Supply Chain in the Travel Industry
The travel industry is an industry that is in constant change. It is the type of industry that must change with the times, including how it conducts business, how it sells its products and services, and how each link of their supply chain works and connects with the rest of the chain. While each brick and mortar location and travel website are similar to their counter parts, each one has a varying supply chain they use in order to get their product and services to the customer. We will take a look at how a brick and mortar travel agency uses its supply chain, and how changing to a website location can and will affect their supply chain.
Supply Chains
Let's begin by understanding what exactly a supply chain is and what it does for a company. A supply chain, or supply network as it is sometimes called, is a coordinated system of people, activities, information, organizations and resources involved in moving a product or service in a physical or virtual manner from the supplier to the customer (Wikipedia, 2007). Supply chains transform raw materials and components into a finished product that is delivered to the end customer. In this case, the travel agency must be able to connect the airline, hotel, car rental, cruise lines and event tickets to the customer wishing to take a trip to a particular location and meet their individual wants and needs for that trip.
Brick and Mortar Agencies
Travel agencies began years ago by opening brick and mortar locations throughout the United States. They would open up offices located conveniently within the cities around
the country so that many people could utilize their services when planning a trip. A brick
Supply Cha...
... middle of paper ...
...e added to the chain that include the purchasing of website names, links, and overall creation of their website to be used. And lastly, links need to be made to financial institutions so that the customer can purchase what they want from the website through an electronic means of transferring money, either directly from their own bank or through a credit card.
Summary
In comparing the differences in the supply chains used by brick and mortar locations versus virtual agents, the chains are similar in many ways, yet have great differences as well. Brick and mortar relies upon personal interaction through agents and agreements with their suppliers. Virtual websites pre-purchase reservations and tickets and offer them directly to the customer at a discounted rate, cutting out virtual links of stores and people, but add links of Internet commerce and availability.
The corporation can use its name as its strong base to attract the attention of new customers as well as to make certain that it is holding on to the old ones. Furthermore, economy of scale plays a significant role in this industry. Travelodge has a higher profitability aspect than the single operations (Wilkinson, 2013). If a new competition enters the market, they will find it difficult to compete with Travelodge as setting a proper quality and price regarding the economies of scale takes time. For Travelodge management, the capital intensive industry is tied with the fixed costs which make the entry of any entrant extremely
As the world’s largest travel agency, American Express offers travel and related consulting services to individuals and corporations around the globe. In fact, American Express Travel Related Services is the largest part of their business and generates around half of the Company's profits. AXI has proved a successful, readily adaptable corporation for over 150 years. In 2000, AXI was organized around three segments: Travel Related Services, Financial Advisors, and the American Express Bank. This case analysis focuses on the Travel Related Services segment.
A supply chain is a quality network of manufacturers, suppliers ,distributors, warehouses and retailers who by planned and coordinated activities develop products by converting raw materials to finished goods.
has identified two market segments to focus on, Travel and Workhorse. One key ingredient to help drive business is to have a brand champion for these markets. While we currently have at least one at each location, more will be hired and trained to take care of these key markets. Both of the markets identified, want easy to access service location with well-trained employees. If a customer comes in and has a question about the product we will have more than enough staff there ready and able to assist them.
In addition to the change in behavior of consumer, many companies or retailers change the sales channel combinations. The greatest impact of the Web-bases electronic revolution has occurred in companies adopting the click-and-mortar approach. Click- and-mortar is one the strategy used by the companies or retailers that they continue to conduct their business in the physical locations and have added the electronic commerce component to their business activities. According to one study, 37% of United States retailers are selling through a combination of the internet, in stores and catalogs. This represents a growing demand for the business-to-customer package delivery service.
This website links to a report on the increasing number of travel agents within the past number of years.
Royal Caribbean Cruise Ltd (RCCL) has two distinct supply chains which create a unique challenge. Each supply chain is managed by a Provision Master. The first supply chain includes all food, beverage, and lodging inventories that needed for the trips. The second supply chain encompasses “corporate spend” materials, such as office supplies, printing services, hardware and software, printed materials, computer supplies, marine consumables (spare parts, fuel, lubricants, any and all services associated with the ship maintenance and etc).
