A Moveable Feast For Royal Caribbean Cruise Lines, the typical challenges of hospitality sourcing are complicated by the fact that its “properties” move from country to country, and sometimes out of satellite communication range. That means multiple sets of regulations and port practices, varying product quality and pricing, and plenty of contingency planning to ensure supply continuity. “No matter what we do, we face risk,” says Laura Luff, director of logistics and material control for Royal Caribbean. “We will source local products if necessary; we’ve even chased a vessel with a feeder ship to deliver critical supplies.” To help avoid crises at sea, Royal Caribbean’s supply chain staff provides early input into proposed itineraries in order to schedule at least one loading port into the plan. The company locks in buying decisions 40 days in advance, cross-docking some goods and storing others in the cruise line’s 500-SKU Miami warehouse. Items such as linens, bedding, and souvenir goods are shipped from China and routed directly to one of the ships’ ports. Inventory must also accommodate the seasonality of the cruise business. The supply chain group has devised many of its own sourcing systems, including one to deliver goods to ports. Every item that moves on and off the ships must comply with stringent Homeland Security procedures. If a repairman needs to come on board with a tile cutter, for example, that equipment must be cleared through customs. Adopting supply chain software to manage these processes on land and on board is challenging due to the ships’ unique mobile and legal status. Royal Caribbean is currently seeking a transportation management system, for example, but any system it chooses will require significant reconfiguration. Ensuring
hotels and restaurants employ spend man- agement, procurement, audit/compliance, and inventory systems to gain visibility into, and control of, purchasing. Hilton Hotels is among those hospital- ity companies that have transformed their approach. “Ten years ago, we were behind the curve compared to other hospitality com- panies. Now, we are close to cutting-edge,” says Don Miller, regional director of sup- ply management for Hilton. The worldwide hotel chain manages procurement through its Beverly Hills, Calif., office, and six regional affiliate loca- tions. The procurement group aggregates buying into national contracts for its var- ious brands, and enables local providers where it makes sense to do so. Hilton cuts deals directly with suppliers, then nego- tiates markups with the distributors that handle warehousing and delivery. “It’s important to control the whole sup- ply chain,” Miller says. Now, the company is tackling the integration of international procurement, brought on by its reacquisi- tion of Hilton International in 2006. SPEND and SAVE Effective spend management helps Hilton control and monitor what indi- vidual sites buy and pay, then ensures compliance. Its hotel properties access a Web-based e-procurement system to view product catalogs specific to their brand and location. The third-generation system manages orders and electronic approvals, as well as inventory. As supplies arrive at individual hotel locations, managers receive data from the system – ensuring that, say, sirloin contracted at $10.99 a pound isn’t charged at $11.99. Standardizing purchases also provides large chains such as Hilton more con- sistent product quality and safety, notes Adaco’s Welch. Some spend management systems extend into the kitchen, ensuring that rec- ipes parse out ingredients at the expected rate, and helping chefs modify them to ensure both flavor and economy. The sys- tems also place controls around previously inexact processes such as calculating liquor consumption at banquet bars. Hospitality companies are also starting to take control of transportation spend. “Most contracts treat transportation as a
160 Inbound Logistics • July 2007
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