33 Procurement Interview Questions in 2023
Supplier Onboarding — The Ultimate Guide
Supplier onboarding in a company can start slowly as its complexity requires the collection of information carefully. With no clear onboarding process, the whole thing can become messy which leads to confusion for both parties.
In this article, we will discuss what supplier onboarding is. We will show you how to create an effective onboarding process and show you some onboarding best practices.
Once you are done reading this article, you will have an in-depth knowledge of supplier onboarding. Thus, allowing you to streamline and make the onboarding process in your company efficient.
SupplierOnboarding Explained
Supplier onboarding, also known as vendor onboarding, is the process of collecting and analyzing the supplier or vendor’s information to register them in the company’s system.
To put it simply, supplier onboarding is about establishing a streamlined and efficient process to build stronger buyer-seller relationships that improve the business outcomes of both parties.
The procedures of onboarding help the company to conduct business, buy goods or services, and pay the supplier efficiently. It also requires validation and vetting in ensuring that the potential supplier complies with applicable laws, rules, regulations, and corporate standards.
EstablishingA Supplier Onboarding Process
1. Establish an evaluation and approval process
When you are starting to build your own onboarding program, you will need to start with creating supplier evaluation and approval policies. This will allow you to be guided by who you will want to work with and know the steps your team and the potential suppliers must do in order to move through the approval process.
2. Set requirements and expectations
After you have established your guiding parameters, you should set business requirements and expectations for the working relationship.
Establishing clear policies and supplier requirements will help your business managers and other stakeholders quickly approve potential suppliers. Thus, it ensures that the parties involved understand what is expected.
Having clear policies and expectations increases efficiency and decreases the confusion and potential friction which may arise from misunderstanding.
3. Build a supplier portal for registration and information collection
If you do not have one, then this is the time you should set up a supplier or vendor portal for potential suppliers to register and send their proposals in hopes of working with you.
The portal should have a form where suppliers will fill out their contact details and other information that will help your team to quickly assess the proposals. This improves the accuracy of your data and streamlines the information-gathering process.
4. Create a process for strategic supplier partnerships
Strategic suppliers or vendors are those who have more impact on the business. Commonly, they represent a huge proportion of spend compared to other suppliers. They may also have other strategic value that can benefit the business.
Due to their significant impact and value to the business, it makes sense to have a separate onboarding process for these suppliers.
5. Build a culture of communication
The last step is to build a culture of communication which is a crucial step in the onboarding process.
While developing your onboarding process, you must keep communication in mind. The process must be easy for different departments and stakeholders when sharing and assessing supplier data so that all parties are well-informed.
Thus, this step will enhance efficiency across the onboarding process, mitigate risks of delays or mistakes, and promote a good relationship with your suppliers.
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Challengesin the Onboarding Process
1. Employees have no idea which suppliers are already working with the company.
Many huge companies often have way too many onboarded suppliers for the same service or good. Having duplicated vendors not only wastes time but could end up causing the company to pay more.
Additionally, employees will be confused about which suppliers they should talk with as the company has many suppliers.
Another reason that companies have no idea which supplier to go to is due to the fact that the ERP system of the company is not accessible to everyone. Thus, employees do not know where to turn to get updated supplier information.
2. The line of communication with the suppliers
When only one person or department has a direct line of communication, it can also cause problems due to the fact that they may get bombarded with emails pertaining to any questions that suppliers may have.
The communication chain is highly efficient when the important key persons or departments can communicate directly with the supplier and not just the procurement manager.
3. Lacks transparency
Supplier onboarding is a crucial process for companies to manage to continue their operations. However, many companies are using an outdated approach to supplier onboarding which includes broken communication chains, error-prone manual tasks, and unnecessary delays.
The lack of transparency in the onboarding procedure makes many parties involved in the process blind to the context in which the need for the vendor arose, leading to more inefficiencies.
Benefitsof Having a Self-Serve Portal in the Onboarding Process
Having a portal for the onboarding process helps the company to acquire accurate information about the suppliers. It also allows the company to compare the proposals of each supplier quickly.
Having a portal will make every process transparent and accessible to all employees to know the status of the acquisition of goods and services.
Other benefits include the following:
- More accurate data entry and management
- Pay the suppliers faster
- Avoid redundancies and duplicates
- Avoid payment errors
- Suppliers can access the portal anytime, anywhere.
- Transparency in payment and order processing
- Automates repetitive tasks
- Many portals have built-in procurement fraud protection
OnboardingBest Practices
1. Assign a key person in managing onboarding checklists
Due to multiple requirements and steps in the process, it is normal for things to get lost on the track. To avoid mistakes and miscommunications, you can try to designate one person to be responsible for verifying each item on your checklist.
2. Use automation
Onboarding new suppliers or vendors can be tedious. You can try to look for opportunities to automate tasks to improve efficiency and decrease errors in manual tasks.
3. Utilize the onboarding process as a guideline
Each supplier that may want to work with you is different. You can use the onboarding plan as a guideline in dealing with potential suppliers.
4. Make a plan for each vendor and follow up
In the onboarding process, you should try to establish a plan for each vendor or supplier that outlines your strategy for growth and the steps to achieve it. After that, you can follow up on the plans to ensure that you are getting value from that relationship.
5. Set expectations
In the onboarding process, you should ensure that suppliers understand the expectations for pricing, lead times, payment, product quality, and other factors regarding the procurement process.
FrequentlyAsked Questions
+ What is supplier onboarding?
It is the process of collecting and analyzing the supplier or vendor’s information to register them in the company’s system.
+ How does it help a company?
The onboarding process helps a company conduct business, buy goods or services, and pay the supplier efficiently.
+ Should I create a portal in my onboarding process?
Yes. Having a portal can ensure easy access to information and that every process is transparent for both parties.
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