When it comes to supplier recognition awards, I’ll follow the advice of one of my key suppliers when she said, "Awards are nice, but I’d rather be recognized with more purchase orders."
Supplier recognition awards were a once a staple of supplier development programs and used to motivate a supplier to increase their performance around a number of quantifiable activities such as on-time delivery, zero defects and cost reductions.
The results were mixed.
Some suppliers actively sought these awards, sometimes using them in their own marketing efforts to catch new customers.
Others accepted them graciously and hung them near the timeclock to show employees that a customer was happy with their performance.
Some tucked them away in a lobby cabinet along with recognition awards from the local Little League.
A few ditched them in a drawer, never to be seen again.
And some suppliers refused them altogether.
I worked at a company that embraced the use of supplier recognition awards. It was a big deal to announce the winners of quarterly and annual honors. These awards were as much a recognition of the buyer for their supplier management as it was to the supplier for their performance.
In my company, it was up to the buyer, as part of a forced relationship protocol, to ensure that the awards made it to the supplier, that the supplier formally acknowledged the award, and that it was displayed as prominently as possible. There were even times that photographs were required.
Sure, it was fun to visit a supplier with their latest award, have the supplier stop by for a handshake and a photo op, or even drop the award in the mail with a note of appreciation.
These awards were as much a recognition of the buyer for their supplier management as it was to the supplier for their performance.
What wasn’t fun was when a supplier ignored the award, or worse yet, belittled it.
And in one case, I lost a high performing supplier over their reluctance to accept the award.
One of my suppliers performed well and statistically earned regular performance awards. There was no relationship other than an annual blanket order or two. The harder I tried to find someone in leadership to acknowledge and accept the award, the more awkward the conversations became. The last one ended poorly, with a senior sales manager clearly stating that not only did they not want the award, they really didn’t care if I was ever a customer again.
That award went into my drawer.
So, what can a buyer do to acknowledge high performance and strengthen a relationship, without doling out recognition awards?
Make the (virtual) journey to the supplier
There is nothing better than visiting a key supplier and acknowledging their success in person. Move out of the conference room and get the opportunities to speak to, and thank, the employees. Employees will find greater value in meeting you than seeing your company logo on a plaque or certificate on the bulletin board.
And in this time of pandemic-restricted travel, a simple video will also do the trick. Bring together the employees who are stakeholders in the supplier’s performance, including those seldomly recognized in your own company like accounting, planning and receiving. And show where and how the product or service is used. Be creative and personable.
Understand the competitive environment
Some suppliers don’t want to risk alienating current or future customers.
On an initial sourcing visit to a local shop, I saw a dedicated manufacturing area for my company’s main competitor, including employees wearing shirts and hats with their logo. The supplier tried to explain that there was room for our relationship as well, but I had seen enough.
A shrine like lobby full of plaques from my competitor might have had the same impact.
Be careful of metrics
If you still use supplier recognition awards, be sure your measurements are relevant.
One dispute around supplier recognition awards is around product complexity. In our supplier recognition program, there were commercial part suppliers, those with standard components produced by the thousands, with little manufacturing variation and a cursory inspection on receipt.
There were also custom fabricators of intricate machined parts and printed circuit boards, each with hundreds of operations and tight tolerances, inspected 100%. The custom manufacturers always felt that they were at a disadvantage as they had more opportunity for failure. Yet, the analytics were the same for each type of supplier. That disparity caused many arguments.
The awards process, established to enhance relationships, actually began to harm them. I had a high performing supplier who was willing to lose my business before they accepted an award, and another who threatened to walk away because they found it next to impossible to win one.
There are plenty of ways to "award" suppliers — without an actual award.
This story was first published in our weekly newsletter, Supply Chain Dive: Procurement. Sign up here.