Supply Chain in the Travel Industry

Supply Chain in the Travel Industry

The travel industry is an industry that is in constant change. It is the type of industry that must change with the times, including how it conducts business, how it sells its products and services, and how each link of their supply chain works and connects with the rest of the chain. While each brick and mortar location and travel website are similar to their counter parts, each one has a varying supply chain they use in order to get their product and services to the customer. We will take a look at how a brick and mortar travel agency uses its supply chain, and how changing to a website location can and will affect their supply chain.

Supply Chains

Let’s begin by understanding what exactly a supply chain is and what it does for a company. A supply chain, or supply network as it is sometimes called, is a coordinated system of people, activities, information, organizations and resources involved in moving a product or service in a physical or virtual manner from the supplier to the customer (Wikipedia, 2007). Supply chains transform raw materials and components into a finished product that is delivered to the end customer. In this case, the travel agency must be able to connect the airline, hotel, car rental, cruise lines and event tickets to the customer wishing to take a trip to a particular location and meet their individual wants and needs for that trip.

Brick and Mortar Agencies

Travel agencies began years ago by opening brick and mortar locations throughout the United States. They would open up offices located conveniently within the cities around

the country so that many people could utilize their services when planning a trip. A brick

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and mortar office would provide personal service and information to those wanting to travel either for personal reasons or for business as well. Their offices would include customer service agents, also known as travel agents, at desks and computers ready to punch in when, where, and what you wanted to do on a trip. Their offices would be filled with posters of exotic locations and pamphlets full of information and ideas to make your vacation perfect.

In order to provide this service to the customer, the agency would begin by making deals business to business with the airlines, hotels, cruise lines and car rental agencies. Their supply chain would begin with those businesses by making deals that they would use their products when arranging plans for their customers. Their supplies would include contractual agreements, as well as informational brochures. For instance, a travel agency would make a deal with certain hotels to try and use them when reserving rooms for their customers. The hotel would then give the travel agency a commission off the room as payment. Business to business links would also come in the form of finding locations to rent for their offices, as well as places to purchase their office furniture and computer systems. There would be the need for travel agents for serving the customers, as well as advertising and distribution of information to potential customers. Hotels, airlines, car rentals, cruise ships, and cities visitor bureau would all make deals with the agencies in order to have their information posted within the agencies as well.

There would not be a need for inventory and storage in this particular industry. There would not be a chance of overstocking or over ordering. The final link for the travel agency would be to sell the trip to the customer and provide the information, guides, and eventually the tickets to the customer. Customers would provide the agency the type of trip

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they wanted and when they might want to go, but all in all, the agency would have a limited

amount of information and packages they could offer to the customer. The customer would have to take the agents word for it that they were getting the best price for their trip, and the best dates of travel for that price. The travel agency offered personal service and had the power of a supply chain