Like all large corporations, Hilton Hotels Corp. of Beverly Hills, Calif., has disaster plans in place. But, after the 2005 hurricane season, Hilton's supply chain organization has stepped up its disaster preparedness plans to be ready for anything.
The 2005 hurricane season saw an unprecedented 26 named storms, including 14 hurricanes, seven of which were major, and three of which reached Category 5 (Katrina, Rita, and Wilma). Total losses from these three storms alone reached $122 billion, $100 billion of which was just from Katrina. It led a lot of companies to redefine the term "disaster preparedness."
"We thought we had been prepared, but Katrina really threw us a lot of curveballs," says Donald J. Miller, Hilton's regional director of supply management southeast (Atlanta), responsible for Hilton's supply management in the Southeast U.S., the Caribbean, Central America, and South America. Miller spent five weeks in New Orleans after Katrina, as well as a week in Florida after Wilma reviewing the damage while taking note of how the company's supply chain could be better prepared.
"Problems after Katrina included a lack of coordination with FEMA, evacuation problems, and civil unrest," Miller says. While looting may not have been in Miller's job description originally, after the Hilton Riverside was looted after Katrina, it's something he has to think about.
"We were able to bring in buses from Houston for evacuation," he says. Hilton also coordinated the delivery of food, beverages, and other supplies from Houston and other markets. It arranged for a truck to run daily to and from Houston, which also had to bring in things like portable showers and portable toilets. Some Hilton properties in the affected area were without water and power for almost five weeks.
As a result of the experience, Hilton has added quite a bit to its supply management disaster program.
During the pre-hurricane season, the goal is to be able to ensure self-sufficiency of properties for a minimum of three days in the event of loss of utilities and other services. These include food and beverages, such as increasing bottled water and bulk water storage; operating supplies, such as paper goods and alternative cooking sources; emergency supplies and equipment, such as lighting, fuel, and safety and security equipment; and damage mitigation and remediation, including sand bags, duct tape, plywood, and fuel drums.
Hilton is also working with key suppliers to develop hurricane plans, including updating emergency contact information and multiple backups; and it realizes that suppliers will have many of the same issues during and after hurricanes, such as road closures, curfews, staff shortages, downed communication, etc. Hilton has also created plans for distribution redundancy, rerouting of incoming calls, and alternate delivery options.
If a hurricane warning is issued, Hilton realizes that most suppliers will close their warehouses and stop deliveries 24 hours prior to landfall in order to protect their employees and facilities, so emergency plans kick into action.
There are several steps the supply chain organization goes through during post-storm recovery. First, Hilton gathers supplier status reports and utilizes backup suppliers if needed. It also gathers hotel status reports related to utilities, operational status, immediate needs, and damage assessment.
Next, it implements alternate methods of communication with the properties as needed, since landlines and cell phones may be inoperable. For example, text messaging and e-mail may be able to get through when voice cannot. It also implements similar backup communication plans with suppliers as needed.
"During Katrina, we couldn't get through by landline, and cell phone service was sketchy," recalls Miller. "We have outfitted all of the hurricane-prone hotels with satellite phones. We also make sure all GMs have Blackberries, since text-messages and e-mails get through better than phone calls."
Hilton also created a website for properties specifically for hurricane preparation and recovery, where it lists available resources. It has also established contracts for refrigerated trucks, lists of hurricane supplies through its suppliers, etc. Hilton also has a plan to update general managers daily on the status of suppliers and whether they will be able to deliver each day.
Accessibility and the ability to get work done may be limited during the post-hurricane period due to curfews, checkpoints, and road closures. As such, Hilton has a program that allows authorized individuals to display Hilton IDs, uniforms, and vehicle markings.
"During Katrina, we were subjected to roadblocks, and the rules for getting around changed almost daily," recalls Miller. "One day, we would need a letter from the sheriff of the parish, and the next day, we'd need a letter from the mayor. The National Guard might let us through, but the local police might not."
As a result, Miller purchased some magnetic signs with Hilton's logo to put on the side of vehicles. "We found that, if we looked official, they would let us through." Miller now has magnetic signs that he can stick in his suitcase and take with him anywhere to stick on rental vehicles.
Inventory control and management is also a post-hurricane priority. Hilton has a process in place for identifying secure storage locations, access control, in and out procedures, and security access. Another strategy involves utilizing regional support. That is, hotels not affected can provide support to hotels in need, such as laundry services and supplies. The next step involves record keeping and controls, such as centralized purchase order logs and maintaining accurate records required for insurance scrutiny.
Update emergency contact for suppliers
Establish alternate communication strategies for key suppliers (cell phone, blackberry, etc.)
Ensure multiple backups for key suppliers
Involve key suppliers in developing disaster preparedness plans
Gather supplier status reports and contact backup suppliers where needed
Gathers hotel status reports including status of utilities, operational status, immediate needs, and damage assessment
Implement alternate methods of communication with both suppliers and other properties as needed
Ensure accessibility using Hilton logos and badges
Identify regional support-what can non-affected hotels provide