NH Hotel Group’s relations with its suppliers are based on communication and transparency, in order to promote the development of innovative and sustainable solutions. These collaborations also build the way to comply with the Sustainable Development Goals set by the Group for the creation of decent work and economic growth (SDG 8) and for responsible consumption and production (SDG 12).
ANNUAL PURCHASE VOLUME (OPEX + CAPEX) IN 2021
+12% compared to 2020
TOTAL OPEX VOLUME IN 2021
+22% compared to 2020
From the beginning of this worldwide pandemic, strategic procurement management has ceased to prioritize effectiveness in price negotiation exclusively, over other factors. This crisis has led NH Hotel Group to perform an ongoing analysis of current suppliers, verifying the traceability of their products and their components, and demanding production flexibility, to assure supply and the sustainability of their products.
All NH Hotel Group suppliers, both approved and not approved, are required to abide by the exceptional anti-COVID-19 safety and disinfection measures for the delivery of goods and provision of services in our hotels.
NH Hotel Group has a formal and mandatory Procurement Policy that sets out the guidelines to be followed by the different departments, whether Corporate or of a Business Unit, in situations that affect or could affect external contracting.
The Procurement Policy contributes to reinforcing:
- The commitment to guarantee transparency, honesty and ethics in the procurement function.
- The need to carry out professional contracting processes to optimize results.
- The need for alignment with internal control guidelines, such as timely and proper updating and communication to all the Company’s employees
As indicated in the NH Hotel Group Procurement Policy, all services or products included in categories that may be tendered by Coperama form part of the Procurement Perimeter. Of the total OpEx purchasing volume, the Procurement Perimeter covers 94% of the hotels in the consolidated perimeter of NH Hotel Group.
The Procurement Perimeter is periodically reviewed by NH Hotel Group and Coperama in order to ensure that it is always adapted to the Company’s needs.
Volume of approved purchases in the procurement perimeter
Approved procurement in the procurement perimeter
HOMOLOGATION OF SUPPLIERS
The selection of suppliers, as well as the working relationship with them, is based on transparency, honesty and ethics with the clear objective of guaranteeing an excellent service, efficient and with quality
Since 2010, the different procurement departments of the Company have become the different Coperamas (companies wholly owned by NH Hotel Group). Their function consists of seeking, rating and approving suppliers, as well as negotiating and contracting the goods and services necessary for the correct operation of hotel management. Each local Coperama provides service to the Regions of the NH Hotel Group Business Units assigned to it. Coperama Holding provides service at corporate level to the Group in all its locations.
Supplier management starts when a need is detected and continues until the service has been finally provided:
Before hotels and offices begin the purchasing process, an homologation process is carried out to generate a database of suppliers that have been evaluated and that meet NH Hotel Group’s requirements in economic and quality matters, as well as in ESG.
Through tenders, Coperama seeks the most efficient supplier in terms of quality, price and service. The phases of the tenders are:
- RFP (Request For Proposal): tender documents.
- RFI (Request For Information): request for technical information and elimination phase.
- RFQ (Request For Quotation): request for economic quotation.
For contract bidding management, NH Hotel Group uses its Electronic Negotiation Platform. This tool makes it possible, through the RFI (Request for Information) phase, to assess and analyze the legal, financial, environmental, operational and social and labour situation of suppliers who submit bids for contracts. This reduces the possible risks that suppliers could generate in future operations with the Company. In this part of the process, suppliers have to accept both the Group’s Code of Conduct and the Coperama Code of Conduct for Suppliers, which includes environmental and labour commitments.
In order to ensure a responsible operation and achieve long-term relationships with suppliers, Coperama has updated its RFI, expanding the ESG criteria in its responsible purchasing process, increasing the weight of the score in the Sustainability questions, and thus prioritizing suppliers with sustainable criteria. This questionnaire is part of the overall assessment for the validation process.
There are some criteria in the RFI that, if not accepted or implemented by suppliers, would result in their automatic disqualification from the tender. One of these criteria is the signature of both the Group’s Code of Conduct and the Coperama Code of Conduct, by which NH Hotel Group is governed.
Throughout the process, special focus is placed on sustainability, to try to mitigate possible negative impacts on the environment, while mitigating the risks inherent in the operation of our supply chain.
