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Category: Supplier Onboarding

Onboard New Suppliers Faster and with Less Risk with These Five Supplier Onboarding Tips

supplier onboarding best practices

Without vendors and suppliers, most businesses wouldn’t be able to function from day to day. Whether suppliers are responsible for raw materials needed to produce finished goods or supplying essential services necessary for company operations, the importance of suppliers necessitates building strong and secure relationships. 

Minimizing vendor and supplier risk and ensuring long, strong relationships is more than just finding the best suppliers. According to Deloitte, 60% of CPOs cite poor data quality, standardization of practices, and governance as the largest procurement problem they face. Having a standardized supplier onboarding process helps increase accurate supplier data capture and quality. Inefficient onboarding processes not only slow your company’s time to market and increase your company’s exposure to undue risk, but also reinforce lack of transparency as a norm for your suppliers. 

Your company’s onboarding process sets the stage for all of your supplier relationships. Efficient and accurate onboarding processes ensure suppliers are aware of and agree to your transparency and communications expectations. Standardized onboarding practices allow suppliers to become partners in data security and transparency. Efficient and transparent onboarding enables positive supplier relationships and helps reduce your company’s exposure to risk.

While risk reduction is a top priority for over 90% of CPOs, poor supply chain transparency leaves a significant number of procurement officers with little to no knowledge of risk beyond their tier 1 suppliers. Lack of supply chain transparency also affects the end customer as well. Over 60% of consumers will not purchase from a company that they do not trust. If your supply chain has low levels of transparency, there are few tools available to use to gain consumer trust.

Adopting best practices for vendor and supplier onboarding will help you create a process that lays a strong foundation for your supplier relationships and ultimately increase profitability while reducing risk for your company. 

What is Supplier Onboarding?

Supplier onboarding, or vendor onboarding, which is part of supplier relationship management, is a process that allows organizations to efficiently vet, qualify, approve, and contract vendors so that goods or services can be purchased, and make timely payments to current and new supply partners. 

While many onboarding processes are similar, organizations may go about them in different ways. The process can either be paper-based or digital, managed via the buyer or self-directed by the supplier. Supplier onboarding isn’t that different from new employee onboarding. 

A well-designed supplier onboarding process helps your company avoid potentially expensive mistakes, including avoiding risks that could put your organization in legal, reputational, or compliance trouble. 

The Supplier Onboarding Process

In this article, supplier onboarding is broken down into five steps:

  1. Identify the need for a new supplier according to procurement requirements. Any new supplier onboarding exercise is triggered by a need identified by procurement.
  2. Identify potential suppliers and evaluate them. During this process, your organization should gather data pertaining to service record, reputation, credit history, and regulatory, financial, and legal compliance.
  3. Qualify suppliers. Once a supplier has been evaluated, your company should use a predetermined qualification process to qualify (or disqualify) a potential supplier. The qualification process should reflect your company’s policies regarding lead times, pricing, ESG credentials, and terms and conditions. Suppliers that do not pass your company’s qualification process should be removed from consideration while those that pass the qualification process can be approved.
  4. Collect supplier information. Your organization should collect supplier information either via a buyer-led process or through a self-service portal. Using self-service portals is considered best practice and saves buyers and suppliers a considerable amount of time. Your company will need to collect different types of information, including payment details. You’ll also want to ensure that suppliers have access to any necessary systems, and that internal stakeholders have access to supplier information.
  5. Regularly review supplier performance. Supplier performance should be assessed on a regular basis after onboarding. This ensures the onboarding process has been completed and ensures that suppliers are always meeting company procurement standards and requirements in the future. 

Supplier Onboarding Best Practices

In practice, supplier onboarding is often an inefficient, time-consuming process that can often take months to complete. Luckily, there are many steps your organization can take to optimize the onboarding process. By adopting best practices, you can streamline vendor selection, speed up the onboarding process itself, and ensure new relationships with vendors have the best chance at success. 

  1. Take due diligence seriously. Spending additional time on the supplier selection process can ultimately save you time by removing unfit suppliers sooner rather than later. Pay particular attention to reputational risk, financial information and risk, insurance information, and the supplier’s information/data security measures.
  2. Prioritize data security. Keeping supplier data safe is crucial, so it’s important to invest in systems that keep your supplier information and data protected from threats. A paperless supplier information management system will help you protect this incredibly valuable information.
  3. Get leadership buy-in ASAP. Having leadership buy-in early on is essential when creating a supplier onboarding process. Make sure all necessary stakeholders are involved in the process from the beginning. Getting buy-in from leadership ensures that your entire organization uses and understands the process, thus driving success in onboarding. 
  4. Be consistent in your approach. Make sure that your onboarding process is used company-wide. Consistent use means consistent results, but your care and attention shouldn’t stop after the onboarding process is finished. Ongoing supplier management brings about additional benefits for your business, like better time to market, supplier innovation, and more.
  5. Automate when possible. Traditionally, onboarding processes can be time-intensive, labor-intensive, and costly. According to Informatica, businesses who automate part or most of their supplier onboarding processes spend up to 80% less time onboarding new suppliers. Using automation tools whenever possible allows for greater accuracy and efficiency when obtaining necessary information. You can maximize onboarding efficiency by establishing a self-service portal where suppliers can enter in their own data.

