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Tourism Supply Chain Management: Why? Print E-mail

Pairach Piboonrungroj
23 July 2009

The last article we talked about the similarities and differences between tourism logistics and tourism supply chain management. I would like to thank Asst. Prof. Komsan for his article ?The heart of tourism logistics? that clarifies what we need.

So far, approximately a year, I?ve presented, talked, discussed about my PhD research ?Tourism supply chain management? with various people. The question that I have been asked most of the time is ?Why do we need to consider the tourism supply chain management??

I was almost blown away when I firstly came across this question.
It is not that I have no idea how importance is the tourism supply chain management but I don?t know how to explain precisely. It was like I was asked why did you decided to study PhD?

Here I will answer my ex-killing question.
Proposition One: How could we (firms) benefit from tourism supply chain management?

The immediate impact is cost reduction. It could be 50% cost reduction on inventory and transport. This is why Toyota defeated the big three especially GM. Toyota has originated and successfully the Toyota Production System, known as Lean Operations. By this new way of management, mass customisation coined in Ford has found its end. Lean techniques were also implemented in service industries like health care and got a highly improvement on their operations and benefits. Lots of research has been done in Cardiff?s Lean Enterprise Research Centre.

Better service level, in tourism it was known as tourist?s satisfaction or perceived value. Supply chain management aims to deliver the products (goods or services) that customers or tourists really want. For example, low cost airline should focus on minimising cost and just keep other things only on the standard level. There is no need to provide FREE foods or even snack for low cost airlines because low cost customer will try to find the airline that offer the lowest fare NOT the best service or delicious free foods. This is why there is only AirAsia that can make profits in Thailand. Another good case is Tesco that also aim for the lowest price of products with acceptable quality. Tesco does not compete with M&S that offer high quality products. Then both Tesco and M&S can survive in their markets.

However, Tesco could be the best supply chain management practice in the UK. They use various techniques such as Vendor Managed Inventory or Factory Gate Pricing that were researched in Cardiff?s Logistics System Dynamics Group (LSDG) where I am now.

Tesco can actually reduce their inventory cost by using the model of my supervisor, Dr. Stephen Disney.

You may want to listen to my supervisor talk about his research on one of the most costly problem in supply chain, Bullwhip Effect.

We may also mitigate bullwhip in tourism supply chain too.
Lower cost but can deliver higher satisfaction to tourist = Benefits of tourism supply chain management.

Next week, we will see what happen to those firms or companies that ignore tourism supply chain management. Can they survive???

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