Supply Chain Management, Brick and Mortar - Essay Example

Supply Chain Management and Section # of upply chain may be defined as the flow of resources into as well as out of the collective operational system of an organization. When an organization, whether manufacturing concern or the service providing one, operates and interacts with its suppliers, a series of inflow and outflow of resources takes place; these resources may be tangible or intangible. Supply chain is the umbrella term to describe all that flow. The importance of supply chain can never be ignored in any of the business, regardless of its nature of operations. As it is the supply chain that determines the efficiency of the overall business to a great extent and its effectiveness reflects and ensures the effectiveness of other front end business processes. For example, when an efficient supply chain enables the timely and cost effective procurement of the services, the possibility of providing goods or services to the customers increases many folds. The travel agency business is no exception in this regards. This paper intends to explore the supply chain under ‘brick and mortar system ’and compare the changes that has been brought due to the interventions of technology on the supply chain. Before moving further few terms need to be explained. Brick and Mortar means manual way of working. Click and mortar means combination of manual and automated working; whereas, click only means totally automated working. The business of travel agency in older times, when the brick and mortar system was in operations, was mainly manual and the service they used to provide was to arrange for the flights, booking of the hotels and to arrange any other service required by the customers during the travelling. Let us explore the supply chain for the travel agency under brick and mortar system. Under manual system, the participants of the supply chain were, the travel agent, the hotel administration, the airline ticking staff and other salesman for relevant services, for example, if the customer is being provided with the car rentals, then the car rental vendor will also be the participant of the supply chain. The process of supply chain was very simple yet bearing a lot of demerits. The process was like, the travel agent used to have the agreements with different vendors and on receiving orders, they used to go to those vendors, book their service and get the tickets/ receipts etc. Though it was very simple supply chain, yet it bore many discrepancies, for example, suppose that a travel agent books the ticket for a particular destination for his journey but later on finds out that all the tickets has already been booked. Another problem was time and efforts required in getting the physical evidence (receipt/ tickets). All this made the work of a travel agent a tiresome and the hectic one. As the information and communication technology evolved over the period of time, the travel agency business also got influenced by it. Initially the use of technological devices was considered as a luxury, but later on people realized that it has become as necessity, otherwise their survival in the industry would become merely a dream. It was thought because of the fact that the use of technology especially in supply chain management not only helped those travel agents to overcome those demerits of the brick and mortar system, but it also helps them in gaining the competitive advantage. The web based / computer based supply chain management for the travel agency is as follows. The vendors for the travel agent remain same. But they are now connected through internet. The travel agent has the real time information of the level of services available and on the basis of this, he can provide the actual information of various vendors available, providing the customer a range of services to undertake. One the customer chooses a particular service; he enters the transactions, pays online and gets the online challan or receipt. This way, the true and real time information is available all the time and easy and quick transactions can be performed, thus reducing the time and efforts required. This way, this has not only helped the travel agents serving their customers more efficiently, thus gaining a strategic edge over competitors, but it has also helped the vendors to increase their sales many folds. Many of the travel agencies provide all these interfaces through their websites to their customers, thus making their customers available with more choices to take an informed decision. Moreover, one more strategic advantage that they have gained through doing so is that now as soon as the customer commits the transaction, the data gets stored in their database. By analyzing this data, now these travel agencies can also analyze the trends like for a particular destination, travelers like what sort of hotels etc. Thus, based on these trends, they can design their packages accordingly. The transition from the brick mortar system to the click mortar system has been done in following manner. First of all, the travel agencies realized the need for having an online presence and thus developed the alliances and agreements with various vendors so as to convince them to link them to their system to provide the real time data. The interfaces were developed to let the customer make their bookings, selecting packages and paying for them online. These interfaces were then made available on net on their websites. When the customer commits a transaction, an entry is made in the system of the vendor and this way that particular service is booked for the customer at the same time, thus the lapse or communication gap has almost been eliminated. The customer is provided with the online proof of transaction (such as e-ticket etc.) This type of supply chain has provided following advantages to the travel agents. First of all, the online presence has now become essential for the survival of these travel agencies. As the data is captured and immediately stored in the database, the niche marketing is possible. The time and space frame are by means a constraint at all, since everything is being done online. The requirement for Human Resource has also been declined, thus reducing the operational cost. Through credit cards, quick and easy payment is possible, as previously there used to be the risk of cheques getting bounced. Another impact of such supply chain is the vertical integration. Now airlines are themselves acquiring various travel agencies to boost their sales. As trend analysis is possible, so the provision of the right and customized package that he wants is now possible. The retailer supplier relations are now changing. The information systems now placed at the vendor’s workplace to connect them are now making them to remain bound with that travel agent, if they want to get benefit of the travel agent’s system, or vice versa. The retailers (travel agents) are now becoming from the intermediaries to infomediaries, someone not only passing the information but managing information from multiple sources and interpreting and presenting them the way user wants, it also includes the price negotiation over web etc. To sum up, use of technology in the supply chain has changed to a great extend, the way the travel agents used to do the business. Now, it has become essential for the travel agents to be highly responsive to the changes occurring in the technological arena and not only adapting to it, but to take its best possible use in order to gain the strategic advantage. References Ayers, J. (2001). Making Supply Chain Management Work: Design, Implementation, Partnerships, Technology, and Profits. chicago: Auerbach. Hugos, M. (2006). Essentials of Supply Chain Management, 2nd Edition (Essentials (John Wiley)). New York : Wiley. Chopra, S., & Meindl, P. (2006). Supply Chain Management (3rd Edition). New York: Prentice Hall. Handfield, R., & Jr., E. (2002). Supply Chain Redesign: Transforming Supply Chains into Integrated Value Systems. Albany: Ft Press. Read More