Last Friday, I discussed the value of awarding individuals and teams for their performance over the course of a year. On Wednesday, I highlighted the value of an annual Supplier Day in my discussion of what Chief Procurement Officer (CPO) Tom Linton, is doing at LG Electronics. Today, I’ll combine the two.
With this Sunday’s Oscars, so ends another awards season in the US. Whether you are celebrating the best of the best or something else, awards are an acknowledgement of achievement. With some forethought, supplier awards can be a very valuable (and fun) way to communicate with your suppliers.
The mere fact that a procurement team invests time and energy into the development of a series of awards that are focused on supplier performance communicates to a supply base very simply that their performance matters. Now of course, supplier performance matters. It matters to every enterprise. I’ve yet to find one where it does not. But while my research into supplier performance management (“SPM”) over the years has consistently placed it above the mean for CPO priorities, the reality is that very few companies have robust SPM systems and processes in place. Presenting supplier awards on an annual basis can help energize a staid SPM program or initiate a new one.
Several (but not all) key points or benefits to note:
- Like a Supplier Day, a supplier awards event can be used to communicate business objectives to key suppliers.
- An official supplier awards program indicates that supplier performance will be reviewed by procurement leaders — suppliers should and will take notice.
- The types of awards will communicate to the supply base what’s important and what the enterprise is focused on at the strategic level (for example: LG Electronics’ Supplier Award Winners are chosen “based on innovation, product quality, on-time delivery, cost-savings and other factors”).
- The awards process will get an entire procurement organization thinking about the supply base, what supplier excellence means, and who the top suppliers are.
- Competition, being what it is, will tend to align supplier relationship managers with their suppliers as they nominate and then advocate for “their” suppliers to win. They will also coach their suppliers in what it takes to win (i.e. how to improve performance to achieve recognition).
- Suppliers will want to participate and they will invest in what it takes to win. It is, after all, great PR when they do – as seen here, here, and here just this month.
Supplier Awards help build trust and understanding which are the building blocks to strategic supplier relationships and innovation. In the decade ahead, supply chain innovation will become an increasingly important part of a company’s competitive advantage.
In recent years, but not recently, I’ve served as an official judge for several procurement organizations’ supplier awards programs. I’d be happy to participate in your current program or provide my two cents on how to design one. Just send me a note.