“And the winner is…”: Supplier Award Schemes

Award schemes come in a considerable variety of shapes and sizes. Likewise the concept of ‘developing’ your suppliers leaves a wide spectrum of potential, with a carrot at one end and a large stick at the other.


The Set Up

Start with defining the effect you want the scheme to have on your suppliers. Are you looking to genuinely reward the best suppliers? This could be by giving them something meaningful, or by using the process to give them contacts and insights into your own company.

On the other hand are you looking to use the process to highlight to non-winners that they are losing out – perhaps that they may even be under threat as a result. Both of these are possible to achieve, but you may set the process up differently depending on your needs.

Establishing Criteria

Next consider how the awards may fit into other measurement programs. If you have an existing appraisal process then it must be related to the awards scheme – if not then one or other of them will suffer a serious credibility crisis. If you don’t have an established scheme, then an awards ceremonies can be a good launch pad to announce them, and to show that there will be winners from the process.

There is a second strong connection between award schemes and supplier ratings – they both only really generate value over time. Suppliers will need to see that the success criteria are not just one-off political choices, and the process is really about developing them – not just an excuse to tell them all to reduce prices or leave the room. It will probably take two or three years to properly establish an event as a key focus for your supply base.

Behind the Win

The most effective awards schemes use the event to genuinely share learning across the supply base. This can be a two edged sword. You want to reward your best suppliers, and you need to make sure you are not asking your best performers to simply give away their competitive advantage in public. With this in mind, get them to share by focusing more on the ‘how’ and ‘why’ of their performance.

In too many ceremonies they simply tell a chronological story, which is not nearly as helpful to others as learning what the drivers, attitudes and obstacles were to success. Also ensure that your suppliers speakers are well practiced, that you have worked together on not only the content, but also the style of any presentations made.

Slick and Well-Staged

This last point confirms that it should be a well managed, well prepared, and a well staged process. The winners would know in advance and can work on helping the development messages. It is not necessary to have fanfares, glitter and repeat sound blasts of Queens’ ‘We are the champions’.

It is important to fund it well, making it slick and professional. Brief your own senior managers who may attend so that they both give a consistent message – and you can use it to engage in a subtle bit of supplier conditioning. External speakers are very effective, they can add a new dimension to the process and give it a ‘special event’ feel.

All suppliers should have some chance to contribute. Don’t just talk ‘at’ your suppliers, make opportunities for them to feedback. Having done this also ensure you manage expectations on how you are going to use this feedback – this will be an important convincer that the process is one to be taken seriously.

Supplier events therefore can be an excellent tool to develop your supply base, and like any tool, planning and practicing its use will make it that much more effective.