Consider this. You’re the general manager at a hotel. The weekend is about to kick in and you’re expecting it to be a busy one. Room service is rushing from one room to the other to make the rooms.
Suddenly, the phone rings.
“The washing machine broke down. We’re out of clean towels.”
Should you have seen this coming? Let’s find the answer.
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What’s inventory management & why is it important?
Not having fresh towels right before peak hours is certainly not ideal for a hotel. But is the general manager at fault? Accidents happen all the time.
That, however, doesn’t mean things are completely out of your control. The first step to preventing sudden outbreaks and streamlining operations is to gain complete oversight of your inventory. What kinds of items do you have? And in what quantity? Who should you contact if something goes missing?
This is called inventory management. It is the act of ordering, storing, and handling your company’s perishable assets in order to run an efficient business.
Back in the day, organizations would use paper files and binders to track inventory and ownership. Today’s digital boom has shifted many businesses to excel sheets or inventory management software.
Regardless of the method you use, it’s important to know what your inventory looks like to be able to foresee upcoming requirements and prevent asset loss.
Taking it a step further: proactive inventory management
Several businesses rely heavily on inventory management for everyday operations. Hotels, healthcare facilities, factories, and facilities management are a few of the prominent examples.
They mainly adopt one of two approaches. Let’s take a look at these.
The first is reactive inventory management. When a machine breaks down or a specific stock runs out, the team rushes to fix the problem. This is a reactive approach to inventory management - you wait for a fire before the firefighters are called. This of course works and is beneficial for companies that are just starting out.
But there is another way to go about inventory management - one that helps you prepare for the fires before they take place.
Proactive inventory management lets you carefully monitor the state of your inventory and plan ahead of time. It also accounts for seasonal trends and past data to better predict demand and accordingly prepare supply.
Hotels that adopt proactivity run periodic audits, inspections & maintenance checks for all of their assets. These preemptive measures enable hotels to make sure that every amenity is available for their guests and they can offer them a memorable stay.
How does this help?
Hotels deal with hundreds of items every day that are moved around and/or used up. These include room and toilet essentials, restaurant inventory, cleaning equipment, and office supplies. A 5-star guest experience requires careful stocking and tracking of these items.
This is simply not possible if you aren’t being proactive with your hotel inventory management. Gaining complete oversight over your inventory helps you know exactly which item is where, when it needs to be restocked, and how much longer can it be used for.
Here’s why this is valuable.
- Proactivity helps keep your inventory in top shape at all times, reduces customer complaints, and improves their overall experience.
- You can match demand with supply for all your perishable hotel items.
- It lets you track the end-to-end lifecycle of an asset so you can stock well in advance.
- You’re able to calculate inventory costs and optimize profits.
- Timely maintenance and inspections also extend the life of your individual assets, helping you get the most out of them.
- Hotel managers have to deal with fewer breakdowns and downtime.
- Serviced equipment bolsters security.
- You’re able to reduce inventory shrinkage and lose less time searching for lost items.
How can hotels adopt proactive inventory management?
Now that we know why, let’s get into the how. There are two parts of proactive inventory control that hotels need to take care of. Both are equally important to ensure smooth operations at any institution.
1. Operations management
When you’re working in the hotelier industry, there’s a lot that needs to be tracked. Most hoteliers treat their rooms as the primary inventory that needs to be active and serviced at all times. This is your hotel's cash cow.
The secondary inventory includes everything that goes into putting your rooms and hotel services together including:
- Room necessities such as linens, pillows, and mattresses.
- Toilet essentials such as shampoos, conditioners, soaps, and towels.
- Snacks and drinks for minibars.
- Restaurant, bar, and gift shop supplies.
- Staff supplies such as uniforms, office supplies, and cleaning equipment.
All these things need to be available and in pristine condition to offer a comfortable stay to your guests. You’ll also want to know where they are so they can always be fetched in time for your services.
So, if someone is putting a floor’s laundry into a wash cycle, they can mark the items under maintenance. This way, reinforcements can be prepared in a timely manner for the next day.
You can also schedule quarterly audits of your inventory to reassess items that are available, gaining popularity, or losing demand.
2. Timely maintenance
The second part of the equation is providing both preventative and reactive maintenance for your machines. This includes the HVAC system, electricity, and plumbing.
You’ll also want to maintain two types of inventories for your maintenance activities:
- Machine parts inventory: These are needed to facilitate repairs and breakdowns. By tracking these, you’re able to see what items are hard to get so you can stock them well in advance.
- Supplies inventory: This is equipment that helps service and cleans your machines such as measuring devices, lubricants, and servicing tools.
Tracking and optimizing both of these are going to be crucial for the smooth operations of your property. Proactive inventory management calls for rigorous preventative maintenance so be sure to schedule checks and inspections periodically.
A step-by-step guide to setting up a proactive inventory control process
Inventory management for hotels can seem like a daunting task but dividing it into smaller steps will help you overcome it in a matter of days.
