Despite persistent hopes that supply chain troubles would dissipate in the new year, businesses around the globe are seeing little supply chain relief as ongoing issues continue to result in raised costs and higher sticker prices. In fact, the U.S. Consumer Price Index—a key measure of inflation—rose by a measure of almost 7% in the final months of 2021, marking the country’s highest inflation rate in nearly 40 years. The continuous challenge of getting products from manufacturers to end-use customers, coupled with heightened consumer demand, shipping bottlenecks and elevated energy prices, reflects this record-breaking increase in the pricing of goods. Some experts are even referencing this surge in product pricing as a hallmark of stagflation, or recession-inflation, which reflects a period of sustained high inflation paired with high unemployment and stagnant economic demand. Put simply, many signs suggest that rising costs may not be falling anytime soon.
As economists and business strategists speculate about the anticipated timeline and potential long-term effects of current product and labor shortages on inflation rates, HSM’s procurement experts are here to help our customers circumvent backlogs, bottlenecks and delays while also offering real-time risk mitigation tips and insulation from the skyrocketing cost of goods. Through our partnership with Mintec Analytics, we offer our customers insights from a monthly detailed macroeconomic and price inflation report, positioning them to make informed decisions around purchasing, product features, potential F&B alternatives and other procurement needs. For example, partnering properties alerted to the current spike in pricing for both Chilean salmon and beef trim, a key component of ground beef, may choose to focus more F&B spend on poultry or pork products, which recently saw a temporary dip in pricing. HSM boasts procurement experts in every category to help guide our customers throughout the planning and purchasing process.
“Raw material shortages, logistical challenges due to lack of containers and diminished labor capacity have affected the entire supply chain, and we try and mitigate these concerns by working very closely with our suppliers and focusing on value engineering of our products—still maintaining the best quality while doing our best to limit price increases,” said Sunil Wadhwaney, HSM’s senior director of OS&E Category Management. “Our products and orders are prioritized because we have very strategic partnerships with our suppliers, and we work with them to increase inventory and to find top-quality alternative products when the standard item is not available. Day in and day out, our team is focused on finding supply chain solutions.”
HSM experts are also outfitting our partners to better weather long-term price hikes for various commodities, such as cotton, which has climbed in price due to poor growing conditions in recent years, as well as navigating ongoing global shortages, such as the current worldwide semiconductor shortage. We are also pointing customers toward timely and advantageous price drops, including the recent seasonal drop in steel driven by lower automobile production. Properties in the midst of building or renovations can count on our project procurement teams to help source raw materials and adhere to construction timelines as closely as possible.
“Strategic sourcing could not be more important with respect to resourcing, cost of goods and supply chain challenges that have ratcheted up the cost of freight to a point we've never seen in our industry,” said Jason Bramhall, senior director for HSM’s project procurement team. “We have a higher number of vetted, approved suppliers to choose from than many of our competitors, and the logistical challenges are ultimately part of the puzzle we enjoy piecing together for our customers. Whatever the project, our team members are providing customers with relevant insights, answering their questions with respect to industry trends, exploring new avenues to save them money and striving to be cognizant of their timeline, working within that window to provide them with a really amazing outcome.”
While we can’t move the needle on inflation rates or shorten the timeframe for supply chain challenges, our team can leverage HSM’s scale, scope, global reach and expertise to provide our partnering properties with as much protection as possible against the ongoing issues facing our industry. To benefit from our risk mitigation efforts and strategic guidance during upticks and downturns, connect with your Strategic Accounts advisor or reach out to us at HSMx@hilton.com.