Hyatt Corp: Serving It

A flagship property for the 213-Hotel Hyatt Corp., The Grand Hyatt New York rises beside the city’s Grand Central Terminal, all glass and elegance. Inside, the Commodore Grill restaurant serves a diverse crowd—conventioneers, upscale couples and international tourists. Yet all apparently appreciate a $12 calamari appetizer, a $26 risotto entrée and a bottle of fermented sparkling wine at $10 a glass.

To satisfy its guests, the hotel must get its preferred ingredients to the table in the right combinations every night—not easy to do with a global supply chain and perishable supplies. Plus, many table items must be custom-made months in advance.

Companies, across industries, have fought to computerize and streamline their supply chains to clamp down on costs. Hyatt comes at procurement from a different perspective: the customer’s view. Hyatt first thinks about how best to please its customers, then buys the right products, no matter what purchase method it has to use. Lots of transactions, especially those with small speciality manufacturers, don’t involve much beyond a pen and paper.

The hotel also deals with large distributors such as the $20.7 billion U.S. Foodservice, which has its customers place orders on a secured e-commerce site tailored to each client. U.S. Foodservice is the main distributor for Avendra, a Rockville, Md.-based procurement company created five years ago by Hyatt and four other hotels. Avendra negotiates prices and contracts with suppliers, marshaling the collective buying muscle of its clients to get better deals on food and other supplies.

The Grand Hyatt New York gets staples, such as rice, coffee and flowers, through Avendra-approved suppliers. The hotel goes off-contract for items that regional executive chef Anthony Arbeeny wants to differentiate the Commodore Grill from other eateries, such as a risotto bowl or a special bacon. As Arbeeny puts it: “Everything’s tracked, but it all doesn’t get processed the same way.”

Dinner plate MADE IN: Sri Lanka SUPPLIER: Oneida Ltd., Oneida, N.Y. TECH TOUCH: Grand Hyatt New York regional executive chef Anthony Arbeeny periodically checks “plateware” inventory including more than 12 different kinds of plates and bowls. He needs 50 of this particular model plate on hand for each meal period. Arbeeny calls his Oneida account manager, who works with distributor Wasserstrom in Columbus, Ohio, to check inventory at Wasserstrom’s Pennsylvania warehouse via wireless laptop or BlackBerry device. Wasserstrom keeps count of inventory on the Sri Lankan plate, as well as the hotel’s sales history, on shipping software from Varsity Logistics of San Francisco, running on an IBM AS/400 server. Plates arrive by FedEx Ground or overnight service; the invoice is matched to Hyatt’s purchase order and sent to Accounting to be paid and filed. DELIVERY TIME: One to three days Risotto MADE IN: Italy SUPPLIER: U.S. Foodservice, Columbia, Md. TECH TOUCH: Chef Arbeeny likes to keep 60 pounds of the Italian Arborio rice in the kitchen. Replenishments are delivered typically once a week by U.S. Foodservice’s own 18-wheelers. Hyatt places orders at usfood.com, logging into a secured Web site. A graphical order guide pops up with brands, pricing and other preferences specific to this Hyatt property. Quantities and shipment dates are entered. Prices have been negotiated previously by Avendra, a procurement company, which also analyzes spending habits using Pivotal customer relationship management software and Cognos business intelligence tools. Avendra consults with hotels on ways to improve efficiency such as taking larger drop-shipments from U.S. Foodservice once a week instead of smaller ones twice weekly, for a 10% savings. DELIVERY TIME: One to seven days, depending on request Bowl MADE IN: U.S. SUPPLIER: Minners Designs, New York TECH TOUCH: Re-orders are made when stock dips below 30 on this bowl, which Minners custom-makes for Grand Hyatt New York and which the hotel uses only with certain dishes. The process is all phone and paper, with invoices matched against purchase orders. Deliveries are usually by courier service. DELIVERY TIME: 12 weeks Champagne glass MADE IN: Germany SUPPLIER: Fortessa, Sterling, Va. TECH TOUCH: Thirty of these German crystal glasses are available at the Commodore Grill at any one time. Orders are phoned or e-mailed to Fortessa, then confirmed by faxed purchase order, which is matched against the invoice when the glasses arrive via FedEx. DELIVERY TIME: Overnight if urgent; two to three weeks for planned yearly restock Sparkling wine MADE IN: New Zealand SUPPLIER: Southern Wine & Spirits, Miami TECH TOUCH: Chef Arbeeny keeps five bottles of Lindauer on hand, restocking with a call to Southern Wine & Spirits, the largest alcohol distributor in the U.S., and then followed by a purchase order sent via fax. The Lindauer travels by ship from New Zealand, then by freight truck to Southern’s distribution centers in 12 states, a six- to 12-week trip in all. When Southern’s delivery truck arrives, Hyatt purchasing staff checks the invoice against the purchase order to be sure it got all the New Zealand bubbly it wanted. DELIVERY TIME: Five days Butter MADE IN: U.S. SUPPLIER: Belgium Co., Kissimmee, Fla. TECH TOUCH: Butter flies at the hotel; it’s served at each meal and with room service orders. Grand Hyatt New York keeps 1,000 “pucks” on hand, reordering weekly from U.S. Foodservice. Deliveries come on U.S. Foodservice’s own trucks and are tracked at the usfood.com Web portal. DELIVERY TIME: Two to seven days, depending on request Olive oil MADE IN: Chile SUPPLIER: Bel Canto Foods, Bronx, N.Y. TECH TOUCH: When inventory drops below 96 bottles, the hotel calls a sales agent at Bel Canto, the U.S. distributor for oil maker Valle Grande Ltd. of Melipilla, Chile. If Bel Canto doesn’t have enough bottles in stock to fill the order, it contacts Valle Grande by phone to order more. Hyatt’s high-end specialty purveyors ship via FedEx. A Hyatt purchasing agent checks the invoice against a handwritten book of phone orders, then sends it to Accounting to be paid and filed. DELIVERY TIME: Seven days from Bel Canto; three months if order comes from Valle Grande Calamari FROM: U.S. SUPPLIER: M. Slavin & Sons, Brooklyn, N.Y. TECH TOUCH: A popular appetizer, the hotel goes through 40 to 50 pounds of squid in a weekend. Orders are made by phone, followed by a fax to Slavin for confirmation and to start a paper trail for Hyatt. Slavin, like all suppliers contracting with Avendra, had to pass safety inspections in its factories, trucking and food-handling practices. Slavin loads the squid on ice in trucks and drives it from Brooklyn to Hyatt in midtown Manhattan. DELIVERY TIME: Five hours Plate MADE IN: Germany SUPPLIER: Wasserstrom, Columbus, Ohio TECH TOUCH: For reorders of this pointed, oblong specialty plate, made by the German company Hutschenreuther, Hyatt calls Wasserstrom, a distributor. Hyatt follows the conversation with a faxed purchase order, which it compares to the invoice upon receipt of the FedEx shipment. Copies go to Accounting, which pays Wasserstrom. DELIVERY TIME: Six weeks