Ultimate Guide to Supplier Onboarding Success

Finding the right supplier for your company is not easy. You must consider many factors that go well beyond just obtaining a nice price. Quality, delivery times, and overall performance are also important. 

So once you find one supplier that meets all the criteria, you might be inclined to believe that the work is done. 

But it’s not 

There’s another fundamental part left, beginning when you bring the supplier into your processes and it’s called Supplier Onboarding. 

Should we learn more about it?

What’s Supplier Onboarding?

You could be thinking, well I just welcomed my new supplier so that should be enough, right? Not exactly, when we speak about supplier onboarding, we are referring to the process of integrating a new supplier into your business’s operations. We’ll see this in more detail later but It involves the collection and analysis of information from suppliers so you can be sure that the partnership is aligned with your operation’s standard. This process is a key part of procurement and can really determine the success of your relationship with your suppliers.

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A Quick Checklist for  Supplier Onboarding

Investigate the supplier’s performance

In the best scenario, you already did this in the sourcing phase, if that’s not the case, now it’s a good time to pause and do a bit of research on your supplier’s service record. 

Confirm their commitment to sustainability

Yes, sustainability nowadays is a top requirement for supply chains, and with good reason. The planet needs it and your customers demand it, so if you are going to start working with a new supplier, double-check their environmental footprint. 

Review their financial history

Understanding a supplier’s financial stability is a must for long-term partnerships. Review their credit history and financial statements to evaluate their ability to fulfill your orders consistently. A financially strong supplier is definitively more likely to have higher quality and standards, increasing their reliability. 

Check their adherence to regulations

Make sure the supplier complies with industry regulations and governance standards. This includes checking for necessary licenses, permits, and safety standards. Compliance is essential not just for legal reasons, but also for maintaining your own company’s reputation 

Sign an ethical code of conduct.

This one might come out as a bit dramatic, but hear us out, the last thing you want is to see your company involved in a case of unfair labor practices. Having suppliers sign an ethical code of conduct helps ensure they align with your company’s values and standards. This document outlines expectations regarding ethical behavior, labor practices, and social responsibility.

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Benefits of Supplier Onboarding 

It guarantees quality

As simple as that, relying on a well-planned onboarding process can have a positive impact on the quality of the goods you receive.  Why? Well, because it gives you a framework to set standards and expectations from the very beginning, something that’s important for maintaining the quality of your products and your brand’s reputation. 

Risk management

Remember the checklist we just saw? Considering things like sustainability, financial health, and adherence to regulations you can feel confident that you won’t wake up tomorrow seeing your supplier at the center of a scandal or financial problem. Proper onboarding allows you to assess all the potential risks.

Efficiency

Imagine that you decide to skip the supplier onboarding process and start working with the new supplier blindly. How many mistakes do you think could happen in the next month? What about the costs? Developing a good onboarding process can save time and resources, leading to a more efficient supply chain.

Positive relationships

Another huge benefit of following a supplier onboarding process is that it creates the opportunity to establish a strong relationship with your suppliers from the start. A good relationship can lead to better communication and collaboration, which in turn increases productivity. 

Compliance 

Depending on your industry you could be required to meet more strict compliance requirements. A thorough onboarding process can be an excellent pathway for your suppliers to meet these standards, protecting your business from potential legal issues.

Now that we have seen the good, let’s see some of the most common problems you could face while trying to onboard your suppliers. 

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Supplier Onboarding: Challenges 

Lack of criteria

At the beginning of this blog, we mentioned the importance of having defined criteria when sourcing suppliers. And it’s quite logical, without clearly outlined expectations, figuring out if potential vendors are suitable can be a serious challenge. Let’s put it this way, if you don’t establish specific standards and requirements for new suppliers, you risk selecting the wrong partners who might cause delays, or deliver poor-quality products. Can you picture the chaos that would ensue?

Incomplete documentation and…information 

Yes, your company needs to go over a considerable amount of documentation from your new suppliers.  Starting with maybe documents related to performance to financial records, and that’s without mentioning ESG practices. But what happens if your supplier doesn’t submit the right papers? You get only half a picture, something that can delay the onboarding process and if not detected, cause misunderstandings later on. 

Manual mechanisms 

While digitalization for procurement is on the rise, you can still find some suppliers still relying on more traditional methods, which believe it or not include emailed purchase orders, phone calls, or, let’s gasp here for a second, faxes. The major problem with this is that it  can slow down the ordering process and increase the risk of mistakes.

On the other side keeping track of orders becomes tricky Without the right tools, updates might not show up in your financial reports, making it harder to keep everything aligned.

No visibility 

And speaking about tricky things, another downside of working with manual mechanisms is that you need to spend a lot of time and effort to analyze complex information. For example, if your procurement operations aren’t automated you would need to trust only your capabilities to not miss any important information or possible red flags concerning your new supplier. 

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Steps for an Effective Supplier Onboarding Process 

Set an approval workflow

This is your starting point, think of it as the backbone of a successful supplier onboarding process. Create a clear framework for evaluating and approving suppliers, and be as specific as your company needs. Decide on the key criteria that will guide your selection process and outline all the steps. Doing this will make things better for your team and contribute to more efficient results. 

Outline expectations

Expectations could really be the trending word of the process. Gather everyone involved, teams, and departments so you can have an accurate picture of what they need from the new supplier. Make a list of all your non-negotiable requirements and share it with the supplier, if there are any questions from either side, this is the time to sit down and talk. 

Work with a supplier registration system

Maybe you already have one or maybe don’t, if this is the case you’ll want to consider developing a registration portal where potential suppliers can apply to work with you. This is something that can help the sourcing process as it usually includes forms for them to submit essential information, making it easier for your team to evaluate proposals efficiently. Once everything is done you will know that the data you collected is accurate and organized.

Personalize the process…for specific suppliers only

Yes, working with a standardized process is always recommended, in the case of strategic suppliers, however, it could be a good idea to work with a customized approach.  Strategic suppliers are those that have a significant influence on your operations, in other words, these suppliers are the ones where you spend the most or the ones that bring you the best results, so it’s natural for you to give them a little extra attention. 

Open communication 

Communication is another key element of any successful onboarding. As you design your onboarding process, prioritize creating pathways for different teams and stakeholders to share and access relevant information easily. This will make the work more efficient,  reduce the chances of errors or worse delays, and strengthen your relationships with suppliers.

Automate 

We have said it before, procurement is a long and somewhat complicated process, and supplier onboarding is no different. There are just too many aspects or factors that must be considered for assessment and if you do it by yourself, the chance for critical mistakes is high. Automation can change this by managing your operations with precision and providing you with real-time insights. 

How to Automate the Supplier Onboarding Process?

Supplier management software

Using dedicated supplier management software is one of the best ways to automate onboarding. These platforms allow you to store and manage all supplier information in one place. You can easily send out requests for information, track documents, and monitor compliance, without worrying about inaccuracies or serious mistakes. 

Automated workflows

Create automated workflows so managing different stages of the onboarding process gets easier for everyone.  For example, once a supplier submits their information, an automated alerts can notify your  team members to review their documents or follow up on outstanding requirements. Doing this will prevent all the problems that arise with miscommunication and late replies. 

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Final thoughts

And that’s it 

We have reviewed all the important bits about supplier onboarding, so we hope that at this point you are convinced that a well-designed onboarding process lays the groundwork for great relationships with your suppliers. The steps in this blog are meant to be considered but you can always remain flexible and see what works best for you and your suppliers.. Remember, effective onboarding not only protects  your supply chain efficiency but also supports your company’s overall success.

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