Get instant access to this case solution for only $15

Service Purchasing at the Sunny Hotel Case Solution

Solution Id Length Case Author Case Publisher
928 1101 Words (5 Pages) Harvard Business School
This solution includes: A Word File A Word File

There are several differences in the purchase of good and the procurement of services depending on the nature of the business. Firstly if the businesses main focus is to provide service to the customers then it will exercise great precaution in outsourcing. As noted that in recent times there has been a shift from goods purchase to service providers in most of the businesses as profit margins in the services sector out weight the profit margin of goods purchase businesses. Moreover, in case of goods there is a warranty that if a good is of inferior quality then it may be replaced but with services a more human interaction is involved. You may change the service provider however, it is a cumbersome, time consuming and costly exercise as compared to good procurement.

Following questions are answered in this case study solution:

  1. What makes the procurement of services different from that of the purchase of goods and materials? 

  2. Define the alternative services that could be purchased by the hotel or in addition to the current one?

  3. Do you think a centralized purchasing department is a logical way to increase purchasing efficiencies? Is it an advantage to manage service purchases by the Purchasing Department? Are there any other ways to improve the purchasing efficiency of services?

Service Purchasing at the Sunny Hotel Case Analysis

Secondly, as mentioned that with the increase in tourism the impact on the purchase of services outnumbers that of purchase of goods. As most tourists would look greatly at the quality of services being offered by the resort rather than the goods they have to offer. It would be more appropriate to say that goods purchase is subset of the procurement of services as it helps in the management and profitability of the services sector.

Lastly as mentioned by the author that before the services were managed by each department whereas product purchase department was centralized but once, both the departments have been centralized the supplier choice is also catered which has led to bad decisions, Thus in some cases it should have remained with the respective department so that no such instances would occur. Even this way some departmental heads have no say in the purchase of products. Moreover, with centralization the services cost has decreased while quality has improved in some instances.

Define the alternative services that could be purchased by the hotel or in addition to the current one?

There are several alternative services that can be purchased by the hotel. However, care must be taken that those services whereby there is a direct customer interaction should not be outsourced.

  1. Laundry: the bell boys can collect the clothes and handover them to an outsourced dry cleaner.

  2. Maintenance of Sports Facilities. The resort can construct sports fields and outsource the staff to maintain the facilities.

  3. Pick and Drop Facility from the Airport and sightseeing and shopping near the resort.

  4. Reconstruction and maintenance staff like carpenter, plumber, and electrician.

  5. Gardening, Floral and landscape management can be outsourced whereby the ambiance of the resort can be maintained.

  6. Maintenance staff for the continuous working of Air conditioners and boilers.

  7. Lift maintaining Staff which ensures the smooth operations of the lifts in the resort.

  8. Operating Supplies Purchase and the Fixed Assets like furniture can be outsourced.

Outsourcing these facilities will have a greater impact in reducing cost while also ensuring that there is a minimal contact between customers and these facility providers.

Do you think a centralized purchasing department is a logical way to increase purchasing efficiencies? Is it an advantage to manage service purchases by the Purchasing Department? Are there any other ways to improve the purchasing efficiency of services?

Maintaining a centralized department for the purchasing services and goods has reduced the cost nearly by 30% whereas the service quality has improved as well. However it is important to note that this decrease in cost is solely attributed to services purchasing as the good purchasing was already centralized before the centralization of services sector.

However in my opinion the efficiency will be compromised as only the relevant department will know its needs and moreover with the lack of representation by senior members of the respective departments this situation will be aggravated. Moreover, the selection process for the service provider can be made efficient by engaging the relevant department as they will better understand various service providers in the market. Lastly, by ensuring their participation the tendency to make wrong decisions will be curtailed as well which will further enhance the operational efficiency and reduce costs to hire new providers.

The lack of say of relevant department can be curtailed by establishing a process flow to hire new providers. Firstly the relevant department should highlight the need for new provider. Moreover, it should also carry out the cost benefit analysis of the said service. They should also supply the procurement department with the services they need from the provider. Lastly they should be allowed to propose some vendors for selection.

Then a committee should be constituted that comprises of senior members of the procurement, finance and relevant department. They should analyze all the proposed vendors by the department and the procurement department. After mutual consultation they should finalize the service provider. This way efficiency in terms of cost, say of the relevant department and the quality of service will enhance.

Get instant access to this case solution for only $15

Get Instant Access to This Case Solution for Only $15

Standard Price

$25

Save $10 on your purchase

-$10

Amount to Pay

$15

Different Requirements? Order a Custom Solution

Calculate the Price

Approximately ~ 1 page(s)

Total Price

$0

Get More Out of This

Our essay writing services are the best in the world. If you are in search of a professional essay writer, place your order on our website.

Essay Writing Service
whatsapp chat icon

Hi there !

We are here to help. Chat with us on WhatsApp for any queries.

close icon