In business terminology, supply chain is the name given to a network of facilities and distribution options that performs the functions of procurement of materials, their transformation into intermediate and finished products, and then later the distribution of these finished products to customers. Although it may seem that supply chains are only important to manufacturing industries, they exist in service industries also. The actual level of its complexity may, however, vary greatly from industry to industry and firm to firm.
Ferdows, K., Lewis, M., & Machuca, J. A.D., 2003. Zara. Supply Chain Forum: International Journal, 4(2), 62-66.
Zappos creates a supply web, to maintain sales growth and for the ease of customers. It increased zappo’s sale of products in the online-market; thus, improving the revenue and yearly profits. On the other hand Zappos supply chain was not as effortless as the linear process of placing orders with its suppliers, stocking inventory and shipping orders to the customers. Zappos brought 6pm- a discount online retailer, so the 6pm dot com website sold a product that was in the Shepherdsville warehouse, exactly in the same way as the Zappo’s website.The products were stored in the same way for both sites, even though these two websites shows different
As aforementioned, there are three market segments in travel agency industry, however, this analysis will focus only on outbound tourism which is the main stream of revenue for the industry. In light of above analysis of the principle and factors influencing demand, exchange rate can be classified as price in the short-run. Travel prices including the price of transportation and the prices of goods and services consumed at the destinations (Dwyer et al., 2016), will rise significantly, thus, lead to higher price of travel agency service. Classified
I will be discussing the use of e-commerce in a “brick and click” organisation. Click organisations are E-commerce sites, like Tesco paly.com, Argos, and amazon. The reason why they are called click is because you have to click to interact with the online store. A brick organisation is your store in the high street, like Gamestation M&S. But the Brick Organisation tends to also have an online website so they can be there for customers 24/7, for example Tesco.
Sustainable supply chains (SSC) are a process, which employ purchasing policies and procedures that assist sustainable development at the centers of tourism. This aspect of tourism is particularly vital to implementing feasible tour operator practices. The final tourist product featured in both glossy brochures and enticing websites must be considerate of viable sustainable supply chain management to create long lasting destinations for the consumer. This report will discuss the benefits and drawbacks of SSCs, and attempt to assess how SSCs are used as a popular management tool in the tourism industry. “Sustainable supply chain management (SSCM) encapsulates the trend to use purchasing policies and practices to facilitate sustainable development at the tourist destination.” (Font and Tapper et al., 2008, pp. 260--271). To expand on this, there is an expectation that Supply Chain Management “emphasizes the logistics interactions that take place among the functions of marketing, logistics, and production within a firm and those interactions that take place between the legally separate firms within the product- flow channel.” (Pulevska-Ivanovska, L, 2007: 11) This definition encompasses the three main components of supply chain management: marketing, logistics and production. According to Dr Xavier Font, the tour operators’ product depends on 3 major sections: accommodation, transport and activities. (Font, X, 2011: 260) Supply chains vary depending on the nature of product and/or service. (‘UNEP’ 2013: 273) The diagram below illustrates the three main areas of impact: economy, society and environment.
Travel Today’s marketing plan product strategies include offering clients vacation packages, cruises, flights, hotels, car rentals, special events, and transportation to and from airports. The company offers last-minute deals to Mexico and the Caribbean to include airfare. Travel Today is offers travel opportunities throughout Europe by offering luxury, adventure, sport, and gourmet food packages. Travel Today is offers adventure packages to Mediterranean or Northern Alaska. Travel Today customizes travel packages. The firm believes that providing customers with exceptional value will keep them coming back.
Lee, H. L. (2004, October). The Triple-A Supply Chain. Retrieved April 29, 2014, from ftp.software.ibm.com website: ftp://ftp.software.ibm.com/software/emea/dk/frontlines/Tripple_supply_chain_Havard.pdf