Support your best; reward them

Awards, citations and plaques are nice, more business is even better

By Tom Stundza -- Purchasing, 11/17/2005

Consistent quality and outstanding customer service are key elements of success in manufacturing businesses. In turn, manufacturers count on their supply base to deliver the same—high quality materials, on-time deliveries, and technical services. In this globally competitive era, buyers and sellers are striving for enhanced relationships where businesses up and down the supply chain benefit through shared cost savings.

Quality, service and savings aren't achieved by handing down edicts about standards or specifications and expecting the supply base to stand up and salute. And, when buyers recognize the suppliers have gone that extra mile, it is fitting that the achievement is commemorated with special acknowledgment such as awards and commemoratives.

An innovative supplier award program was held just last month in Wolfsburg, Germany, where Volkswagen Group and 38 supplier-partners identified and approved triple-digit million savings potential at the automaker's first Suppliers' Convention. Francisco Javier Garcia Sanz, a member of the board of management responsible for procurement, says these suppliers—together with 38 cross-departmental teams—agreed to long-term strategic supply partnerships during the week-long event.

"These suppliers will become our premium partners," says Garcia Sanz, "and will have special standing when we come to deliberate on new vehicle projects."

Not all companies have merged supplier awards with such a strategic approach to managing supplier activities as Volkswagen Group—but they probably should consider it. Reason: "Years of cost-cutting and lean operating practices have made businesses more vulnerable to supply disruptions than ever before," suggests Tim Minihan, senior vice president of supply research and strategy at Aberdeen Group in Boston.