Travel Industry Demand Management Competitiveness Term Paper

Excerpt from Term Paper :

Yet, there is still tremendous opportunity for many procurement organizations of travel industry operators to improve their performance as a significant gap exists between the Best in Class companies and the rest of the field.

Best in Class enterprises understand that technology is a process-enabler, not a process in and of itself; successful organizations have efficient, proven processes in place before introducing a new technology. This translates into patience in first perfecting the processes surrounding e-procurement and supply chain management first, then selecting adding in SRM and supply chain information technologies products aimed specifically at automating the tasks overall.

Best in Class travel operators understand the large change management issues at play in an e-procurement and the development of an overall supply change strategy. The fact that 70% or more of a supply chain integration projects' cost is used for planning and managing the change at the individual contributor level and it is clear to see how important the process of managing change is in an e-procurement and supply chain strategies.

Best in Class travel industry operators who are generating the highest returns on their e-procurement and SRM also have an executive sponsor which actively seeks out internal support for initiatives and programs, often being the first to endorse an overall program and evangelize its value. This is a critical role in the overall development of a successful supply chain implementation for any travel industry operator and has often been seen as the critical link in making these strategies successful.

Best in Class travel industry operators also have a much different set of supply chain priorities as they relate to the development of supply chain initiatives. Figure 1 show these priorities as defined by Aberdeen Research in their extensive research of the adoption of technologies by travel industry operators to ensure the highest performance possible for e-procurement and supply chain strategies.

Figure 1: Best in Class Travel industry Operator's Information Technologies Priorities

Additional lessons learned from research completed of the highest-performing services operators by Aberdeen and others include the following:

Supply chain visibility and planning multiple layers deep into the supply chain - in travel industry operators, producers and developers, sales of packages to other companies often is based on pricing quotes that include Available-to-Promise (ATP) and Capable-to-Promise (CTP) dates. ATP and CTP tell the customer when the tours and other services they have ordered will be available for delivery to their locations. These are two very important dates, as in travel industry and travel selling scenarios the delivery of purchased services from one supplier is immediately used in the development of a new travel service. In many services organizations that are critical parts of travel and travel industry operator's overall supply chains, every company is trying to minimize their inventory costs and how long they hold products to be used in the development of new services, and this is why ATP and CTP are two very important dates on a quote. The only way a company selling their services to a travel operator can be sure what they are offering can in fact be delivered given previous commitments and constraints is to create quotes ATP and CTP dates, and to make these dates accurately and with confidence, visibility into their supply chains is critical. Supply chain visibility refers to the ability of a manufacturer to see what is now available from its suppliers, and even from their suppliers. AMR Research makes this point clearly in their research completed on the use of supplier relationship strategies in travel programs, travel packages and broader definition of travel industry programs.

Vendor-Managed Inventory (VMI), supply chain optimization and the growth of Private Trading Exchanges (PTX) typify the growth of supply chain strategies in the world's leading travel industry companies. Specifically in the area of how these world-class companies are using their websites and electronic initiatives to provide both greater levels of inventory and pricing cost reductions for all members of the supply chain to accomplish their profitability targets, it is clear that best in Class travel industry operators are relying on these extensive programs to attain higher levels of supply chain performance and more flexibility in defining and delivering new programs. Inventory management is critical for

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