The 5 Elements of Great Vendor Onboarding
Reducing costs and improving supplier performance and efficiency are among the key objectives of operations leaders and supply chain executives. Ineffective vendor management means valuable time and money is wasted due to substandard onboarding processes.
Failing to properly onboard vendors can prove to be extremely damaging to a business. Insufficient diligence when sourcing vendors can result in safety incidents, fines, reputational damage and financial liabilities.
When done right, good vendor onboarding means uninterrupted field operations, improved operational efficiency, reduced costs, and better vendor relationships. These all result in significant financial benefits for businesses. In some industries, it has been claimed that better vendor relationships could result in profits increasing by billions of dollars. Here are five key elements of effective onboarding:
- A robust evaluation and approval process
Many vendor onboarding processes, rather surprisingly, do not include established protocols and policies covering evaluation and approval. But this is one of the most important elements of onboarding. At the very least, it’s important to clarify at the outset exactly what type of vendor your organization will, or will not, engage. The next step is to identify the various stages that will make up the actual evaluation – for example, creating a company profile, assessing capacity, reviewing operations management, and assessing customer satisfaction.
- Clearly communicated expectations and requirements
To get the best value out of the relationship with a vendor, and therefore ensure it is a success for both parties, it’s important to clearly define what is required and expected from the supplier. In addition, it’s vital that these expectations are communicated clearly and effectively. Also, a system for maintaining compliance needs to be developed – this can include clearly defining on-time in-full delivery, expected lead times, as well as response times in case of support issues. Establishing requirements and defining them in a master services agreement will lay the foundations for a fruitful business relationship and help with communication.
- Make vendor registration as simple as possible
It’s crucial that vendors find the registration process easy. It’s also vital that, as part of the onboarding process, all relevant vendor information is captured quickly and consistently. It’s also important that non-disclosure agreements (NDAs) and any other binding documents are digitized.
- Have a consistent onboarding process so vendors are assessed on the same criteria
Sometimes supply chain managers may fall into a habit of treating high-priority ‘strategic’ suppliers differently to other, what might be termed ‘lower-impact’ vendors. This is a mistake. It’s important to have a consistent onboarding process across all vendors, which means that you are able to evaluate performance against consistent criteria, which helps with benchmarking. It also means there is an established process for new vendors, which saves valuable time for supply chain managers.
- Make sure data is exchanged in an integrated and structured way
You should aim to make data exchange as seamless as possible so that correlated data is used on both buyer and vendor systems. Ideally, data exchange should be automated. This will save both parties large amounts of time spent on data entry, improve transparency, and reduce the risk of confusion or disputes occurring further down the line. Effective onboarding is so vital for successful and cost-effective relationships with vendors that many Oil & Gas businesses have chosen to outsource all of their vendor management and onboarding.
At Workrise, we take the burden out of vendor management. For best in class vendor onboarding that takes weeks, not months, lets chat