Starwood Supply Chain Strategy video embrace 6 sigma methodology which helps process improvement and efficiencies involve hotels in process customers help select suppliers and product services embrace technology use e procurement platform which helps hotels become much more efficient and effective ordering products and services provides with critical information that helps source to good level rely on suppliers partnerships allow them to source more broadly while keeping overhead load low by taking advantage of the services that suppliers bring outsource where appropriate only source that best in class in use other companies that assist them Starwood supply chain starts with contracting but also customer relationship order fulfillment supplier relationship processes Strong linkages between the companies upstream suppliers of services materials information and the customers If upstream relationships are not carefully managed downstream delivery of consistency quality and value to Starwood guests may suffer As a result significant efforts are placed on the nested processes within the supplier relationship process such as design collaboration sourcing negotiation contracting and information exchange existing contracts expire individual hotel brands seek new products hotel property design teams generate ideas suppliers bring new ideas to Starwood new categories of products emerge and need evaluation or a particular hotel needs help with local service contract 60 of time is spent on brand Put suppliers into a pool then takes one of two paths reserve auction pre selected vendors bid against each other done with shorter term contracts on commodity items that have low external customer visibility should only be used when you have a minimum of 3 suppliers that are bidding for business that is purely a commodity meaning that the quality and the service would be exactly the same regardless of what supplier that you brought in only care about lowest cost of goods additional step additional negotiation don t always pick the lowest cost provider depends on quality of the service request for proposal requires vender to put best terms forward at the outset for consideration used when need more subjective information around quality and pricing After review by the supply chain team vendor winning the auction or RFP review activity is engaged in negotiations builds partnerships to maximize values for each party so as contract negotiations conclude each side is comfortable with the price quality and delivery requirements they have agreed upon management existing supplier relationship after is most challenging task of all Brands can change Innovation is changing Alternate supplier might come in and bring a more beneficial program while maintaining relationship with current supplier and keep integrity Guests can change along with requirements Look to see what the market is doing to make changes to meet guest expectations What information would be relevant for handling this situation and what would you do refuse to consider the alternate supplier s offer check out the offer to see if the suppliers claims are true take the information to the existing supplier think about what linen and terry are they touch your body They are extremely important part of the hotel experience for the guest First and foremost it s about quality Approach existing distributor partner and challenge them to find another manufacturer that could provide same quality product at lower cost of goods At minimum match what the other manufacturer had offered Worked with them Able to find company that could manufacturer the same quality product at a much lower cost of goods It was a US based company that had offshore manufacturer in the middle east Cost savings of 25 of what original program was Stable source of supply and support two initiatives balance global sourcing between both domestic and international suppliers support diversity Offshoring at Darden Restaurants Olive Garden Red Lobster off source network extends to 40 countries Bill Herzig senior VP of purchasing oversees the selection and on going relationship with Darden s growing team Bringing fresh fish to Darden restaurants starts with selecting the best suppliers globally It is done through looking at imports statistics to find out who the large suppliers are that bring product to the United States Do it through their network of existing vendors who know good quality suppliers that handle other species Then they will reach out to the suppliers they have interest in pursuing or they reach out to Darden Start with a plant visit determine the quality of their facility Then process of being vendor into system teach process they require for managing the cold chain throughout the entire system Fish gets loaded into gel packs Process begins at the source make sure they have the right producer then the producer will ship the product into a key port of entry in the US distributors will pick up from that point air ship or ground ship it then sub distribute to the rest Can t own the seafood supply chain Fishing business must be native of the country in order to secure a license Legal barriers Makes sense to work in partnerships with companies that are native to the country where the products are from Instead of just looking only for the most competitive pricing deal the agents strive for durable long term relationships with suppliers so a mutually beneficial relationship is formed Make a macro strategies for how they want to approach the supply chain Each individual buyer will be responsible for his own supply chain Standards for quality for their supply is very high and higher than US government standards Test for all things that could be harmful for environment and public Process of tasting shrimp and measure things like presence of black spots in the shell miss cuts miss shapes most competitors have to buy through middlemen outsourcing may be an option for lower costs lower wages rates combined with processing in bulk open the door to economies of outsourcing skill development and capital investment are often easier to justify with higher volumes Darden s Global Supply Chain develop and manage multiple supply chains 4 distinctly different supply chains Four Supply Chains 1 Central Distribution for Smallware 2 Independent Supply Chain 3 Darden Direct Distribution 4 Seafood Warehousing Network smallware warehouse is about their nonfood products plateware glassware flatware printed