Last time, I discussed the value of awarding individuals and teams in the procurement organization for their performance over the course of a year. Today, we’ll look at the value/opportunity in recognizing suppliers for their hard work and strong performance.
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 Ardent Partners’ research over the years and our articles here on supplier performance management (“SPM”) have consistently placed it above the mean for Chief Procurement Officers 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, supplier innovation will become an increasingly important part of a company’s competitive advantage [Sidebar: We believe this last point so much so, that we built our large 2011 CPO Rising report around this idea].
Looking for some ideas on how to get started? I’d love to help – send me a note.
originally published 3/12/10 – updated for 2/29/12