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.