Vendor onboarding is also known as supplier onboarding, and it’s a process of collecting suppliers’ documents/identities to verify, approve, and connect with organisations. However, conducting vendor onboarding is challenging and a time-consuming process where companies need to verify the vendor’s credibility, comply with laws, build relations with the vendors.
Why is the Vendor Onboarding Process Important?
With vendor onboarding, companies can increase their efficiency, reduce risks and increase ROI. For instance, building an effective vendor onboarding process can help you:
● To reduce risks
● Increase efficiency
● Increase ROI
● Track data and workflows
● Automate the tasks
● Less lime to onboard new suppliers
● To grow business
● To reduce redundancies
Vendor onboarding is one of the crucial processes to grow your business.
How to Build a Successful Vendor Onboarding Process?
Building an effective vendor onboarding process in your company will enable you to foster constructive partnerships with vendors without putting the business at risk. However, drafting a vendor onboarding process can be challenging:
Step #1 – Pre-Onboarding Activities:
In the first step, you need to build clear criteria for onboarding that vendors can follow; this may be a companywide policy or a form of contract for vendors to sign. This step will disclose the expectations you have from the vendors.
Step #2 – Create Vendors Self-service Portal:
Drop-off rates are higher because most businesses cannot implement AI-enabled solutions facilitating self-service portals with minimal manual intervention. Hence, it is crucial to partner with companies offering vendor onboarding, digital onboarding, employee background checks, etc. This solution helps you onboard the vendors faster.
Step #3 Vendor Approval and Onboarding:
Now it’s time to review the suppliers’ details and find if suppliers can fulfil the company’s expectations and follow the regulations. After reviewing the details, it’s time to start onboarding vendors and supplying the products/services.
The vendor onboarding process enables businesses to develop constructive partnerships with vendors. It instils the idea with the vendor that they are dealing with a legitimate company, which is pivotal in ensuring trust and building long term partnerships.
Furthermore, vendor onboarding does not end after integrating the particular vendors into the business. It has to be a continuous process. It is crucial to keep track of your vendor’s performance and how they’re providing their products/services like quality, delivery, timing, ratings, and other necessary aspects for businesses.
If you’re in doubt about how you can build this process, you need a checklist.
Vendor Onboarding Checklists
We’ve covered a detailed checklist so that you can create a successful process:
Step #1 – Evaluate “Supplier Risks”:
● Check supplier’s products/services
● Check financial health
● Check vendor’s compliance with regulations record
● Check backup plans
Step #2 – Gather Details about Vendor’s Products/Services & Conditions:
● Expected volume, frequency of requirements
● Products/Services specifications
● Extra things (packaging, labels etc.)
● Order placements requirements
● Pricing & discounts
● Delivery process
● Return orders they’re getting
Step #3 – Collect Vendor’s Details:
● Registered name, address, contact details
● Licence, insurance and employee background check
● Banking details
Step #4 – Share Available Information for Internal Use:
● Accounts department
● Purchasing department
● Warehousing and inventory control
Step #5 – Share Details with Vendors:
● All records, terms & conditions and send formal approval
● Provide invoicing details
● Provide contact details for purchasing manager, account and warehousing
The vendor onboarding process is essential for businesses to expand, reduce costs, increase, and ROI, including mitigating reputational and financial damage. You need to follow a step-by-step process and in-depth checklists to build a successful vendor onboarding process. But, it is not possible to conduct these tests manually.
Businesses can partner with companies offering AI-powered solutions for vendor onboarding and complete these checks in a record timeline without manual intervention. As a result, these solutions also help in reducing operational.