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Blog
The ROI of Supplier Recognition
May 6, 2008
What might be the return on investment for your annual Supplier Recognition activities?
Benefits typically fall into two categories:
– Further performance improvements from the premier suppliers that you recognized
– Improvements from suppliers who want to become your premier, recognized supplier next year
Here is a snapshot of one company’s experience:
– First year expenses of less than $ 50,000 (all-in expenses, including a full-page color ad in a major supply management magazine)
– The “extra effort” of just one supplier who wanted to be selected in the second year generated new cost reductions of more than $1 million per year
– ROI : 20x just based on one supplier’s performance improvement
– Noticeable, quantifiable improvements in TCO from many other suppliers
Beyond these “program benefits,” the effort also increased the involvement of senior management in the company’s supplier management activities – in a positive manner.
Supplier recognition – done well - can be a valuable part of an overall transformation plan for your supply management activities.
Posted by Robert A. Rudzki on May 6, 2008 | Comments (0)