Supplier Management Strategies for Streamlining Tourism Business Operations

The tourism industry is huge, with a worldwide revenue predicted to reach over $900bn in 2024. In a market of this scale, there’s a lot of competition. So, standing out from the crowd, providing the best experience and keeping a close eye on your costs is an absolute must.

Creating and implementing the right supplier management strategy is a key part of achieving all of this.

Working with suppliers is a great way to expand your business and broaden your offering. But, you want to make sure you go about it the right way.

Whether you partner with a transportation provider to ease customer arrival or you decide to collaborate with a local cooking school, how you approach your strategy will help you to guarantee the quality of the products and services as well as the price you pay for them.

We’re going to take a look at the key components of supplier management so you know what to expect and then dive into seven winning strategies you can use to streamline supplier management in your tourism business.

1. Key components of supplier management

supplier management

Getting your supplier management strategy right is crucial for creating a mutually beneficial relationship. There are three key components of a strong supplier management strategy.

Supplier evaluation and selection

Firstly, you need to carefully evaluate the suppliers available to you and make informed choices about who you’re going to partner with.

You should set clear criteria for how you’ll evaluate suppliers to make sure that your selections are aligned with your business goals. Analyze your previous business data to give you the best insights into your budget, your needs and how you’re going to boost your offering.

For example, if you’re a food tour operator who advertises that all your ingredients are sourced locally, the location of your suppliers is going to be a key consideration. Alternatively, if you run river and kayaking trips, you’ll want to consider a transport supplier that’s within budget and able to accommodate your activity schedule.

Building strong business relationships

Once you’ve selected which suppliers you’ll partner with, it’s time to start forging lasting relationships with them.

Putting in place clear and effective communication is a great place to start. Poor communication can quickly lead to misunderstandings, wasted time, and a breakdown of trust. This can all lead to difficult negotiations and supply issues further down the line.

Source: project.co

A strong business partnership often leads to long-term relationships. Prioritizing long-term supplier relationships can have numerous benefits. Once you’re well acquainted with a supplier, you’ll often find that negotiations run smoother and your operational efficiency improves.

Monitoring supplier performance

Supplier relationship management doesn’t stop once you’ve started working with a suitable supplier. In fact, it’s arguably at this point that effective supplier management becomes vital.

Periodically evaluating the performance of your suppliers allows you to see how well they’re fulfilling the objectives and requirements you set at the start of your partnership.

2. Strategies for streamlining supplier management in tourism

streamlining your supplier management processes

The more streamlined your supplier management processes, the easier they’ll be to implement. This can save you valuable time and money that you can divert to investing in your business and growing your tours or activities. Here are seven key strategies for streamlining supplier management in your tourism business.

Set clear criteria for thorough evaluation of potential suppliers

Before you begin evaluating potential suppliers, it’s important to have a clear idea about how you’re going to assess their viability.

There are a few key criteria that you should pay attention to:

Cost

It’s important to select suppliers that are within your budget and that offer good value for money.

Tools such as cash flow and budget management software can be invaluable when it comes to this. By feeding in spending data from across your company, you can quickly come up with spending limits to make sure you don’t go over budget when it comes to choosing your preferred suppliers.

You could also use a tool like a supplier evaluation matrix or scorecard to directly compare the costs of potential suppliers. In fact, these are useful tools for comparing all the criteria you need to consider when choosing suppliers, especially if you weigh the scores in a way that reflects your business objectives.

Reputation

You should look at reviews and testimonials from other businesses to see what they have to say about the supplier. Are they reliable? How long have they been in the industry? How transparent are they?

Pay particular attention to whether or not they deal with other businesses in the tourism industry. If they’re already used to working with activity providers, travel agents, and tour operators, chances are they’re well-placed to help you with everything you need.

positive reviews

Scalability

It’s important to know that suppliers can meet your needs in the present, but it’s worth considering the future, too. If you have your sights set on expansion, make sure that your most crucial suppliers are in a position to support you as your business grows.

For example, maybe you plan on expanding your city tour to new locations in the near future. So, if you’re looking to partner with a travel agency to help boost sales, you’ll want to make sure that they also operate in a variety of locations.

Considerations like this will help you to maintain a similar offering in your new locations and will be easier than working with a multitude of different partners in different cities.

Compliance

Any supplier you work with should meet industry standards and regulations. Lapses in standards or absent certifications from your suppliers could have knock-on effects on your business, particularly if you’re an activity provider who needs to guarantee equipment meets safety standards.

So, make sure you do your research and use resources to check policy updates, especially if you’re operating in a variety of different countries.

3. Streamline onboarding processes for new suppliers

Supplier onboarding is a crucial process for all tourism businesses. It’s when you obtain all the information and documentation you need to register your suppliers on your internal systems and carry out the necessary compliance and risk assessments.

That said, there are numerous obstacles to overcome during supplier onboarding.

Keeping the supplier onboarding process as seamless and efficient as possible helps you to complete these tasks in good time, and also creates a positive experience that lays the foundations for a strong future relationship.

Streamlining the onboarding process for new suppliers can be tricky, meaning that onboarding is often labor-intensive and time-consuming. You can take some of the hassle out of the process by selecting onboarding software solutions that enable you to automate tasks wherever possible.

4. Establish clear and effective communication channels

Clear and effective communication is essential for building long-lasting, strong relationships with your suppliers. This is especially crucial in the tourism industry, as bookings are often reliant on previous good experiences and reviews so there’s a need to maintain consistent high standards.

