Inventory management is an essential part of running any business, and hospitality businesses such as hotels are no exception. It is essential because it has a direct impact on a business’s cash flow and profitability. In other words, it can make or break a business.
The art of inventory management lies in discovering and ensuring the availability of the right amount of whatever you are selling. For a hotel, that means the number of rooms available as well as the amenities inside the rooms, drinks for the bar, ingredients for the restaurant, and even tables in the restaurant. Customers will go elsewhere if you do not have what they want, so this is unacceptable. At the same time, stocking too much costs you more upfront and could lead to financial difficulties later.
A lot of factors go into striking a balance between these two extremes, such as setting the prices correctly and influencing demand through marketing. In the past, businesses relied on a combination of judgement, sales data, and periodic stock takes to get it right. Today, technology can provide businesses with up-to-the-minute data and statistical forecasts to help them manage their inventory much more effectively.
This guide is going to look at how automation solutions are helping improve inventory management in the hotel industry.
What is effective inventory management?
It is easy to think that inventory management is simply about maintaining consistent stock levels, but it is really about analysing supply and demand to set that level at the right point. This means that if the business had any more, it would be wasting company resources, while having any less would mean that there is not enough for customers.
The following are some of the most common practices that help businesses set the right inventory level/
Categorisation
Not everything in a business’s inventory will move at the same speed. Generally, more expensive items are not sold as frequently, but you do not need as many of them to generate the same income as cheaper items. Categorising inventory along these lines is something many businesses do. Hotels typically use this for their primary inventory, i.e. rooms. They have more lower-cost rooms than premium ones.
Tracking
Collecting key information about your inventory items is important for effective inventory management. In a hotel, for example, you might keep track of the brand and scent of shampoo along with what room type it was put in. This can help you see what customers like and dislike, as well as spot the factors that affect prices.
Auditing
Regularly counting stock is essential for making sure that items are not being stolen, that sales and orders are being recorded accurately, and that suppliers are keeping to their end of the deal. The latter can be very important, as unreliability and delays can cause big problems for businesses.
Can inventory management be automated?
As you can see, effective inventory management takes a lot of work. This is a problem because much of that work is administrative, e.g. physically counting stock and keeping records of orders and sales. It is necessary work, but it does not really contribute to the bottom line, and there is a significant risk of human error.
Many have now implemented an automated hotel inventory management system instead. You might think of this as a digital copy of your hotel’s inventory, typically stored on a cloud service. It provides a more accurate way of recording incoming and outgoing stock and can handle orders and invoices. For example, it can automatically reorder items that are running low and mark rooms as available or booked across many different websites.
Below, we will discuss more of the benefits of automating inventory management and how doing so can help fine tune your business for success.
The benefits of automated inventory management
Automated inventory management solutions can help businesses meet many different kinds of goals. These can include things like improving customer satisfaction rates and minimising waste. Here are some of the top benefits that hotels love.
Anytime inventory visibility
When you automate inventory management for your hotel, you can log in anytime and get an accurate picture of what rooms are available, how many amenities like soap or water bottles you have left, and much more. You can expect your automated system to present a much more accurate picture of what’s available than when things are recorded by people, which means stocktakes can be done less often.
Statistical forecasts
Automated solutions also help you turn that extra visibility into useful data for making decisions. For example, they can make predictions about demand for rooms or services based on data they have collected in the past. This can help you stay in that sweet spot between overstocking and running out.
Manage suppliers better
Automated inventory management software makes it easy for you to find out which suppliers are reliable and which ones are not. They also let you easily pull up and compare the prices of any vendors you’ve worked with in the past. This can be very helpful for finding consistent suppliers at a fair price and ruling out any overpriced or problematic ones. You can also use the data you have about supplier performance to help negotiate contracts in the future.
Minimising wasted resources
While some amount of overstocking can be useful in case of any unforeseen supplier issues, it can be problematic when you are dealing with perishable items such as food. Ordering too much can be wasteful, but on the other hand, so can having things delivered in regular small amounts which could easily be delivered less frequently and in larger quantities. An automated system can help you see where you can be more efficient.
Reduce labour costs
Without the need for staff to do tedious stocktakes or make orders, they can focus instead on delivering a great experience for your guests. An automated system can help you essentially expand your team without increasing your wage bill.
Conclusion
Automation can be a great way to make better use of your hotel’s resources, and this will soon show up on the bottom line. Inventory management is a good candidate for automation since it involves both sales and expenses.
Want to boost efficiency in your hotel operations? Head over to Buzz Revolve for inventory management strategies that work.
