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The Role of Supply Management at Hilton Worldwide

I was able to listen to Christopher Nassetta, the CEO of HIlton Worldwide, speak to his team of global supply managers in MacLean Virginia this morning.

Chris spoke about a number of important themes at HIlton, which related directly to the role of supply management in running a major hotel chain.  He emphasized that “The reason we are where we are today is because that as an organization, we have been focused and aligned.  Our organization has come together.  We had a 100 year history, but were seriously disjointed.  Supply management was not fully integrated.  We have come a long way in the last five years– and have more to do, and will be launching the next step in our cultural revolution.  The secret sauce of what we do is the culture – it is the people.  We are about serving people, and that is what we do in the business we are in. – and the Hilton Supply Management team played an important role in bringing us together.”

“At the core of one of our competitive advantages, is serving any customer anywhere in the world for any travel need they need – which drives a higher market share of wallet, and getting the returns, and faster growth.  A big part of this is connecting with our customers, and providing the infrastructure and services to support this.  We are all digitally connected, as it gives us more choice and control over everything we do.  We can do texts, emails, and control our environment.  We have to think about our business in the same way – all of our customers want the same thing in the way we interact with us. We need to find ways to have people become more directly loyal to us.  Giving them technology and more choices of control is a key part of that – and making them feel special.  The message for supply management to bring this technology enablement is key.”

On the growth side, we have to continue to serve customers in more places at different price points.T here was huge opportunity to do things more efficiently and to buy more efficiently as we grow our network.  Hilton Supply Management is tasked with providing strategic sourcing capabilities to both managed and franchised locations globally.  This global network is expanding rapidly, (for example, we are building 400 new Hampton Inns in China!)  Previously, supply management was NOT an EBITDA producing operation.  This year supply management had a great year, generating savings that have been critical in enabling supply management to engage and participate in the vision and mission of Hilton Worldwide .  The savings generated, the number of incremental owners, the third party partners on the franchise side of the business are growing, because of the service and transparency created by the supply management group.  Better results and costs are driven because of the talent, the ability to create a shared vision.  There has been a commitment to Ariba and spend analytics, as a baseline for enabling measurement of supply management outcomes.”

Another important set of outcomes involves the creation of a Director of Strategic Sourcing Sustainability position, and designation and launch of a global Responsible Sourcing Advisory Group.  This involved a number of initiatives, including a focus on data and spend visibility, and global awareness and collaboration on a number of initiatives, including cage-free eggs and gestation crate-free pork, sustainable seafood, UK welfare and sustainability guidance, recycling programs, and a Green Lodging highlight.  There has been a lot of work on recycling, waste management, batteries, lights, and other forms of waste reduction.  There are a number of labor and human rights issues as well, focused on child labor, awareness of human trafficking in foreign regions.

Overall, the core themes of supply management as an enabler to Hilton’s growth, customer intimacy, financial outcomes, diversity, sustainability, leadership, and community outreach was emphasized in this great set of discussions.