There are various tools available that can help you improve your communication with suppliers, such as business messaging apps and document-sharing platforms.

Using communication channels such as these allows you to store correspondence in a centralized place, so you can quickly and easily resolve issues with your suppliers should they emerge.

5. Monitor suppliers using defined key performance indicators (KPIs)

The performance of your suppliers directly influences the performance of your business. Monitoring their performance, then, is crucial for guaranteeing your own and being able to evaluate your relationship.

Source: kodiakhub.com

You can use a variety of KPIs to monitor supplier performance against specific criteria that are vital to your business. This helps you identify any areas where suppliers may be falling short of the standards you’ve agreed upon and lets you take steps to rectify that.

KPIs you can use to measure the performance of your suppliers could include:

  • On-time delivery performance
  • Defect rate, e.g., how many end-of-tour souvenirs arrive damaged and need to be sent back to the supplier
  • Order accuracy e.g. Did the food supplier fulfil the dietary requirements specified by your guests for your hiking tour lunch order?
  • Supplier lead time
  • Contract renewal rate.

Daily performance accounts for 40% of all KPIs in supply chain monitoring, closely followed by cost reduction at 35%. This indicates that most businesses monitoring their supply chain are interested in getting things on time, and at a fair price.

A range of tools and technology are available to help take the hassle out of monitoring these KPIs. To keep a close eye on your suppliers, consider leveraging supplier performance management software. This integrates all the main aspects of supplier performance – including risk management, compliance, and collaboration – giving you a complete overview of what’s happening in real-time.

If your main area of concern is orders, you can use order management software to generate reports about your inventory and order fulfillment processes, giving you insight into how your suppliers are performing when it comes to providing the equipment and supplies you need for everything to run smoothly.

6. Foster strong partnerships through collaborative business planning

Collaborative supplier management strategies

It’s important to clearly communicate your business objectives to your suppliers and work together to build plans that’ll help you achieve them.

When your suppliers are aware of your specific needs, they can offer propositions that will deliver maximum value for your business. By involving them in your planning, you’ll often be able to take advantage of synergies that may otherwise not have emerged.

For instance, suppliers may be willing to offer discounted rates during the off-peak season to their most valuable customers in the tourism industry, knowing that they’ll more than make their money back when demand picks up again.

A collaborative partnership with your suppliers can help boost the efficiency of your supply chain, guarantee a long-lasting partnership with your supplier, and potentially lead to cost savings.

7. Ensure compliance and manage supplier relationship risks effectively

There are potential risks to be found in every area of your business, and unfortunately, your vendor relationships are no exception. These risks may include:

  • Financial risks, such as the possibility that your suppliers cease trading and leave your order unfulfilled.
  • Legal risks, including contractual non-compliance.
  • Operational risks, such as quality control issues that could lead to dissatisfied customers.
  • Reputational risks, including safety or quality issues relating to products, or suppliers failing to fulfill ESG (Environmental, Social, Governance) promises. 81% of travelers say that sustainable travel is important to them, making ESG promises a key concern for tourism businesses and their suppliers.

To mitigate these risks as much as possible, you must carry out supplier risk assessments carefully during the selection process and beyond.

It’s especially important to pay attention to the different rules worldwide when operating in the tourism industry. If you operate a tour company or travel agent that does business in several territories, you need to be aware of how suppliers in each of those locations perform against the relevant local regulations.

8. Leverage automation and tech for efficient channel management

Unlock seamless supplier management with a comprehensive suite of cutting-edge tools and technologies designed to automate your processes and streamline your supply chain. For example, Rezdy Channel Manager is a powerful tool that simplifies the way tourism businesses connect with their suppliers. Through a live two-way sync, Rezdy Channel Manager provides real-time access to thousands of tourism suppliers, all integrated into one seamless platform. From transportation services to local culinary tours and other complimentary tours and activities, Rezdy Channel Manager opens you up to a world of endless distribution possibilities.

At Rezdy, we recognize the significance of reselling diverse operator tour products. To streamline this process, we’ve designed a user-friendly approach. Follow these simple steps to manage and categorize supplier products in your marketplace effortlessly:

Finding and adding products to a category

Starting from Tours and Activities in the Marketplace:

  • Select Marketplace Rate from the Rate option.
  • Click Admin.
  • Find a product, click Add to Category

Within the Category window:

  • You can add to an existing category by clicking the Select button
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  • Or, you can create a New category by giving the new category a title, and clicking Save.
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After clicking ‘Save,’ your website will dynamically display the products, showcasing real-time availability and comprehensive details listed in the product listing. When a booking is initiated through your website, the respective operator receives an immediate notification. And with Rezdy’s seamless system, payments and commissions are automatically processed, ensuring efficient and hassle-free transactions.

By automating your supplier management processes, you can ensure a smooth, hassle-free experience for your customers. No more juggling multiple systems or dealing with delays. With Rezdy Channel Manager, you gain instant access to a vast array of experiences, simplifying your operations and enhancing customer satisfaction.

9. Key takeaways

Implementing strong, efficient supplier management strategies is the key to building long-lasting, lucrative relationships with suppliers in the tourism industry.

Set clear criteria to evaluate potential suppliers, onboard them effectively and efficiently, and then monitor their performance closely with KPIs once they’ve been selected.

Build strong partnerships by collaborating on business plans, and employ clear and consistent communication to keep everybody on the same page throughout the partnership.

Ready to boost productivity and streamline your supplier management processes? Start your FREE 21-day trial with Rezdy or book a demo today.

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