249
HAZLIN BT HADZIL / SAL / A16A0211
NUR IZATUL SYAFINAZ BINTI KHAIRULL AMIR / SAL / A16A0700
1. What makes the procurement of services different from that of the purchase of goods and materials?
Referring to the wikipedia, the word purchasing refers to a business or organization attempting to acquire goods or services to accomplish the goals of its enterprise. As we know, purchasing is the formal process of buying goods and services. The purchasing process can vary from one organization to another, but there are some common key elements and the process usually starts with a demand or requirements.
The word procurement also referring to the wikipedia which means the act of finding, acquiring, buying goods, services or works from an external source, often via a tendering or competitive bidding process. Procurement also involve the process that used to ensure the buyer receives goods, services or works at the best possible price. So this is important when aspects such as quality, quantity, time, and location are compared. Companies and public companies often define processes intended to promote with fair and open competition for their business while minimizing the risk. Procurement generally involves making buying decisions under conditions of scarcity. Procurement activities are often split into two distinct categories, direct and indirect spend.
The different between procurement of services from that of the purchase of goods and materials can be seen from several aspects. First, procurement of services has high levels of uncertainties compared to procurement of goods. This is because services are intangible which means it cannot be touched, looked and tested however goods and materials are tangible which means it can be seen in physical shape and touched. Furthermore, services cannot be returned or resold when damaged and unsatisfied as compared to goods. On the other hand, services are perishable and cannot be stored for future uses whereas goods can be stored for a large or small quantity for future demands. It also can be transported from one place to another.
Secondly, most service providers are small scale unlike those supplying goods and materials. The process to purchase the goods is straight forward and easy which is involves selecting the supplier, specifying the characteristics of the goods, and finally receiving the goods. The differences will make the company to limit the award of contracts to the small firms that do not have the delivery quality of services as their desired technical qualifications. To purchase goods and materials, prices and quality will become the main focus but to purchases services, the knowledge, experience and the affordable prices will become priorities.
However, the process to purchase services is different because the transformation, delivery and receiving service always happen at the same time. For example, Sunny Hotel currently purchases and contracts for the outsourcing of the services such as cleaning and security services. So, the provider of the service will deliver the service and we will able to judge and assess the service right away after completion. It is not possible to assess the quality of the cleaning and security service before it is delivered unless if the supplier was delivering a tangible goods.
On top of that, Sunny Hotel cannot ensure the quality physical inspection of goods needed before delivery but in case of services it is not possible to judge the quality of service during servicing. So the characteristics of services and goods is clearly indicated that the both types of procurements is totally different and opposite to each other. This means the problems at Sunny Hotel is on procurement of services and from characteristics it is understood that the service procurement is more complicated than the purchase of goods and materials.
2. Define alternative services, or additional ones, that could be purchased by the hotel.
Alternative services are services that are not generally provided to the business, but can be provided upon request for a cost. The company currently purchases and contracts for the outsourcing of the Security, Cleaning, Animation, Insurance, Software support, Staff training and Food storage & delivery services. The company can add the others alternative such as Concierge service. Concierge service is the specialty ensuring hotel guests have pleasurable and personalized experiences. Hotel concierges work to make guests happy and ensure that travellers have problem-free stays. They often make special arrangements before guests arrive, and fill any special requests guests may have. Concierges take messages for guests and make sure that the messages are delivered. They also receive guest mail, packages and messages and ensure that the guests receive them. Concierges make recommendations for restaurants, attractions, and night life hot spots, and they may also answer detailed questions about the city or town in which the hotel is situated.
Tourism services also can be created by the company. Tourism services is defined as the services one receives from their tourist provider. It can include things such as the airline, the hotels and entertainment establishments that they go to. The company can get many benefits from the tourism services. This is because most of the customers are come to travel and this can be the opportunities to the company and take the advantage of the chances. The tourist product can be analyzed in terms of its attraction, accessibility and accommodation. Of the three basic components of a tourist product, attractions are very important. Unless there is an attraction, the tourist will not be motivated to go to a particular place. Attractions are those elements in a product which determine the choice made by particular tourist to visit one particular destination rather than another. The attractions could be cultural, like sites and areas of archaeological interest, historical buildings and monuments, flora and fauna, beach resorts, mountains, national parks or events like trade fairs, exhibitions, arts and music festivals, games
Third, the company can created the translation services that are the most important for the big company such as Sunny Hotel. This can help the customer to make a better communication and this also can increase the customer satisfaction. Translation service also can be used for the in-house literature of a company; documents such as menus, itineraries, in-room directories, maps, rental information and safety instructions should all be available in many different languages in order to cater to the world audience that the company will be trying to attract. Having staff who are multilingual is an advantage, but some businesses might consider this a luxury they cannot afford to invest in; translating all on-site informational documents is the next best solution for companies who are not in a position to hire staff with multiple languages.
