At its core, supplier onboarding involves an organization collecting the information needed to set up a third-party as a supplier or vendor for their own supply chain. An integral part of supplier onboarding is ensuring the prospective supplier complies with the laws, regulations, and standards required by your organization.
Before you begin the supplier onboarding process, it’s important to verify whether or not there are existing suppliers within your current supply chain that can be leveraged to meet your needs. Awarding business within your current supply chain will not only help strengthen your existing supplier relationships, but it will also increase the speed of delivery for the task at hand. If you’re unsure whether or not your current supply chain can address your needs, a GAP analysis can be performed to verify if bringing on a new supplier is the right step to take.
If you determine a new supplier is needed, vetting the new suppliers will be crucial to identifying the right partner to move forward with. You need to make sure any partner that you’re considering entering into an agreement with can truly meet your deliverables. To properly vet the suppliers, you should request they complete a Request for Information (RFI). The RFI will determine if this supplier can meet the needs of your client – if the supplier is not a good fit at this time, create a profile for them to store in your database.
When is Supplier Onboarding Necessary?
There is a gap or a need your current supplier pool is not filling, but should you immediately look for a new supplier? You may believe a larger supplier pool is the best option – but in reality, a larger supplier pool may dilute your results. When a problem arises, analyze your current supplier pool first by performing a GAP analysis.
Performing a GAP analysis is an integral step in determining whether or not you need to onboard a new supplier. This will either validate that your organization does have a gap within your current supplier base or determine that your gap can be addressed through your current supplier pool. If you can’t solve your problem among your current supplier list, draft an RFI that centers around the issue you are trying to solve, and request suppliers provide the needed information to solidify that they can meet this demand. Send the RFI to your prospective supplier base – the responses to your RFI will allow you to determine which supplier(s) are capable of addressing your issue at hand.
The vetting process is an integral part of successful supplier onboarding. Vetting is the process of diligently investigating your prospective suppliers prior to moving forward with a partnership. You must collect details from the RFI to determine if the prospective supplier will fill your gap or need. If you determine the prospective supplier is not capable of addressing your issue at hand, create a profile for them to store in your data base. Monument Consulting has an abundant list of suppliers and the needs that they support – creating this database is very useful for when a client comes to us with a gap in the future.
Why is Supplier Onboarding Important?
Implementing a supplier onboarding process is the premise of building strong partnerships with your suppliers. Not only will it strengthen your business relationships, but it will also assist your organization to mitigate risks, streamline processes, increase efficiency, and ensure compliance within your organization’s internal and external policies and regulations.
While the supplier onboarding process takes time, it is important to ensure all suppliers are fully compliant in order for your organization to minimize exposure to risk. Your hiring team may be eager to fill roles, but it must be done in a compliant manner with a deep due diligence process. Steps you may take to ensure supplier compliance include, but are not limited to, determining their financial health, verifying they have the right level of insurance, and processing a background check.
Although business needs may urge you to fast-track supplier onboarding, missteps in the process can cause business disruptions and impact your current supplier partnerships. To mitigate this, a standardized onboarding process can ensure all requirements are met to form a successful partnership.
The Key to Successful Supplier Onboarding
If through your GAP analysis and vetting process you’ve determined that moving forward with a new supplier is the right next step, there are several processes to follow in order to achieve successful supplier onboarding. Below are the main steps you’ll need to ensure the process flows smoothly.
- Document your approval process
- Before you build your supplier onboarding process, you should establish clear approval policies. Determine who from your organization needs to approve the onboarding of a new supplier, gather the necessary approval in writing, and store the approval per your compliance requirements.
- Establish onboarding requirements and expectations
- Outline your program’s supplier onboarding policies, procedures, and systems. Clearly outlining your requirements and expectations will not only allow your company to easily vet and approve appropriate suppliers, but it will also ensure the prospective suppliers are compliant with your regulations.
- Establish a communication and training plan
- As you develop your onboarding process, communication and training must be highly considered. This will increase efficiency, reduce the risk of human error, and strengthen supplier relationships.
Proper supplier onboarding also helps to ensure the supplier understand the rules of the program before they start. Together, examine the rules of engagement and the rules of the program; Define every document that needs to be filled out. As suppliers return the requested documentation, assign a member of your team to be accountable for ensuring each document is filled out completely and accurately. By auditing documentation as it is submitted, you will help mitigate risk of missed information which can result in impacts to your deliverables down the road.
Once you have successfully onboarded your new supplier, your organization must ensure the supplier is fully prepared to support the client. To do so, you must provide training and orientation sessions to ensure your new supplier has all of the information necessary to successfully support your client. You will need to conduct a high-level introduction between the supplier and the client by setting up introductory meetings between the supplier and procurement, HR, management, and other appropriate client resources. Once the supplier has started supporting your client, begin tracking the performance.
Founded in 2003, Monument Consulting is built on a commitment to our clients and our shared values. Through our genuine passion for delivery, relentless pursuit of perfection, and bold decision making, we are creating a more agile contingent workforce so businesses can dream bigger and achieve more. Our expertise is proven, and we’ve worked with a suite of Fortune 500 companies to help implement innovation that lasts. Our agile model allows us to pick the best tool(s) based on the flows and features that will truly meet our client’s needs and bring them the best outcomes.
If you’re looking for a partner who’s ready to help, contact us.