Being a procurement professional isn’t an easy job. You must make the right decision when selecting vendors and suppliers. And once you make that crucial decision, you have another task to handle: onboarding them. You can follow many vendor onboarding best practices to enable successful onboarding.
Vendor onboarding can be tedious but is essential to any successful supply chain strategy. The good news is that best practices exist to help streamline the process and ensure success. If you’re looking for an easy-to-understand vendor onboarding best practices checklist, look no further than this comprehensive guide from SupplierGATEWAY.
We’ll look at the key factors to consider when onboarding vendors and how SupplierGATEWAY can help simplify the process and save your organization time and money. Let’s dive in!
Preparing for Vendor Onboarding
Vendor onboarding is critical to your company’s supply chain— suppliers are crucial to the quality and cost-effectiveness of your business. Fortunately, setting up and managing vendor onboarding can be easy with the right approach. When done correctly, onboarding can be integral to your company’s success. Not having a supplier onboarding program can cost your business money and expose your business to undue risks.
To start on the right foot, you should begin by understanding the basics of vendor onboarding. This involves developing a systematic process for evaluating an incoming supplier to ensure their quality and performance standards meet your expectations. As part of this evaluation process, it is important to create a comprehensive checklist that covers:
- Due diligence processes
- Risk assessments
- Supplier contracts
- Quality assurance measures
- Operational procedures
A standard, easy-to-follow onboarding checklist guarantees that you can correctly track each supplier’s onboarding process and that all suppliers meet your company’s criteria quickly and efficiently.
Assessing Your Vendor Risk
Now that you’ve identified and selected the right vendors, it’s time to assess the associated risk. Vendor risk assessment is a process that looks at each vendor’s qualifications, capabilities, and the impact of the risks posed to your organization should anything go wrong in your relationship. It is critical when implementing vendor onboarding best practices. While assessing vendor risk is critical, it can take a vast amount of time and slow down your business. Lengthy supplier intake questionnaires take forever to complete for suppliers. Reviewers often miss important information buried among unnecessary information.
According to Gartner, you should streamline your supplier intake questionnaires by considering what constitutes high risk to your organization and focus your risk assessment in those areas.
Common risk categories include but are not limited to:
- Qualifications – Is the supplier qualified to meet your organization’s standards?
- Capabilities – Does the supplier have the physical and digital infrastructure necessary to deliver their services?
- Financial Risk – What would the financial impact be if your relationship with this vendor breaks down or ends?
- Reputational Risk – How might a relationship with this vendor affect your organization’s brand image?
- Regulatory Risk – Are there any potential risks associated with government regulations and compliance laws if you work with this supplier?
By assessing risk components that most impact your business, you can ensure that new vendors or suppliers are an asset rather than a liability for your business.
Establishing Vendor Management Policies and Procedures
If you’re looking for an easy-to-understand supplier onboarding checklist that includes best practices, establishing vendor management policies and procedures should always be top of mind. In many cases, these policies determine the entire direction of your procurement process—from supplier selection and onboarding to quality assurance and ongoing performance reviews.
So what deliverables should you include in your vendor management policy? Here are some processes to focus on when creating vendor management policies:
Vendor Selection
Your vendor selection process should include criteria for choosing suppliers, assessing and evaluating suppliers, and assessing supplier risk. All of this must align with your stated objectives and corporate sourcing strategy.
Data Collection
Your vendor onboarding process should also include a strategy for data collection. Allow your suppliers to provide data like contact information, supplier capabilities, payment terms, and contract sign-offs. Getting the data from the supplier instead of piecing together data from spreadsheets and emails helps ensure data accuracy and completeness. For more information about what good foundational supplier data looks like, check out this article and this article.
Communication
The success of any partnership depends on communication. Establishing clear communication channels with regular check-ins can help avoid problems from occurring down the road. Your policy should also lay out protocols for addressing issues or resolving disputes if they arise.
All in all, having a comprehensive vendor management policy will go a long way in helping you build strong partnerships with your suppliers—and keep them going long into the future.
Setting Up Vendor Contracts and Agreements
Getting your vendor’s contracts and agreements in order is critical to onboarding. With the correct setup, you can streamline your operations and maximize efficiency.