1. Tag and log your items
Start off by tagging all your items and logging them onto an online database. Each asset of value should have a unique identifier so employees can tell them apart. You can also add serial numbers based on the department that is responsible for the asset. For instance:
- HOUS - 0001: Series for housekeeping inventory
- REST - 0001: Series for restaurant inventory
- RECE - 0001: Series for reception inventory
In addition to tagging these items, add location, quantity, costs, and status. You can also add an owner to indicate who is responsible for each item at any given time.
2. Set a baseline for all your supplies
Identify the quantities you need for optimal functioning. This will make it easier to have backup inventory at all times. You’ll also be able to understand when to re-order stocks.
3. Add vendor data
For each of your inventory items, add vendor details to streamline orders. Add contact details and information for the point of contact. This will make re-ordering fast and hiccup-free. You’ll also be able to maintain quality and consistency by sticking to the same vendors.
4. Schedule inspections and maintenance
Once all your items are in the database, you can add an inspection and maintenance schedule for them.
Start with your rooms. Add a daily inspection for every room in your inventory. This will include tasks such as:
- Replacing the linens
- Cleaning the floor
- Washing the toilet and restocking shampoos, soaps, and towels
- Restocking the minibar
Next, schedule preventative maintenance for your hotel equipment. This will include machine inspections, lubrication, and compliance checks. You can also log customer complaints into your inventory management database so they’re assigned to the right person and can be resolved within the stipulated time.
With the right data by your side, you’ll also be able to track key performance indicators (KPIs) that will help you predict total asset costs and identify important issues.
- Asset downtime and availability
- Asset lifecycle
- Depreciation and maintenance costs
- Reactive to preventive maintenance ratio
- Work order resolution times
5. Plan quarterly audits
At the beginning of every quarter, look through your database to see what’s available in the books and then compare it with your actual inventory. This will help identify ghost assets and inventory shrinkage.
It’s also critical to run safety and risk assessments and compliance checks for the protection of both your guests and employees. Make sure that you’re following all local, state, and federal requirements to ensure your property is looking after its people.
6. Flag and dispose of obsolete equipment
Based on the inventory KPIs coupled with regular audits, you can also predict when an item is nearing the end of its useful life. Get rid of these periodically and order reinforcements so your inventory stays functional and well-equipped.
6. Use data to improve decision making
Another key benefit of proactive inventory management is the ability to make data-driven decisions. Your inventory database gives you a holistic picture of the state of all your assets and lets you compare them with market trends and fluctuating demands.
This makes it easy to optimize stocks and maximize profits. It’s also good practice to review your inventory management strategy with your distribution strategy. This means that when you’re increasing your marketing efforts or posting more listings online, you can also ensure the availability of adequate assets.
7. Educate employees
An inventory management system only works when everyone interacting with the inventory also accounts for it. Inventory management is something all hotel employees need to be responsible for.
Create standard operations and processes (SOPs) so your staff knows how to handle each item with care along with logging it into your inventory management system. Reinforce the importance of updating statuses and ensuring data sanity for your asset database.
You can also offer certifications so they’re able to offer better services and also advance in their careers. Here are two that you can make mandatory for your employees:
- For hotel maintenance staff: The Certified Maintenance Employee program (CME) is offered by the American Hotel & Lodging Educational Institute (AHLEI)
- For maintenance and engineers: The Certified Chief Engineer program (CCE) is offered by the National Association of Hotel & Lodging Engineers (NAHLE)
Spreadsheets vs. inventory management software
Excel spreadsheets are a great way to set up a centralized online document that any employee can update. They are also cost-effective, customizable, and easy to set up, making them perfect for new and upcoming businesses.
But if you’re willing to spend a bit more to protect your valuable assets, a better bet is to deploy inventory management software. Such solutions have pre-built modules for hotels to help them stay on top of their inventory management at all times.
Here are some of the additional features that typical inventory management software solutions provide:
- Track logs and edits with time stamps to see exactly when an inventory change occurred. This helps reduce inventory shrinkage.
- Receive alerts and notifications for pending tasks such as inventory counts, room inspections, and equipment maintenance.
- Use built-in depreciation models to calculate equipment lifecycle and returns on your investment.
- Automate re-ordering based on thresholds that you set. For example, if you need 500 sheets to ensure your property is well-stocked for all rooms every day, set up a baseline for 500 sheets. As soon as you hit 499, the software will trigger an order invoice to your linen vendor so the sheets can be restocked well before time.
There’s a lot that goes into putting together a proactive inventory management program at your hotel but for growing businesses, the benefits are unmatched. You’re able to know exactly what you have at any given time and you’re able to plan for emergencies ahead of time. These things go a long way in offering a stress-free stay to all your guests.
It’s always good to start building out an inventory management system and then keep building on it to make it more proactive as you grow. Every business has different needs and you’ll only be able to understand these as your proactive inventory control matures. The tip is to start early!