Key Benefits of Strategic Supplier Onboarding 

Developing a strong and well-managed supplier onboarding process helps your organization create an efficient and effective supplier relationship management program. A clear, efficient, and easy-to-understand supplier onboarding process creates a strong foundation for relationships that focus on mutual success. 

Alongside relationship benefits with suppliers, your organization will also see these additional benefits when best practice supplier onboarding is instituted:

Supplier Risk Management Solutions from SupplierGATEWAY

At SupplierGATEWAY, we take your company’s risk mitigation seriously. As a SOC II Type 2 and ISO-certified company, we truly care about your supplier data security and accuracy.

We’ve launched over 2,500 self-service supplier onboarding portals and work with some of the world’s top brands and companies like Nike, The NBA, Vizient and LVMH.

Efficient and accurate supplier onboarding is just the beginning of effective supplier risk management—discover how our Supplier Risk Management software saves you time and money while creating more transparent supply chains and helping your organization mitigate risk.

4 Best Practices To Streamline Supplier Onboarding

Today, more and more companies, especially global ones, have grown their supply base exponentially, which makes the onboarding process more complex than ever. It is becoming common for large companies to have hundreds of thousands of suppliers. But establishing new supplier relationships and managing these new suppliers’ risk profiles can be a problem. 

Despite these constraints, companies are also expected to gain a deeper understanding of supplier activities. The solution to these issues starts from picking the right suppliers to partner with and optimizing the onboarding process.

To effectively manage the process, an organization must master its risk assessment, due diligence and supplier relationship management (SRM), which can be difficult without proper tools and good business operations. The following four best practices are the answers you need to streamline and improve the process.

  1. Mitigate Risk and Fraud From The Beginning:

Carefully assessing and prequalifying your potential suppliers is crucial to avoid any future risks and reduce fraud. To achieve that, having clear communication about your organization’s values and, in turn, if the supplier’s value aligns with yours is a must. You should also certify and verify all pieces of information – categories, insurance, financial information, sub-suppliers, and so on – provided by suppliers.

The SupplierGATEWAY supplier-prequalification app can configure supplier risk questionnaires, standardize workflows and automatically filter suppliers who don’t meet your minimum criteria. Furthermore, you can utilize our Financial Risk Monitoring app to proactively watch for bankruptcy filings, tax clients, late payments and collection fillings within your supply base.

  1. Supplier Self-Service Portal:

As the number of suppliers increases, many organizations are under tremendous pressure to assist and work with suppliers without increasing their staff number. With a self-service portal, your suppliers don’t have to email directly to your team whenever they have a question or need additional information, which has often occurred to organizations managing it manually.

The SupplierGATEWAY self-service portal provides you all the necessary tools to ensure consistency in onboarding new suppliers, regardless of the specific category or the supplier sizes. We help you avoid all these troubles and save your time and money with a simple and efficient supplier-friendly portal. 

  1. Access to The Most Current, Relevant, Validated Information:

To save your time and efforts, collecting all relevant, completed and validated documents from suppliers is necessary. Not doing so can potentially interrupt and harm your business. Also, It’s time-consuming without the help of technology. In other words, we believe standardizing the implementation data is your hassle-free solution.

Fortunately, in the SupplierGATEWAY self-service portal, your suppliers can easily update their contact, company, certifications and product information at any time, which is a win-win for both parties to ensure everything is up-to-date.

  1. Automate, Automate and Automate:

Innovations such as AI and automation are more evolving, particularly in business, in which many organizations have been utilizing technology to streamline their operations. Automation brings considerable benefits to your onboarding process, including greater efficiencies, configuring resources and users, fewer errors and tighter control over your SRM platform. Using automation is part of supplier onboarding best practices.

With more and more increasing problems coming from suppliers, the need for automation is expecting to be higher than ever. That’s a reason why the SupplierGATEWAY supplier management solutions are offered, which enhance your process to be more transparent, robust risk management and make better decisions.

Wrapping it up…

No matter what products or services you offer, it’s essential to build a good and strong business relationship with suppliers through supplier onboarding best practices. By doing so, you will positively impact your business’ success in the long run by increasing opportunities for smart and strategic sourcing. And we’re here to help you speed up building that stronger relationship. Schedule your demo today!