Winner of the 2011 Supply & Demand Chain Executive 100
Pillar Hotels & Resorts had a problem: A good problem, to be sure, but a problem nonetheless. The Irving, Texas-based provider of on-site management services for an expansive portfolio of hotels and resorts, grew 800 percent (from 30 to 240 properties) in just 6 months.
Pillar’s properties in 37 states represent 16 different flags, including Marriott, Hilton and IHG. To expand hospitality management capabilities and prepare for future growth the company (formerly Archon Hospitality), needed a solution that would bring visibility and control to its ever-expanding procurement functions. Pillar required a scalable Procure-to-Pay (P2P) solution designed to maximize savings and visibility, and minimize infrastructure.
Pillar chose Avendra, a 10-year-old provider of comprehensive procurement, strategic sourcing and supply chain management services. With $3 billion in annual purchases, Avendra is able to deliver reduced costs, supply chain assurance, customer support and innovative solutions to 5,000 customers across North America.
Avendra bases its procurement approach on a sophisticated and holistic style of supply chain management. The company wraps support services—such as change management, reporting expertise and customer assistance—around its programs and keeps a watchful eye on quality, pricing, safety and service. Avendra contracts with approximately 900 suppliers to meet the needs of its customers.
The company says that procurement choices must be aligned with strategic goals and organizational culture. They start by getting to know the customer’s team—from leadership to regional staff—and work with them to establish a tailored approach for their business and brand. Its purchasing programs cover a wide variety of hospitality industry segments, including food and beverage; rooms operations; engineering, building and construction; administrative, professional and financial services; cleaning chemicals and sanitizing systems; grounds maintenance; spa equipment and products; gift shops; and kitchen equipment and decorative furnishings.
Avendra laid the ground work for the Pillar program by providing strategic sourcing and supply chain management services covering everything from food and beverage, to engineering and administrative supplies. When Pillar indicated its need for a Procure-to-Pay solution, Avendra brought in its preferred e-procurement provider, BirchStreet Systems. Newport Beach, Calif.-based BirchStreet's e-procurement system facilitates the strategic contracting benefits Avendra provides.
BirchStreet provides its web-based e-procurement platform to restaurants, country clubs and some of the world’s largest hotel companies. BirchStreet’s applications are delivered over the Internet, using the Software-as-a-Service (SaaS) model, which reduces the total cost of ownership compared with the traditional method of buying and maintaining enterprise software. Currently, more than 36,000 registered users at more than 3,000 properties in 35 countries use BirchStreet to access and manage more than 160,000 suppliers.
A Collaborative Approach
The collaboration among Avendra, BirchStreet and Pillar made it possible to customize a single online environment to manage everything from sourcing to payment. Pillar’s properties embraced the new technology quickly and savings increased significantly.
All purchases are now placed, approved, paid and tracked centrally. As a result, purchasing compliance scores improved across Pillar's entire portfolio, currently averaging 90 percent. Despite setting some very aggressive savings targets, Pillar out-performed original projections by 50 percent within the first year of “go-live” with the combination of the Avendra programs and the BirchStreet solution.
Pillar's AP system is now predominantly paperless. Of the tens of thousands of invoices received each month, 85 percent are auto-matched, reconciled and paid without any property-level intervention. In addition, Pillar recaptured approximately $2 million in spend that previously could not be analyzed, including utilities, services and ad hoc expenditures, further improving visibility of spend activity.
The comprehensive P2P solution provided by Avendra and BirchStreet increases cost savings, procurement visibility and has unlimited scalability.
"Implementing this comprehensive procure-to-pay system enabled our properties to make the best purchasing decisions and maximize our savings through Avendra,” said Dale Turner, senior vice president, hotel performance and support at Pillar. “Without an integrated solution, I know our compliance metrics would be lower, and to me that is quantifiable value."
For more information on combining Avendra's supply chain capabilities with BirchStreet Systems to create a procure-to-pay solution, please contact firstname.lastname@example.org.