Next, the company can create maintenance service. Maintenance of electrical, mechanical and other repairable stuff is an important part of any Hotel. Providing non-stop heating in winter and cooling in summer is not possible without a reliable maintenance service. It is good to have an outsourced service for maintenance of different appliances and equipment used in the hotel to have satisfied customers. For instance if there is an electrical problem occurred in the kitchen it results in disturbance in all other services. Therefore well maintained equipment is very important to have a great deal in other services.
3. Do you think a centralized purchasing department is a logical way to increase purchasing efficiencies? Is it an advantage to have the purchasing department manage service purchases?
Yes, I do believe with centralized purchasing department is a logical way to increase purchasing efficiencies. Centralized purchasing is the control by one headquarters department of all purchasing that is undertaken by a business. Some advantages are quantity of purchases and bargaining power and a consistent purchasing system throughout the entire corporation. Purchasing can help the firm's competitive edge by providing better materials and reliable suppliers, while being able to work closely with the suppliers and being able to take advantage of the suppliers expertise in improving the quality of raw materials, and also being able to involve their suppliers and purchasing. It keeps the organization spending in one location that can be easily checked. It is good for the company and it also make the smooth flow during run the business, I think it is an advantage to have the purchasing department as manage service purchases.
Many large companies have grown quickly and smoothly. This might they have several separate purchasing departments that are each responsible for purchasing a group of products or services. There are a few advantage purchasing department manage service purchases. Among the advantages are allows for fewer overheads, staff can be trained in purchasing and how to minimize costs and suppliers know where and whom to contact which makes supplier contact much easier. Staff also benefit with better training and support and the ability to build better relationships with suppliers.
According to the case study, organizational changes the purchasing departmentof the hotel was started by Murat. He started work at the Sunny Hotel/Spa & Wellness Resort in 2015 and he also holds an undergraduate business degree and a master’s degree. Mr Murat make an observation about the purchasing department when he started at the hotel, he said the purchasing department was only focusing on the supply of goods. There were the staff-training services contract was arranged by the Human Resources Department. The approach taken by Mr Murat is to consolidate the purchase.
4. In Table 1, the Supplier Selection and Evaluation Matrix for “purchasing goods” is illustrated. The same criteria and techniques are being used to purchase service at The Sunny Hotel. Do you think that some other distinctive criteria for the supplier selection and evaluation of service purchases are needed? If yes, please briefly define them. How would you present them to the company as a consultant?
Yes, some additional criteria for service supplier selection are needed in the criteria applied for the purchasing goods supplier. As already explained above, service purchasing is more complex. This requires some unique criteria in the supplier selection process. One of the additional criteria is provision of support or auxiliary services. Suppliers of services should be able to provide support services when needed. This is important in cases where the services delivered by the supplier fail to meet the expected standards or scope. In such a case, the service purchaser should contact the supplier to provide the additional services required.
Another criterion that should be added is quality level. This can be achieved by determining whether the service provider has quality certifications such as ISO 9001. Quality standards and accreditation is important in determining the competence of a service provider. This is one of the only tools that can be used to assess the quality of services to be provided before the service is actually delivered.
Besides, process and design capabilities criterion should be added. The supplier should have up-to-date and capable services, as well as process technologies to produce the services needed. Because different service processes have various strengths and weaknesses, the organisation must be aware of these characteristics upfront. When the organisation expects supplier to perform competent in design and production of services, it should asses the hotel process capabilities in provided good services when needed to their customer.
Lastly, when selecting a supplier for services, financial condition and cost structure of that supplier should be considered to gage strength of supplier. Financial stability is an important element in services so the supplier can manage and the variety and variation in services and demand with flexibility. An assessment of a potential partner’s financial condition usually occurs during the evaluation process. Evaluation teams typically evaluate the different financial condition that determined whether a supplier can invest in resources, pay its suppliers and its workforce, and continue to meet its debt and financial obligations.
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