Jewelry chain motivates suppliers with its ‘Vendor of the Year’ contest

[h3]Day’s Jewelers[/h3]
Address: 88 Main St., Waterville, ME 04901
Phone: (207) 873-7036
URL: www.daysjewelers.com

[dropcap cap=E]very January, the vendors who supply Day’s Jewelers’ six stores in Maine and New Hampshire wait with a certain apprehension. It is report-card time.

One supplier will be named Vendor of the Year. The others will receive written evaluations of their performance in the preceding year, noting their weak points and areas they need to improve.

[componentheading]THE IDEA[/componentheading]

It is not a time for the thin-skinned or sloppy. “We strive for excellence all the way through,” says Kathy Corey, vice president of merchandising and one of the owners of Day’s Jewelers. “It really boils down to quality.”

While other retailers may hand out plaques to promote a little goodwill between supplier and buyer, Day’s has a steely focus on ensuring its vendor partnerships are watertight and operating at maximum efficiency.

“The concept was to improve communications between what we do and what our vendors do for us,” says Corey. “The things we measure and evaluate are important to us in having an ongoing partnership with our vendors. And in putting it all in writing, we find it is much more effective than having a phone conversation.”

Smooth-running vendor partnerships are of crucial importance to Day’s Jewelers, whose six stores range in size from 5,000 to 10,000 sq ft and offer a wide array of designer and custom jewelry.

[componentheading]THE EXECUTION[/componentheading]

In evaluating its vendors, Day’s assesses three main performance categories:

Communication. This is to ensure the vendors understand requests for product. “We track how we are able to communicate to the vendor and how well they comprehend — how we place orders, and how they understand us,” Corey says.

Quality. This covers not only the condition of the merchandise itself, but also the paperwork. “When the merchandise gets here, is it invoiced properly? Is the quality up to our standards? Is the merchandise what is supposed to be there?” Corey says.

Payment. Day’s makes sure that there is consensus from both parties as to what is owed, and that they have the ability to reconcile disputes. “We want to make sure we are paying our bills on time, and we want to make sure their employees are courteous and friendly,” Corey says. “We also want to make sure there are no issues over how much we owe them, and we want to make sure we get credit for returns.”

All three of these factors are taken into consideration in determining a vendor’s performance. Results are tabulated by Day’s employees and written down on report cards.  

“We grade on a numerical system with scores from one to 100. If a vendor is always or almost always right on, they get a score from 95 to 100,” Corey says. “We do the evaluations on a quarterly basis, based on a review of invoices and receipts.”

Not every vendor is evaluated in such a comprehensive manner. Day’s makes a list of its top vendors in terms of volume and how important they are to each product category. “It’s not because I don’t want to evaluate every vendor,” Corey says. “But we want to put our time into the top vendors.”

Corey estimates that she and her staff spend a total of about 50 hours per year on the written evaluations and tabulation of the results and that the expenses come to between $1,000 and $1,500, which is a small price for a retailer that buys about $9 million a year in merchandise.

The support group involved in evaluating the vendors includes both the employees who work in inventory operations — those who work on quality control and anybody who puts their hands on the product and gets it ready for the stores — and the company’s accounts payable department.  

“We send a letter of notification congratulating the winner accompanied with a gift such as lobsters or a basket of other Maine products,” Corey says. “We also send letters to the other vendors, informing them who the winner was.”

Suppliers to Day’s Jewelers can get the award more than once. Stuller, for example, has won the Vendor of the Year title on a number of occasions.

In addition to the notification letters, the vendors get the evaluation sheets, so that Day’s suppliers can see what they are doing right and what they need to fix.  

“We send the report cards directly to the president of the company and to our sales rep,” Corey says. “We have noticed that with certain vendors with whom we have had a hard time effecting change, that this vehicle is very effective. One particular company president even used the information to share with his own employees during company meetings.”

Another vendor, due to a problem with its delivery methods, was not meeting Day’s requirement of having its merchandise in stock 98% of the time, Corey says. “He was not aware of it until he got the report card. It was a wakeup call for him, and it was instrumental in helping him improve his business.”  

Corey says the feedback for vendors, both good and bad, is well received by company principals.  

“In my experience, the owners prefer to see the bad news, because it gives them a chance to improve,” she says. “Always when reading these report cards, they take the problem and address it as expediently as possible, because they want to drive their scores up. They want to take care of their customers.”

Not one to just point fingers, Day’s shines a light on its work practices as well.  

“We also call our vendors and ask them to evaluate us, which is also tied into our own employees’ evaluations,” Corey says. “We randomly call 10 to 12 vendors a month and ask them how we are doing in paying our bills on time, evaluating our accounts. We get a lot of surprised reactions when we call to ask that.”

[componentheading]THE REWARDS[/componentheading]

Corey points out that getting feedback from vendors on her employees’ performances is necessary in maintaining profitable relationships with the vendors. “I can’t stress enough the notion of partnering,” she says. “We try to get the whole picture. It is all about relationship building, communications. It is all about performance.

“There is no secret to this. It is about how to get the best out of people — out of vendors or of employees. We find that positive reinforcement brings more positive experiences,” she says.

[span class=note]This story is from the September 2006 edition of INSTORE[/span]