How to Create the Ultimate Supplier Onboarding Process
Developing relationships with new suppliers is key for supplier onboarding. It is possible to lose valuable business and sacrifice profit margins without a clear system in place for onboarding and developing these partnerships.
A smooth start to your partnership can be achieved by onboarding your suppliers before you begin working together.
Table of Contents
What is supplier onboarding?
A process for Supplier Onboarding
1. Establish a process for evaluating and approving
Establishing supplier evaluation and approval policies is the first step in developing an onboarding program. You should define the guiding parameters for who you will and will not work with, as well as the approval process that will be followed by your team and the prospective vendors.
2. Set clear expectations and requirements
By defining clear policies and vendor requirements, you will be able to expedite the process of vetting and approving suppliers and ensure that both you and the supplier are on the same page. It will be more efficient and less likely to cause friction if policies and expectations are clearly defined.
3. Create a vendor portal for the purpose of collecting vendor information and registering vendors
Make sure that you establish a vendor portal for your prospective suppliers to register and apply to work with you if you do not already have one.
It is recommended that the vendor fill out a form on the portal that will enable your team to quickly vet the proposal by obtaining contact information and other information. Your data will be more accurate, and the process of gathering information will be streamlined as a result.
4. Identify, develop, and implement a strategic supplier partnership process
Vendors considered to be strategic suppliers have a greater impact on the business. As a general rule, they account for a larger proportion of the company’s spend compared to other vendors and may also have other strategic benefits to the company.
Due to the significance and value of these vendors to the business, it is prudent to create a separate vendor onboarding process for them. The onboarding program may benefit from the involvement of a cross-functional committee to nurture these relationships.
5. Develop a communication system and culture
A culture of communication is the foundation of the most successful onboarding programs.
Be sure to keep communication at the forefront of your onboarding process. To ensure that all parties have access to the best vendor information, your processes should be designed to facilitate the sharing and access of vendor data between departments and stakeholders.
Supplier Evaluation When Onboarding
Process For Approving Suppliers
Before proceeding with the approval process, you will want to ensure that all parties understand each other’s objectives. Before finalizing approvals, please clarify the following expectations and requirements:
- Estimated number of requirements
- Timeframes for delivery
- Payment terms
- Order process
- Delivery process & costs
It is likely that strategic supplier partnerships will require a more deliberate approach to onboarding so that these relationships can be nurtured and developed carefully. A basic checklist is not sufficient for these types of suppliers.
Supplier Onboarding & Information Collection
- Name and contact information for the supplier
- Documentation and accreditations
- An overview of the primary contacts at the supplier and their responsibilities
Make sure you share all necessary data with all stakeholders once you have gathered all the necessary information. In order to make the supplier onboarding and activation process as seamless as possible, it is imperative that accurate information is communicated clearly.
Supplier Onboarding Best Practices
- The onboarding checklists should be managed by a designated point person. It is easy for things to be lost in the shuffle when there are so many requirements and process steps to follow. Establish a responsibility for verifying each item on your checklist(s) so as to avoid any errors or miscommunications.
- Whenever possible, automate processes. It can be a laborious and complex process to onboard a new supplier.
- Develop a plan for each vendor and ensure that it is followed up on. For each vendor partnership, a customized onboarding process should be developed that outlines your growth strategy and steps for success. Ensure you are maximizing the value of the relationship by following up on your plans.
- Be clear about your expectations. Provide suppliers with a clear understanding of the requirements regarding lead time, pricing, payment, and product quality.
Why Do Companies Need A Supplier Onboarding Process?
Developing a strong supplier base management program begins with a supplier onboarding process, which is the first step to building those crucial business relationships.
- Reduce the risk of loss.
- Increase efficiency by streamlining processes.
- Maintain compliance with regulatory requirements.
- Increasing return on investment.
- Track data and workflow.
- Streamline basic tasks by automating them.
- Reduce the time it takes for new suppliers to be approved and activated.
- By eliminating middlemen, human error can be reduced.