Ponson had a 1-7 record and a 7.36 ERA in 14 games including nine starts for the Royals. In his last start on Friday night, he was tagged for seven runs in 4 1/3 innings by the Tampa Bay Rays.
"Honestly, I still love his stuff, I really do," Hillman said. "It's just a matter of location. He hasn't had any help [from the bullpen] with his inflated numbers. I haven't done the statistical research but he hasn't had any help with inherited runners at all."
Davies, since being optioned to Triple-A Omaha on June 20, had a 4-2 record and a 2.14 ERA in eight starts. In 46 1/3 innings, he gave up 47 hits and 14 walks with 44 strikeouts. For the Royals this season, Davies was 3-7 with a 5.76 ERA in 14 starts.
The change means that Davies will start on Wednesday night against the Seattle Mariners in Kansas City.
Ponson will remain on the roster until the move is made official, the Royals said.
Davies was sent to Omaha primarily to work on his fastball command.
"We still want to see it be better," Hillman said. "It's just time to get him back up here and ride it out, get him back in the rotation and, hopefully, he performs well."
The Royals have 10 days to put Ponson on waivers, trade or release him. Hillman indicated that, if he clears waivers, the Royals would offer Ponson a spot at Omaha.
"He hasn't had any breaks but he also hasn't located the ball effectively with the stuff that he has," Hillman said. "We like the arm, we like the stuff, there is the possibility that we would allow him to pitch in Triple-A if he wants to hang with the Kansas City Royals. He'd be a security blanket with experience."
Davies could have replaced either Ponson or Bruce Chen, who is 0-6 with a 5.73 ERA, in the rotation.
"It could have been either one of those guys but obviously Bruce, in his last two outings, has monitored the damage better," Hillman said. "The cut fastball has added to his pitch repertoire and he had some bad swings and jam shots on him yesterday."
Chen had his best outing since joining the Royals on Saturday against the Tampa Bay Rays. He gave up two earned runs on five hits in 6 2/3 innings but the Royals lost, 7-1.
According to Hillman, Chen's next challenge is to avoid elevating his changeup in the strike zone.
Hillman was appreciative of Ponson's work for the Royals. Ponson was signed during Spring Training with a background of being a sometimes controversial figure.
"He was a pro's pro," Hillman said. "He did everything we asked him to do -- bar none."
Dick Kaegel is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.