“Supplier Recognition: Start Now!”

There is real, tangible value in recognizing your exceptional suppliers. But, doing supplier recognition well takes a lot of planning. The analogy I use is that it’s like planning a wedding – lots of decisions, lots of planning, lots of logistics.

I tend to raise this topic annually at this time of the year for a simple reason – if you plan to have a supplier recognition event in the April – June timeframe of 2011, you should be starting NOW.

What might be the return on investment from a well-designed annual Supplier Recognition program?

Benefits typically fall into two categories:

1. Further performance improvements from the premier suppliers that you recognized
2. Improvements from suppliers who want to become your premier, recognized supplier next year

Here is a snapshot of one company’s experience:

1. First year expenses of less than $ 50,000 (all-in expenses, including a full-page color ad in a major supply management magazine)
2. 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
3. ROI : 20x just based on one supplier’s performance improvement
4. 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.

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