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October 13 2022
Your Step-by-Step Guide to New Supplier Onboarding Process
Bringing on a new supplier is a complex practice involving a multitude of manual steps. By first establishing a clear and organized new supplier onboarding process, you can avoid expensive mistakes that put your organization at risk.
From identifying a business need and finding a supplier to performing due diligence and onboarding the vendor, the entire new supplier onboarding process is often slowed down by multiple handoffs and manual, error-prone procedures. Lack of visibility combined with compliance issues can be a formula for delays and increased risk.
A strong vendor onboarding process creates positive partnerships and drives better outcomes
Supplier onboarding is the process of collecting information from prospective partners, assessing any potential risks they may bring, and integrating them into your supply chain. The goal is to make sure both parties have the right information and documentation to work together productively, minimize risk, and leverage the full value of the partnership. By creating a streamlined onboarding process you can build stronger relationships with your suppliers that drive better business results for both parties.
Benefits of a streamlined supplier onboarding process:
- Enhanced collaboration between key stakeholders
- Consistent data collection
- Faster approval and activation of new suppliers
- Increased efficiency
- Cost and risk reduction
- Ensure regulatory compliance
- Improved overall supplier engagement
- Higher ROI
Create your new supplier onboarding process flow
Before you can onboard a new supplier, you first have to establish the exact steps in the process, as well as the people and departments responsible for managing the process. Use this supplier onboarding checklist to help you during the conceptualization phase:
Supplier Onboarding Checklist for the Strategy Phase
- Establish supplier requirements and expectations — Educate suppliers on your policies and procedures to increase efficiency while reducing confusion and any potential snags.
- Determine primary stakeholders and their roles — Assign a specific person or team with excellent organization and communication skills to oversee the supplier onboarding process.
- Set up a supplier evaluation and approval process — Develop a supplier evaluation process that regularly measures performance without overburdening your team. Whether your process leverages questionnaires, scorecards, or third-party standard certifications, create a process that is effective yet simple.
- Implement a platform to exchange and verify information — Create a way for suppliers to enter their own information so you can quickly vet them and get down to business.
- Create a workflow of your onboarding process — Determine the specific steps in your onboarding workflow. For example, the process may begin with a business department submitting a request for a new supplier and end with the supplier being vetted, approved, and ready to work with you.
- Introduce a communication system — Developing a reliable way for your internal teams and suppliers to communicate will improve efficiency, reduce delays from human error, and strengthen the relationship with your partners.
Set up your vendor onboarding process in 5 simple steps
Once you’ve established the parameters of your new vendor onboarding process, use this checklist to help you move smoothly from prospective supplier to approved partner:
Supplier Onboarding Checklist for the Execution Phase
- Evaluate supplier and risk — Review the company’s track record for service and products, financial health, regulatory compliance, and industry reputation.
- Discuss rules of engagement — What are the two parties’ expectations as far as lead time, pricing, payment terms, the order and delivery process, and any training requirements? Does the supplier have the capacity to meet your needs?
- Gather information — Gather information including supplier name, licenses and documentation, primary contacts and their roles. The easiest way to accurately and consistently collect this data is through an online portal that allows suppliers to input and update their own information.
- Share information internally and externally — Once you’ve gathered the necessary data, share it with all involved stakeholders – accounts, purchasing, and warehouse managers. Share the final approved contract with the supplier to review before activation.
- Perform routine evaluations — Best-in-class organizations perform an evaluation every 3 months, though this may not be feasible at your organization. We recommend that you identify the suppliers that are most critical to your company’s business operations and evaluate them at least twice a year. For the rest of your suppliers, an annual evaluation should be sufficient. Each time, determine whether your suppliers got a better score than previously.
Automate to speed up supplier onboarding
The new supplier onboarding process can be quite complex. But with the right technology, you can build a seamless, automated onboarding workflow that increases your efficiency and visibility, while reducing human error, ultimately saving you and your suppliers hours of manual work.
Let Us Do the Heavy Lifting.
Graphite can help you create a streamlined step-by-step workflow to enhance your data capture and simplify your supplier onboarding process.
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