Although NH Hotel Group does not currently perform social and environmental audits of its suppliers, it works constantly to align ESG criteria with the sustainable management of the supply chain. To ensure responsible sourcing, the Company has developed a series of procedures that reinforce the commitment to the supply chain.
The winning supplier will sign the Coperama Homologation Contract, which contains, among other documents, the Coperama Supplier Code of Conduct and the NH Hotel Group Code of Conduct. The signature of this contract grants the supplier the status of Approved Supplier.
Additionally, and as part of the Homologation Contract, the SLA (Service Level Agreement) is applied, which parameterizes the level of service and penalizes any deviation in the service offered by the supplier.
The breach by the supplier of any of the clauses of the Homologation Contract, as well as of any of its terms or annexes (e.g., NH Hotel Group Code of Conduct or the Coperama Supplier Code of Conduct) will lead to an automatic termination of the contract, giving rise to the possibility of taking legal action against the supplier.
Have signed the Code of Coduct signed currently in force
signed to Code of Conduct In 2021
During 2021, a total of 169 new suppliers globally adhered to the NH Hotel Group Code of Conduct and the Coperama Code of Conduct. Thus, in 2021 the number of active suppliers with signed codes reached a total of 1,756, compared to 1,816 last year, down 3%.
NH Hotel Group is focusing its efforts on achieving sustainable management throughout the entire supply chain. The supplier management Model seeks to have the best suppliers available through business procedures that guarantee transparency and equality of conditions for the different bidders. The Company offers a win-win model for all parties with a commitment to a long-term relationship. The supplier’s rating is the requisite necessary in order to participate in procurement processes and is obtained as a result of the approval process.
Accordingly, NH Hotel Group encourages approved procurement in most of its hotels, with the need for the required products being identified by each hotel. Coperama’s task is therefore to approve and authorize potential suppliers. In conjunction with our responsible supply goals, we will continue to identify high-quality products that are environmentally acceptable and socially responsible. These efforts will contribute to the development of responsible products in all geographical areas where we are present and in the future.
Hotels that consolidate have different monitoring indicators to control purchases from approved suppliers within the Procurement Perimeter.
In 2021, the goals have not been met in all Business Units because of the worldwide pandemic and the need for hotels to adapt to current demand.
* Accounted for all suppliers with billing during 2021.
** For NH Hotel Group, a local supplier is defined as a supplier based in the same country where its tax headquarters are located, while an international supplier is one that has its tax domicile in a different country.
RISK MANAGEMENT IN THE SUPLY CHAIN: CRITICAL SUPPLIERS
Procurement volume from critical suppliers
Critical suppliers identified
NH Hotel Group works to expand sustainability to a supply chain that is permanently improving, with innovation always at the forefront, made up of the best partners and suppliers. The supply chain management process is based on an assessment of the intrinsic risk factor of outsourcing a service or the supply of a product.
To carry out its management, NH Hotel Group has identified its critical suppliers as those that could affect the Company at reputational level (or generate an operational and/or legal risk) or due to a significant volume of billing or having products that have been especially designed for the Company. According to this definition, the critical categories for NH Hotel Group would be the outsourcing of cleaning services, security services, laundry, amenities and textiles, the latter belonging to Tier 2.
The selection of these suppliers must be carried out using the highest quality standards, which will be established by the RFP (Request for Proposal) document, with technical questions. For this initial assessment, specific documentation must be submitted providing evidence of the veracity of the information provided. This preliminary assessment is complemented with a subsequent screening that is intrinsic to the contract award process, based on compliance with the technical requisites included in it.
A new development in 2021 has been the creation of a self-assessment questionnaire for suppliers. NH Hotel Group’s main suppliers have to complete a questionnaire each year on ESG criteria established by the Company. This self-assessment questionnaire will allow suppliers to provide additional information for consideration related to ESG criteria. Based on the results, the Company will implement any adjustments and improvements it considers necessary. This analysis will let NH Hotel Group focus its progress in reducing Scope 3 emissions, and in this regard, it is working side by side with its suppliers to reduce its commitment of 20% by 2030.
Subsequently, as part of the Homologation Contract, the SLA (Service Level Agreement) is applied which determines the service level parameters and penalizes any deviation in the service offered by the supplier. Suppliers’ services are controlled by the hotels or departments that are the end users of such services. In the event of a complaint, Coperama is notified and, depending on the severity of the error, it demands immediate correction or directly rescinds the contract with the supplier. In 2021 no such case has arisen in any of the Business Units.