22 January 2009 | Andy Allen

Running a supplier awards ceremony is one way of improving relationships and gaining innovative ideas from vendors. Andy Allen explains how to do it

As the entertainment industry knows only too well, awards ceremonies can be invaluable when it comes to spreading a warm glow of good feeling - just look at the Oscars. Procurement professionals may be hard-headed types, not given to emulating the tearful acceptance speeches and glittering frocks of Hollywood's finest. Nonetheless, a growing number of buyers are discovering awards ceremonies can help reward their best-performing suppliers and align them more closely with business strategies.

Howard Andrews, head of infrastructure sourcing at Fujitsu Systems, says: "Awards are a more structured means of communicating what the organisation wants from the supplier."

At South West Water, which has been running a supplier awards programme for two years, senior buyer Pippa Farr identifies several benefits. She says the programme has made suppliers more aware of the strategic vision of the company and helped disseminate innovation throughout the organisation and among other suppliers. It has also highlighted the role procurement plays internally.

So how does a buyer organise such an event and maximise the benefits of doing so?

GETTING STARTED

Perhaps the first task is to gain the support of senior managers and relevant board directors. This is more than just a formality - their participation plays a vital role in motivating suppliers to take part in the awards.

While it is almost impossible to promise future contracts to even the best suppliers, the incentive for them to participate in awards is the chance to gain a competitive advantage. They can do this by meeting senior managers in the buyers' organisation and gaining insights into the direction of the company. Naturally this requires the participation of executives. At South West Water, for example, the awards ceremony is hosted by chief executive Chris Loughlin. At Fujitsu Systems it is attended by board directors and senior management. In many cases suppliers would usually have difficulty gaining access to top level people.

Last year suppliers who won Fujitsu Systems' "gold standard" were also invited to participate in webinars (web-hosted seminars) which outlined the strategic direction of the company.

"Winning an award doesn't give anybody a guarantee of new business," says Andrews. "But it primes them and puts them into a position which other suppliers would have difficulty getting into." Buyers at Fujitsu Systems in turn get an opportunity to learn about new technologies and processes being introduced by suppliers.

John Collington, group commercial director at the Home Office - which believes it is the first major government department to run a supplier awards programme - agrees this is a major incentive. When the department held its first ceremony in July those suppliers who were invited (anyone who chose to submit an entry) had the chance to meet Home Office minister Meg Hillier and senior civil servants.

"A number of SMEs found this particularly useful because it would be their only opportunity of talking to the permanent secretary."

Collington sees another benefit for successful suppliers. Many of the winners, such as Ernst & Young, now feature the award on their websites. For suppliers the marketing benefits are being named as a high performing company by a prestigious customer. And, Collington stresses, it is important to communicate to suppliers the benefits of the awards programme and the behaviours the buyer wants to encourage.

WHICH CATEGORY?

Before handing out the trophies, however, any buyer organising an awards programme needs to define the categories the awards will be divided into and solicit entries. Fujitsu Systems had three categories - IT software suppliers, hardware suppliers and service suppliers - whereas the Home Office had awards in eight categories supplemented by a single overall winner.

Buyers should not be afraid to tinker with the format from year to year. The Home Office, for example, scrapped the "best technology improvement" category in its last awards after realising that many suppliers were reluctant to enter for fear of giving the impression that their previous work had not been up to scratch. Next year the Home Office will hold additional categories for suppliers from the voluntary sector and SMEs. Similarly, South West Water has seen the quality of entries rise significantly by reorganising categories to make them clearer.

Approaches to deciding who should win awards also differ significantly. At Fujitsu Systems a supplier management board examines all 35 strategic suppliers against a performance matrix. Last year it awarded gold standard to 18 suppliers. At the forthcoming awards in March, a "best of the best award" will single out overall winners in three categories.

At South West Water strategic suppliers are invited to submit a two or three-page application with photos.

"We get people to write a brief on a project or something they've done within the year," says Farr. "Then we make sure the shortlist goes to the right team members internally to ensure what is being submitted as evidence is a true and balanced entry."

This helps filter out suppliers who might have exaggerated their achievements.The format of the event itself presents its own challenges. In response to feedback following its first year of awards, South West Water fine-tuned the ceremony to introduce extra drama into the proceedings.

Instead of informing the winning supplier that they had gained first place beforehand, the winner and two runners-up in each category were told they had been short-listed for the award and invited to the ceremony. The reward was an added sense of occasion when the overall winners were announced.

SMOOTH RUNNING

Organisers may also benefit from introducing a theme to the event. At the Home Office awards the focus was on sustainability, with food from sustainable sources, organic wine served and trophies made from recycled materials.

During the event itself, a carefully prepared presentation on how the winners can help communicate best practice to other suppliers is a good idea. At South West Water award winners included suppliers who had developed innovative ways of minimising disruption to the public during works programmes. These processes were often picked up by other contractors during the awards ceremonies - setting new benchmarks for standards.

"In the next year that becomes normal practice," says Farr. "It's a way of increasing standards, raising expectations and demonstrating how a supplier actively contributes towards the corporate vision."

Lastly, organisers should leave enough time to set up the awards. Fujitsu Systems allowed a year between making the decision to hold its first ceremony and the big day. In most cases buyers advise allowing four to six months to organise the event. After all, a rushed ceremony is worse than none at all.

Andy Allen is a freelance business journalist