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The Ultimate Supplier Onboarding Process

The Ultimate Supplier Onboarding Process

The process of establishing new supplier relationships can be complex. Your business may be at risk of losing valuable business if you do not have a clear system in place for onboarding and developing these partnerships.

In order to start working together successfully, you should onboard your suppliers prior to the start of the project. 

Table of Contents

What is supplier onboarding?

Onboarding suppliers involves obtaining information about prospective vendors, assessing their compliance and risks, and integrating them into your platform and supply chain. In order to improve buyer-vendor relationships, supplier onboarding involves streamlining processes to create more streamlined processes.

What is a good supplier onboarding process?

1. Establish a system for evaluating and approving proposals

As you build your supplier onboarding program, you will need to establish policies for evaluating and approving suppliers. Make a list of the guidelines that will guide your selection of vendors and determine the steps you and your team must follow to move the approval process forward.

2. Identify the expectations and requirements

The working relationship should be outlined in terms of your business requirements and expectations.

You will be able to vet and approve appropriate suppliers much faster if you create clear policies and vendor requirements, along with ensuring that both you and the supplier are on the same page. By establishing clear policies and expectations, efficiency will increase, confusion will be reduced, and potential friction will be reduced.

3. Establish a process for developing strategic partnerships with suppliers

It is important to identify strategic suppliers as they are those vendors that have a greater impact on the company. As a general rule, they represent the majority of spend as compared to other vendors, and may also be of strategic importance to the organization.

It is appropriate for these vendors to have a separate onboarding process due to their significant impact on the business. Throughout the onboarding program, other internal stakeholders may be able to contribute to nurturing those partnerships.

4. Clear Communication

Communication should be a priority when developing your onboarding processes. In order for everyone to act on the best information, your processes should facilitate the easy exchange and access of vendor data between departments and stakeholders.

You will benefit from this step by improving the efficiency of your organization, minimizing the risk of costly delays or mistakes, and enhancing your relationship with your suppliers.

The supplier onboarding checklist

It is important to keep in mind that every business and vendor partnership is unique, but a basic checklist can be used to walk through each potential partnership. Here is a checklist you can use as a guide to help you onboard your suppliers.

Evaluation

A supplier evaluation and a risk assessment are the first two stages of the onboarding process:

  • Review the track record of the supplier in terms of customer service.
  • The sustainability credentials of the company should be checked.
  • Assess their financial and credit history to determine if they are a good investment.
  • Ensure that the company complies with all relevant regulations and governance guidelines.
  • A code of ethical conduct should be requested from them.

Supplier approval and requirements gathering

In order for the approval process to be successful, both parties have to be on the same page from the outset, and this is how you will qualify your suppliers at the beginning of the process. Before you finalize approvals, it is important to clarify the following expectations and requirements:

It may be necessary to take a more deliberate approach to onboarding strategic supplier partnerships in order to nurture and develop those relationships. A basic checklist is not sufficient for these types of suppliers.

Suppliers shared data

Creating an online vendor application portal where each supplier can input their information on their own is the most effective and efficient way to collect accurate and consistent supplier data.

In some cases, you may have to follow up with the supplier in order to verify additional information provided in your form, depending on how detailed it is. For each supplier, you will need to gather the following data:

As soon as all necessary data has been gathered, it is important to share it with all stakeholders involved. An effective supplier onboarding and activation process requires clear communication of accurate information.

The account manager, the purchasing manager, and the warehouse manager all need to have the information regarding the supplier and the requirements on hand, in order to then share a finalized approval contract with the vendor for review before the account is activated. The result of this will be that all departments and stakeholders will be on the same page and have a clear understanding of what to expect.

Onboarding best practices

Follow these best practices when developing your onboarding process to ensure that it is as effective as possible:

Why is supplier onboarding important?

Relationships play an important role in the success of any business. The same applies to both clients and customers, and it does not only apply to them. In the same manner that you should nurture and support the relationship with your clients, you should also nurture the relationship with your vendors and suppliers.

The first thing you must do is to develop a supplier onboarding process that is the foundation of an effective supplier base management program, as this is what will help you build those crucial relationships with your suppliers.

You will not only strengthen your business relationships with your vendors if you implement a vendor onboarding process, but you will also be able to:

At best, you will find yourself facing decreased productivity and efficiency due to a poor onboarding process, and at worst, you will find yourself losing valuable business due to poor training, poor management, or a lack of nurturing of partners.

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