Hilton hotel supply chain issues
Following are the issues based on key Supply Chain Drivers. These issues are faced by Hilton Worldwide (HW) Supply Chain Management in general and Hilton Australia in relation to HW:
1 – Information Technology
Birch Street System (2008) explains that Birch Street System Software provides electronic hosting and maintenance for Hilton Hotel Corporation's Supply Management. This has posed many challenges for e-procurement which is used on make-to-order
technique. It has a problem to integrate maximum local businesses and brands of Australia within the new supply chain network.
Hilton Hotel Case Study (2011) argues that in the case of Hilton Hotels, in order to reduce inventory costs, distributors also have access to enter the same web where data on sales done and inventories required are received. This is a noble practice for forecasting but the hotel industry in Sydney is majorly based on tourism; which is a highly seasonal industry. It also creates problems for maintaining seasonal inventory
. This also breaks down the speculation of safety inventory
, which acts as a buffer against any uncertainty. Thus, forecasting gets difficult to be made.
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3- Centralized system
As mentioned in Hilton Supply (2011), Hilton Hotels have a unique practice, where all hotels pay the same price for products and services through their Hilton Worldwide (HW) Supply Chain Management’s programs. This practice of centralization has greater implications on local needs, pricing strategies, inventory forecasting and day to day regional supply chain decisions.
Convergence (2010) explains that economic conditions are not same in every part of the world. In some countries, inflation is on the higher side and vice versa. With the fluctuating prices of commodities and gap between their demand and supply, the situation poses a serious threat for Hilton Australia for making effective supply chain decisions. On the other hand, at times, Inventory has been purchased with wrong speculations which led to dis-economies of scale instead of economies of scale. Hence, efficiency in the supply chain got compromised by Hilton Hotels. On the other hand, due to reliance on much imported products and machinery, Hilton Australia faced severe problems of exchange rate fluctuation for deriving effective pricing.
5- Transportation (Distribution)
Hilton Supply (2011) explains that for distribution services, Hilton Hotels uses The Commodity Distribution Program (CPD) and HW Supply Management’s Super Regional Distribution Program. These are groups of supplier negotiated for each metropolitan area in order to deal with multiple commodity program suppliers. These are cross discipline teams within a geographical supply market providing suppliers with forecasted needs of the hotel and purchasing products for inventorying. This has a serious challenge of bullwhip effect, since a smaller fluctuation of pattern within the supply chain involving multi-partners can end up with a higher fluctuation; which has happened at many times with the HW Supply Chain Management.
Birch Street Systems. (n.d.). On-Demand E-Procurement Solution Enables Global Enterprise To Simplify Supply Management . Retrieved 08 14, 2011, from birchstreetsystems.com: http://www.birchstreetsystems.com/news/studies/hilton_CS.pdf
Convergence - Supply Chain Management : Bringing Together Supply Chain Solutions. (2010). Retrieved 08 14, 2011, from hiltonsupply.com: http://www.hiltonsupply.com/Docs/convergence_fall_winter_10.pdf
Hilton Hotel Case Study (03 06, 2011).
Hilton Supply. (2011). Bringing Together Supply Solutions. Retrieved 08 14, 2011, from http://hiltonsupply.com/: http://hiltonsupply.com/faq.asp
Hilton Supply. (2011). Supply Management : Leveraging Power. Retrieved 08 14, 2011, from http://hiltonsupply.com/: http://hiltonsupply.com/distributionprograms.asp
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