Have a Clear Agreement in Place
Before you place your first PO, be sure to have an agreement that outlines what both parties will do and how they will do it. Include payment terms, legal disclaimers, and other necessary documents in the agreement. You’ll want to ensure everyone involved understands what they’re on the hook for—or else there might be misunderstandings down the line that can delay deliveries and payments or cause other issues.
Document Vendor Performance
It’s also important to document every part of the vendor’s performance—from onboarding to delivery—so you can ensure they meet any contractual obligations outlined in their agreement. Tracking everything from vendor communications to shipment dates protects your organization from potential litigation and other risks should anything go wrong.
Establish Clear Expectations
When setting up contracts and agreements with vendors, establish clear expectations about how each party operates and performs. Include terms for payment deadlines, quality control standards, turnaround times for products and services, and other guidelines about how the two parties should interact and work together during the onboarding process. When you start with clear expectations, you reduce the number of headaches you’ll have further down the line.
Improve Vendor Onboarding Best Practices with Automation
Onboarding suppliers is critically important to your organization. However, most supplier onboarding processes are manual and lead to incorrect supplier information. Gathering supplier information is time-consuming and tedious— no one enjoys chasing down information or pouring over spreadsheets.
That’s where automation comes in.
Automating some or all of your onboarding process creates a more streamlined experience for everyone. Allow suppliers to use a supplier onboarding portal to supply their information and get supplier data straight from the source.
Customizing your onboarding workflows speeds up the process and sets the tone for your relationship with a supplier. With custom onboarding workflows, you ensure that you only get data that applies to that specific supplier— no more asking general contractors for their IT certifications.
Keep these best practices in mind when automating your onboarding process:
Set Clear Onboarding Goals
The first step in automating the onboarding process is to set clear goals. What are the KPIs that you want to measure? How much time do you want to dedicate to onboarding each supplier? Clear objectives help ensure that the onboarding process runs smoothly and efficiently.
Streamline Documentation
Another critical step in automation is streamlining documentation. Instead of manually collecting information from each supplier, look for ways to simplify the documentation process. For example, using a tool like SupplierGATEWAY’s Supplier Onboarding Software makes it easier for suppliers to complete forms, helps eliminate redundant data, and helps ensure supplier data accuracy.
Having a single version of supplier data stored in one place makes it easier for tracking and analysis down the line. Since our software connects easily with your current ERP/AP systems via API, supplier data collected through your SupplierGATEWAY onboarding portal and software can be easily populated and updated throughout multiple systems.
Automate Invoicing
Finally, consider automating invoicing processes so that payments get sent out automatically upon completion of work. Reduce manual effort on both sides and help ensure that payments are received on time – every time! Automated invoicing gives you access to real-time data on payments and vendor performance and helps inform business decisions about future projects.
SupplierGATEWAY’s Supplier Onboarding software includes an easy-to-use procure-to-pay system that allows you to pay your suppliers automatically. Receive 1% back on all your payments using SG Pay— saving time saves you money!
Ongoing Performance Management and Evaluations
The last step in vendor onboarding is the upkeep of the supplier relationship, known as supplier relationship management. Supplier relationship management ensures that your relationship with your suppliers remains beneficial. Regularly review supplier performance depending on their contractual obligations and assess them against established KPIs.
Supplier relationship management is outside the scope of this article, but you can read more about supplier relationship management in the following articles:
Learn How Your Company Can Benefit From Supplier Management
Maximizing Your Procurement Process With Supplier Relationship Management
Conclusion
In short, supplier onboarding is a complex process and should be broken down into key steps. To ensure you have the best experience during onboarding, have appropriate processes, tools, and people in place. Consider supplier requirements and provide a frictionless experience while remaining compliant with internal compliance policies and governing industry regulations.
Using the right tools and best practices, you can streamline the onboarding process and make it faster and easier than ever. By leveraging the right technology and external data sources, you can reduce the time, effort, and cost associated with supplier onboarding and make sure you are working with the correct suppliers.
With SupplierGATEWAY, you can get the most out of your onboarding process and ensure it meets all requirements. Schedule your demo now and see why top Fortune 500 brands use our onboarding tools.