The Best Vendor Onboarding Process
Onboarding is a process where vendors and suppliers are evaluated for potential risks and integrated with a company. It can be a lengthy process, but it is a crucial part of beginning a new relationship with a vendor.
Vendor Onboarding Process
When onboarding a vendor, you want to have a set process. This process will help determine the steps your company and the vendor need to take within the onboarding, as well as determine the departments and individuals who have responsibility.
There are three stages to a successful onboarding process.
Stage One – Exchange of Information
During this stage of the onboarding, the vendors and the company will learn more about one another by exchanging information. This information should include a code of conduct, a company overview, contact information, and the company mission and values.
There is also documentation that needs to be exchanged, documents like the vendor’s tax information, non-disclosure agreements, insurance policies, security certifications, credit history, and information about fourth parties and subcontractors.
Stage Two – Align the Processes, Approach, and People
This is the stage of onboarding where the individuals from both the company and the vendor who are going to be working together should meet. This introduction can be made either in person or through online Communications, but this is an opportunity for the two to learn more about each other and plan an approach.
Stage Three – Set Expectations
Explain to the vendor what your company’s set expectations are and how it measures success. You can provide them with a sample vendor performance evaluation form that explains what your company is looking for, as well as what your company needs.
This is an important time to discuss with vendors when to expect vendor risk assessments, as well as quarterly or biannual performance reviews.
Vendor Onboarding Checklist
Because there are many different factors to look out for when onboarding a new supplier, below is a checklist to use when onboarding.
Evaluate Risks
Evaluate the compliance of the vendor with governance and the regulations put upon it, as well as ask the vendor to sign a code of conduct contract. Assess any risks that the supplier may pose; there are many different possible risks.
It’s important to learn the supplier’s track record regarding services and products so that there are no surprises later on.
Gather Product Information
Gather all the information you can about the products and services that the supplier offers, as well as the commercial condition. This is information like:
- Training requirements
- Payment terms
- Discounts and pricing
- Requirements for placing orders and format
- Specifications of the product or service
- Delivery Process
- Information about returning products and adding credit to the account
Gather Vendor Information
Have a detailed account of the vendor’s information. This includes all of their licenses and documentation, any banking details that your company requires, the registered name and address of the supplier, and contact information for not only the vendor but representatives of the vendor that you are in contact with.
Make Information Available
Make all of the information that you have on the supplier available to different departments for internal use. This includes the accounting and purchasing departments.
Additionally, your company needs to share information with the vendor. The vendor will need contact details for the accounts, warehousing, and purchasing manager. Your company may also need to provide training and orientation sessions for the vendor, and your company should record all of the terms of the agreement and send it to the vendor for formal approval to set everything in stone.
Best Practices
There are a few practices to follow during the onboarding process.
Be Flexible
Every vendor has its differences, so be flexible during the onboarding process and adapt it to the uniqueness of different vendors.
Technology
Automation and digitization have opened up a whole new world where businesses can seamlessly approach partners and vendors with lesser baggage.
The business world has become more interconnected than ever, mainly due to advancements in technology, process automation, and digitization. As a result, the process of vendor onboarding has also evolved dramatically over the years.
Today, businesses can use technology and automation to streamline the onboarding process, reducing the manual effort required and allowing them to focus on more important tasks. Additionally, businesses can leverage big data analytics tools to evaluate vendor performance, making it easier to identify high-quality vendors and grow their networks.
While there are many benefits of digitizing the vendor onboarding process, there are also some challenges that businesses need to be aware of. For example, the increasing amount of data generated through the onboarding process can pose a risk to data security if not managed carefully. Additionally, businesses must ensure that they have adequate resources in place to support their ongoing vendor relationships and effectively monitor their performance.
Save time with onboarding and managing data by investing in the right technology. There is vendor onboarding software that can be extremely helpful.
Checklist Management
Have someone within your organization manage the onboarding checklist to verify all of the items on the checklist.
Your company can have a successful onboarding with a client simply by establishing an onboarding process.