Recognition Programs for Good Suppliers - Pros and Cons

[RosieA]

I am working on development of a supplier recognition program to reward those suppliers who consistently meet our requirements.

For those of you who already have such a program, what have your experiences been? Has it been helpful? Are there pitfalls or drawbacks?

Is there a monetary or other value to them, such as better payment terms? Or is it strictly a certificate or a plaque?

Thanks in advance!

 

[trainerbob]

Which customers do you prefer to do business with - The ones that pat you on the back regularly, or the ones that beat you up regularly. Pass the same thinking on to your suppliers!!!

 

[harry]

What comes out from the 'horse mouth' certainly have much more value than that from an independent third party with no real or actual business experience with you (such as certification bodies).

From what I see over here, many organizations place more attention to it - especially after they had received recognition for the first time (to maintain the recognition).

 

[RosieA]

Bob, i agree, and that's why we're planning a program. What I'm looking for is feedback on things that may backfire or trip us up as we build our program.

For example: years ago, a fortune 100 company told us that they were narrowing their supplier base from 40 suppliers to 6. If we wanted to stay in the 6, we'd have to do some spec work to match their requirements. We put a years worth of work in, made the top 6, only to have their procurement group do a reverse auction and place the business with the lowest cost supplier.

If you reward the best suppliers, and your company philosophy is to reverse auction based on cost, then the reward is meaningless. That's the kind of thing I'm looking for.

 

[Statistical Steven]

I have seen both good and bad from supplier recognition programs. The good is that the "smaller" suppliers use it as a marketing tool, especially if you are a larger customer. The negative is that larger suppliers might not value the recognition. I have found a very useful technique is to have a supplier day at your facility. Invite in your key suppliers for a day where they can see how their products fit into your process. Let them experience why quality matters. Also allows you to share best practices amongst your suppliers.

 

[Mike S.]

Yes, it does tend to mean more to the smaller companies – after all, does Fed Ex care if they get a “Supplier of the Year” award from a $1M a year small biz? Probably not. But it can be rewarding to the small to mid size companies, especially if you (the giver) ensure that the grunts (QE’s, Inspectors, Assemblers, Machinists, other floor-level folks) get involved in the recognition and not just a couple of the big-cheeses.

And even if you don’t have a formal SOTY award, if a supplier has done well for you, especially if they had to work hard to get there, make it a point to go there if you can (and conference call if you can’t) and praise the key people in the presence of their bosses, or send a nice letter to them and copy their bosses. Trust me, people remember that kinda stuff. If you're sincere, it will show and it will pay off.

 

[jasonb067]

I have posted in detail here how our supplier rating system works. Again, the best and most effective part of our system is being allowed to pay more for more stable, better performing suppliers. This has given us a spot at their facility as a preferred customer.

EDIT: DEAD LINK DEACTIVATED.