Responsible procurement considerations play a key role both in our supplier selection process and how we conduct business with our existing suppliers.
Our supply chains
Our supply chain activities are split into two broad categories – corporate supply chains and hotel supply chains. Our corporate supply chains cover procurement for our corporate offices and mainly focus on items such as technology and professional services. At the hotel level, supply chains cover procurement for all items required for operating a hotel, including food, linen, cleaning supplies and furniture.This procurement predominantly happens at the local hotel level. Our hotel owners will also have supply chains at different stages of their hotel’s life-cycle, for instance at the construction stage for new build hotels.
For hotels in the Americas region, we maintain IHG Marketplace, a platform that allows hotels to purchase goods and services directly from approximately 150 preferred suppliers. Hotels in other regions continue to procure individually at hotel-level. To manage the corporate and IHG Marketplace supply chains, we have developed a Risk in Supply programme, which is overseen by a Supply Chain Risk Council.
IHG will launch a Supply Chain Sustainability programme and criteria designed to ensure its supply chains adhere to sustainability requirements.
IHG’s Vendor Code of Conduct sets out the standards under which IHG suppliers are expected to operate, including in relation to human rights and modern slavery in areas such as voluntary freedom of association, working conditions, forced labour and the exploitation of children. In recent years, we have enhanced our procurement systems and asked the majority of our existing corporate suppliers (those who supply us more than once) and all new regular corporate suppliers to sign the IHG Vendor Code of Conduct, as well as suppliers who support our hotel buying platform in the US.
IHG suppliers are requested to pass through our supplier registration process through which the relevant due diligence information is gathered. It is only upon passing through the supplier registration process that a supplier can become an IHG accredited supplier.
IHG’s procurement team has committed to carrying out risk profiling for all corporate and hotel preferred suppliers by the end of 2018. This will be followed by audits of all suppliers considered to present the most potential risk, and a requirement to meet quality standards and accreditation set out by an external body.
IHG franchised hotels are independently owned and operated; however, all of our hotels and owners, both managed and franchised, have a shared commitment to responsible business. In 2014 we launched a new brand standard requiring all hotels to adopt their own human rights policy and we have provided guidance and training materials to enable this.
Diversity in the supply chain
We operate a supplier diversity programme for our US suppliers. We track and report our supply chain diversity profile and during 2017, our spend with diverse suppliers in the U.S was $66m, an increase from $59m in 2016. Tracking our spend with diverse suppliers in the US helps support our commitment to provide suppliers with equal access to purchasing opportunities.
We encourage our hotels to use environmentally friendly products and to source goods and services locally wherever possible. In 2016, we developed and rolled out a Sustainable Seafood Policy, which applies to all IHG branded hotels globally, and we have committed to sourcing 100% cage-free eggs at all our hotels globally by 2025.
We have implemented a series of programmes designed to reduce our carbon footprint and minimise waste in our hotels and corporate offices. In 2017, we partnered with suppliers to recycle over 2,000 beds and mattresses in Europe and we are exploring ways to expand the scheme to incorporate additional items of furniture in 2018. We have also identified further opportunities to better utilise ‘end of life’ items in our hotels and will focus on implementing additional programmes in 2018.
Supply chain risks
At the beginning of 2016, we established the Supply Chain Risk Council. The Council’s role is to identify and evaluate supply risks across both corporate offices and hotels.
In 2017, our procurement team launched a dedicated Risk In Supply project designed to identify and address risks in conjunction with four suppliers providing bedding, lighting, fabrics and technology in our hotels.
Following this successful pilot, the procurement team have developed an IHG Risk Assessment Template and plan to roll out the project across a number of suppliers in 2018.
In 2015, we introduced a Procure to Pay system, which simplifies and streamlines the way we purchase goods, and provides us greater visibility on our corporate suppliers. We also launched a new Global Procurement Policy, which sets out how our corporate colleagues should conduct business when spending money on IHG’s behalf.
In the two years since the introduction of the Procure to Pay system, we have achieved far greater levels of spend visibility, enabling us to further embed our responsible business practices in our corporate supply chain.
In 2017, a new dedicated e-Learning for corporate colleagues was launched, designed to enhance understanding and awareness of IHG’s Global Procurement Policy, it also focused on the importance of identifying and minimising risk across all of IHG’s interactions with external suppliers.