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Supplying Principles and Practices > USPS Supplying Practices Process Process Step 5: Measure and Manage Supply > Recognize and Reward Supplier
Recognition of a Supplier is the identification of exceptional contributions and
capabilities from past experiences on Postal Service contracts. It is in the
Postal Service's best interests to realize the importance of recognizing and
rewarding supplier contributions and accomplishments. Rewarding suppliers
for outstanding performance motivates further quality and encourages
suppliers to strive for excellence in their products, service levels, and
operations. Recognizing and rewarding suppliers strengthens strategic
relationships, which fosters strong and productive supplier relationships.
Reward programs inherently benefit suppliers. Recipients will show
substantial improvement in total quality and performance levels compared
with unrecognized suppliers. Suppliers can also improve company reputation,
increase marketability, and reduce costs. Posted on websites and used in
marketing materials, recognition awards help suppliers develop new business
and create strong relationships with other companies. By achieving a certain
status with the Postal Service, suppliers can:
• Improve their competitiveness
• Improve their relationships with the Postal Service
• Reduce inspections
Performance metrics are tools that enable the Postal Service to objectively
benchmark the ability of their suppliers to meet company performance
standards. Supplier recognition and rewards are linked to these standards.
Once supplier performance is measured, the Postal Service may choose to
recognize and reward outstanding suppliers to cultivate the
Supplier/purchaser relationship. Determining what to measure is the most
important challenge of evaluating supplier performance. The metrics used to
measure supplier performance should be simple and SMART:
• Specific - metrics are specific and targeted to the area
measured
• Measurable - data that are accurate and complete can be
collected
• Actionable - easy to understand and clear, when performance is
charted over time, which direction is "good" and which direction is
"bad"
• Relevant - do not measure everything, but only things that are
important
• Timely - measures for which data are available when needed
The major metric categories that manage supplier performance, although
they may vary in terminology, are:
• Cost
• Quality
• Delivery
• Responsiveness
• Technology
• Other metrics may include continuous improvement, value,
environmental, etc.
Metrics are reviewed internally and externally by the Supplier. The key
metrics that are in place should be vital to supplier performance and aligned
with Postal Service objectives and strategies.
Metrics are used to create a rating system, which may be weighted to
emphasize factors crucial to successful performance. Feedback should be
solicited from suppliers regarding ratings to assure buy-in. Ratings are used
for:
• Objectively comparing similar suppliers
• Identifying supplier excellence award winners
• Aiding future supplier selection (supply base optimization)
Reward incentives can include assurance of future business or public
recognition such as a plaque, awards luncheon or dinner, honors ceremony,
press release, or outstanding letter or formal communication to the Supplier's
senior manager. Recognition programs encourage performance
improvements by rewarding suppliers with additional benefits, cash back for
achieving performance-based objectives, and strategic or key supplier status.
In return for some of these rewards, suppliers must be willing to invest and
share risks on key Postal Service programs, innovations, and technologies.
To ensure that suppliers retain motivation to attain rewards and recognition,
the frequency and number of awards presented to suppliers must be
considered. The following tactics can assist the Postal Service in maintaining
the prestige of supplier recognition and rewards:
• Use high-caliber suppliers in the evaluations to reinforce the idea
that the competition is of high quality.
• Present the awards in a highly visible setting to ensure that the
prestige of the award is recognized and remains high.
• Hold awareness evaluations in a timely manner. Awards should
be given frequently enough to keep suppliers encouraged, but not
so frequently that the award is no longer seen as an
accomplishment over a substantial period of time.
One of the most valuable benefits from supplier recognition and reward
programs is feedback. After analyzing and assessing the results of the
evaluation, the Postal Service should provide feedback to the suppliers and
advise them of the changes that need to be made in specified areas. These
programs also allow the suppliers to provide feedback to the Postal Service
for improvements to Postal Service operations.
The Postal Service initiated the Quality Supplier Awards (QSA) Program to
annually recognize its most outstanding suppliers (i.e., suppliers who have
clearly demonstrated their ability and commitment to consistently provide
quality products or services to the Postal Service). The awards are presented
by the Postmaster General to publicly and formally recognize suppliers who
have truly made significant contributions toward helping the Postal Service
benefit from Supply Chain Management best practices. These efforts have
been successful in providing positive bottom-line and performance results
that ultimately help the Postal Service more effectively achieve its mission of
providing mail service to the American public.
This program has recognized small, large, minority-owned, and
woman-owned firms for outstanding performance since 1989. In the past,
winners have been segregated by small and large company categories. From
1997 to 2002, winners were segregated further by three other categories:
• Operational Services
• Professional and Consultant Services
• Manufacturing
Evaluating responses to a set of criteria is the Postal Service's basis for
awarding suppliers the QSA. The criteria conform to commercial best
practices by:
• Being linked with the Postal Services strategies and objectives
• Incorporating some of the major categories (i.e., cost, quality,
etc.) used to manage supplier performance
However, the Postal Service can further align the QSA Program with
commercial best practices by developing the criteria (standards) that
suppliers are evaluated against into metrics.
The Postal Service follows other best practices by having its employees or
teams who work closely with the suppliers participate in the evaluation. The
"internal customers" provide information concerning the criteria. Unlike the
QSA Program, where evaluation is based on qualitative evidence, most
reward and recognition programs evaluate information that is in the form of
quantitative data.
The Postal Service publicly recognizes the suppliers who attain a QSA that
follows commercial best practices. The winners receive a QSA plaque and a
letter of commendation signed and presented by the Postmaster General at
the QSA Ceremony, which is hosted by the Vice President, Supply
Management (VP, SM). Postal Service Officers and Vice Presidents are also
invited to the ceremony. A celebratory reception is held after the QSA
Ceremony, which includes supplier attendees and members of the
Purchase/SCM Teams responsible for the successful effort. A videotape,
photographs, posters, and mementos such as "USPS Quality Supplier" lapel
pins are provided to the winning suppliers to share with their employees and
to aid their publicity efforts.
A press release is prepared by the Postal Service Media Relations
Organization for appropriate distribution and publicity. Winning suppliers are
able to create a press release themselves and use any other means to
communicate the award (e.g., supplier website).
After the Postal Service establishes criteria and performs the evaluation, the
suppliers' information can not only be used for the QSA Program but can also
be leveraged to designate suppliers a certain status, such as "strategic" or
"key." Currently, the Postal Service uses the information gained from the
criteria as examples of cost reduction achievements and best practices
implemented by various Postal Service Purchase/SCM Teams.
Rewards can serve to strengthen Postal Service and supplier relationships
and motivate not only the winners but also the losing nominees to improve
and win the award the following year (if suppliers are not motivated, this can
be a telling sign of the award program or the supply base). Providing
feedback to suppliers, especially those that were not selected for the award,
is essential to generating supplier understanding of necessary improvements
and how to align with Postal Service objectives. The nominator, a Postal
Service employee, receives feedback relating to how the Supplier can
improve as a Postal Service supplier and QSA nominee.
Provide Feedback topic, Make Final Decisions task, Process Step 3:
Evaluate Sources
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