Supply chain technology, digital transformation and automation has been hitting the headlines on a regular basis as the solution to reduce the colossal disruption Covid-19 has had on even the most sophisticated economies and organisations with mature cross-border and logistics infrastructure.
For the hospitality sector, Covid-19 was a mirror displaying the weaknesses across the whole value chain and the broad range of dependencies from reliance on non-resident workforces, to the crippling effect of manufacturing and delivery delays of all products from perishable foods to highly specialised non-perishable product categories that range from mattresses to guest electronics.
So it’s easy to imagine the stress to value chains across emerging markets where just-in-time supply chain was only ever a dream, and where even pre-covid they faced a myriad of problems ranging from lack of specialised procurement talent and direct access to products all the way to more complex border and customs requirements and reduced transport infrastructure.
At the same time, manufacturers of non-standard hospitality products are more than ever aware that their long-term growth is increasingly dependent on access to these new markets. But how can they do that when old models of distribution still exist?
Today, majority of hospitality product manufacturers are located in Europe, the USA, China, India, Japan, with fast rising numbers of manufacturers entering the market across Malaysia and Turkey.
For many of these manufacturers the market is pretty much saturated across Europe and the USA and many have increasingly been turning to the emerging markets across Middle East, Africa, Pacific Asia and Latin America to expand their market share. For some this is to offset the risk and dependency issues they face due to heavy reliance on one or two major hotel clients or operators. For others, it is to naturally expand their footprint to regions with strong pipeline growth and a burgeoning hospitality and tourism market.
So why has it been so hard for hospitality buyers in emerging markets to procure and receive the goods they need?
The lack of choice and optionality across the supply chain is extensive with many of the purchasing power in the MENA region for instance still remaining in the hands of a few resellers, distributors and vendors with limited product lines, and high resale values directly hitting bottom lines of both manufacturers and hospitality operators, as well as causing costly delays to the launch of new projects. Manufacturers are then reliant on indirect sales and have little to no control over lead times.
The reasons lay in that old model of distribution that still drives the import and export businesses in these regions, with heavy reliance on personal networks and connections. The cost of investment in business development in emerging markets is a huge barrier of entry for most manufacturers, many of them simply do not have the resources, marketing teams or country and regional knowledge.
Even with manufactures that have direct representation, there remains many challenges due to lack of focused representation in most cases, incorrect comparisons with other brands rising from lack of product knowledge and the complex nature of composite non-standard products
Digital supply chain, procurement and aggregate solutions are increasingly of interest to hospitality operators across the board from large international groups to smaller boutique properties. In Gartner’s latest “Future of Supply Chains” they highlight 4 innovations that will be essential to disrupt the current state of affairs – commercial growth from supply chain, authentic fulfilment of ESG, real-time supply chain execution and flexible work experiences.
New digital marketplaces like www.togglehospitality.com are offering direct connectivity between buyers and manufacturers (and their approved vendors) through digital catalogues, in some cases for the first time, and a direct chat, all backed by full SaaS enabled procurement tools. These are workflow tools that allow businesses on both sides of transactions to operate their full procurement cycle of RFQs, RPs, negotiate, compare, request samples and customisation as well as shipping and payment terms.
The logistics challenges from sourcing to final delivery can be managed seamlessly through such full value service integrations and management tools for purchase orders, logistics and payments – ensuring that buyers and manufacturers are in direct communication, that they are aware of lead times and can track their products each step of the way.
It also removes the existing lack of choice for manufacturers wanting to service new markets by overcoming the looming issue of representation and lack of distributors. With global representation through digital platforms and services, these new agnostic solutions support buyers by offering them choice and access to wider product lines, and to the suppliers by offering them connectivity.
The challenges faced by emerging markets are real. With innovation and flexibility, the hospitality sector continues to face these with optimism and pragmatism.
The Toggle Market team representing our premier B2B SaaS enabled marketplace www.togglehospitality.com will also be attending the upcoming Future Hospitality Summit in Saudi Arabia this coming 24-25 May 2022 organised by hospitality experts Bench Events.