5 Ways to Bulletproof your Supplier Onboarding Process
Building new supplier relationships is tough work.
And not surprisingly, new supplier onboarding – like new customer and new employee onboarding – can have a dramatic impact on the long-term success of the relationship.
Perhaps the greatest impact.
According to a recent Aberdeen group report, The Value of Strategic Supplier Data Management, leading supply chain managers were 30% more likely to have structured and systematized supplier onboarding processes in place. The report, based on a survey of supply chain and sourcing professionals, describes what separates the “leaders” from the “followers” among procurement organizations.
When “leading” supply chain managers applied a process to the qualification and onboarding of new suppliers, they saved time on coordination, reduced error, and improved overall communication.
By streamlining supplier onboarding, leaders were then able to focus on relationship management itself: negotiating favorable purchasing costs, improving data quality, getting more out of partnerships, and driving growth.
By contrast, the “follower” group still managed supplier onboarding in an undocumented, unstandardized fashion: no standardization of process steps, no centralized data repository or benchmarking, and endless threads of emails back and forth.
We've talked at length about the costs of poor process management. No surprises there.
Apart from the massive headache, lack of productivity, and potential compliance risk, if you don’t have a clear process in place to onboard suppliers, you’re probably not getting the most out of your supplier relationships.
How to create a bulletproof supplier onboarding process
A complete supplier onboarding process will include several “micro-processes” running in parallel which help to expedite the process, and have the supplier fully up-and-running in your systems as quickly as possible.
Below are five, actionable strategies that you can begin to implement starting today, that will help you to bulletproof your supplier onboarding process – from sourcing and evaluating a prospective supplier, all the way on to daily procurement and generating top-line growth.
1. Build an evaluation and approval process
Surprisingly few supplier onboardings begin with firmly established protocols and policies for evaluation and approval. But it’s the first step on our list, and one of the most important.
At bare minimum, determine internally the guiding parameters for who you will (and will not) work with as a supplier. Then, identify the steps that your team needs to take in order to move potential suppliers through an evaluation – for example, creating a company profile, assessing global capacity, reviewing operations management, assessing customer satisfaction, etc.
At this stage, we recommend developing digital checklists for both your evaluation steps and sourcing parameters.
2. Set and communicate expectations and requirements
To get the most out of your vendor relationships (and ensure success for all parties) you’ll need to set clear cut requirements and expectations for suppliers.
You'll also need to communicate them clearly and effectively, and create a system for maintaining compliance – defining, for example, on-time in-full delivery, expected lead times, response times in case of support questions, conditions for good returns, and so on.
Establishing these requirements and defining them in your new vendor SLAs will make up the foundation for a successful business future, marked by transparent communication and understood expectations. Having a system where clear policies are documented and readily visible will increase trust, and reduce the likelihood of confusion or friction down the line.
3. Digitize supplier registration
Everyone will tell you to build a vendor portal.
Well, there may be some benefit in that, but let’s look at the big picture:
You will need to build the portal and invest your own tech resources into maintaining it. On the other side, your vendors will probably not be excited about becoming "expert users" of your system, working with another portal, with more log-in information, functions to learn, more expectations, etc.
In other words, a vendor portal is not necessarily a bad thing. But alone it won't make your onboarding process any less complicated for you or your vendors – more likely the opposite.
Instead, you should focus on creating a vendor registration experience that is as easy to submit as possible without any friction introduced by a complicated vendor portal. As part of your onboarding, be sure to capture all necessary vendor information, quickly and consistently.
This can be achieved with an embedded digital form or survey for the vendor to fill out and submit, which includes contact information and other details that will help your team quickly assess the submission and get the vendor registered. If you have NDAs or other binding documents needing to be signed, digitize those as well.
Bottom line: if you want real buy-in from your vendors and your team, ease-of-use, convenience, and transparency trumps having an all-encompassing, bespoke vendor portal.
4. Apply a globally consistent process, end-to-end, with localized and vendor-group specific customizations
Some supply chain strategies emphasize handling high-priority “strategic” suppliers differently than other, “lower-impact” vendors in your supply chain.
Although it is likely that some suppliers have more significant impact for your business than others, we still strongly recommend handling all suppliers with a baseline onboarding process that can be localized or customized to accommodate specific vendor conditions.
This will ensure that all vendors have been evaluated on consistent criteria, whether or not the expectations and handling may vary with higher-priority suppliers. This will also ensure that your team is prepared to handle each new supplier with ease, and that every relationship starts off on the right track: regardless of location, strategic priority, or any other specific handling requirements.
With digital process management tools, this customization can be accomplished in minutes, simply by copying your "standard" onboarding process, making the necessary localization or customization edits, and saving it as a process template for each "strategic" supplier group.
5. Exchange data in an integrated and structured way
As you build your onboarding process, make sure to build in seamless data exchange at every step, so that correlated data can be used in both vendor and buyer systems. This exchange can and should be automated, where possible.
Here, the capacity of your process to integrate between supplier and buyer systems is paramount. You can learn more about about the integration step of a digital process here.
Your process should be integrated with your ERP, data management system, procurement database, negotiation spreadsheets, and SLAs. This will save both parties massive amounts of time, as well improving transparency.
Moreover, by adding in a data integration layer to your process, you remove a large manual coordination and data entry component, which can be replaced with what really matters: the time to focus on building better relationships with your suppliers.
How to build your supplier onboarding process
Each business and supplier partnership is different, but in any case, a basic checklist is highly recommended. Even better if you can digitize this, to benefit from notifications and checklist completion statistics.
For businesses needing to automate and expedite their supplier onboarding process, we recommend implementing a digital supplier onboarding process, which can be achieved using this customizable template. This template already includes the necessary checklists, communication, and integration components you will need to start onboarding new suppliers in minutes.
The supplier onboarding process can be a lengthy one, made up of complex tasks that span your entire business, and may require input and approvals from multiple stakeholders. Building a digital process in three steps will enable you to meet your business needs quickly, and get the most out of your vendor relationships, while keeping manual coordination and frustration to a minimum.
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