Vendor Onboarding: The Guide You Are Looking For!

New vendor onboarding and navigating them through your systems can be intricate and require well-planned strategy and well designed vendor onboarding process. Vendor onboarding is making the right fit vendors getting to work with your workflows or systems. This onboarding process involves so much ground work like gathering data, validating them for due or risk factors and choosing the right vendor (many choose the vendor  and believes to work with one who accomplishes the same values in their business). So it is crucial to onboard the suitable vendor and the process to onboard them gets its importance. When onboarding is done right you can focus on other value added business activities. So, this writeup gives you a better understanding of the vendor onboarding process. It also discusses the steps involved and its benefits. You can also get to know the importance of effective vendor onboarding that helps your organisation avoid any expensive pitfalls during the procurement process and the best practices to follow to make it a win-win!

Vendor Onboarding/ Supplier Onboarding

Vendor onboarding is a process involved in the procurement process, where the data about the new suppliers is collected and documented to refine the effective perspectives of the approved vendors with your company. Supplier onboarding intends to set up the approved vendors in the company’s vendor management system and provide them access to your procurement setup.

When there arises a need for a vendor or supplier in an organization, supplier onboarding typically begins. Some reasons like new project requirements or expansion, and replacing old vendors make you formalize vendor onboarding in your organization. The vendor onboarding process gives new vendors access to the company’s supply chain system. This process aims to establish a mutual relationship between the vendor and the organization while also prompting a smooth and efficient supply of goods and services.

In essence, vendor onboarding is the process of collecting supplier information and analyzing it to find whether the vendors fit your organization’s requirements and register them as the approved vendors to use your organization’s workflows, portal, or tools to embrace seamless invoicing and payments. Supplier onboarding holds the crucial space in vendor management and other business activities like account and invoicing; the onboarding process commences with so much of groundwork to approve vendors as they become part of your business like you can conduct business with them, purchase goods and services, and make payments.

Approaches To Vendor Onboarding

Every business process is different and the involved procurement is a lot different for every business organization. There are two common approaches for the vendor onboarding process where the business organization initiates a contract as RFP (Request For Proposal) and the prospective vendor’s information is collected. 

This information is then analyzed for the best deal by the stakeholders and the contract is finalized with the winning RFP vendor. Before finalizing a contract, the supplier and the organization might negotiate over the deal to match the contract. In his case, the required information is collected from the vendor and the process of vendor onboarding can be initiated with a smooth and timely collaboration.

The other approach for vendor onboarding is prompted by the vendor itself. This vendor onboarding approach is usually used by large companies. Here, the process of sharing their basic details is initiated by the vendor.  Even if there is no need for a vendor or supply at a particular time, the vendors approach the enterprises in the hope that they will be considered when the need arises. 

In this model, the organizations come up with a prospective vendor pool vetted by the RFI(request for Information) form or through their website. This approach is utilized frequently by the organizations as they can initiate the RFP and vendor onboarding process whenever a need arises, without really waiting for a prospective supplier to emerge.

Vendor Onboarding- Steps Involved

Vendor onboarding process requires input from various departments and the time and level of engagement involved to onboard a prospective vendor might differ depending on the organization and their onboarding policies. An effective vendor onboarding should always for a balance between the time invested to onboard a supplier and the benefits received from their end. A strategic vendor onboarding should aim for a smooth collaboration and long term positive relationship between the organization and the vendors. The vendor onboarding process involves the following standard steps which can be made flexible with some additional steps or tools as per your needs to work with your vetted vendor pool. Let us have a brief overview about how to onboard a new vendor.

The vendor onboarding process commences after the evaluation of best deal among the vendor pool and there are number of metrics to approve them as a registered vendor.The organization can audit the vendor production site and their QA process and look for other certifications like ISO 9001, SOC 2 etc to ensure whether they supply standard materials and have a background check before onboarding a new vendor for their compliance activities.

Know your vendors– the vendor onboarding process is basically a method to introduce the vendors to your internal system and get them aligned with your policies while supplying your organization’s needs. So, vendor onboarding involves so much time and ground work aiming to know and better understand each other. 

The first step would be the exchange of information which is gathered from the prospective vendors and provided to the vendor by the organization. This is basically done to ensure that the vendor is capable of delivering your expectations without any discrepancies. 

So, this is an essential groundwork to do before enlist the suitable vendors to work with them for a long-term.Clear understanding of your requirements along with their motivation and capability makes every step of vendor onboarding progresses towards building a positive relationship. 

Information like company ownership, NDA, Business licensing, insurance policies, ACH forms, credit history, compliance and security certifications, taxation and supplier diversity certifications, vendor’s  production capacity, delivery procedures and shipping details, profit margin, handling price fluctuations during peak demands, QA process and their customer support to resolve. Organizations should share their mission, vision and values, their code of conduct, billing procedure and feedback collection and their compliance policies.

Plan the process, policies and execution– The gathered details of the vendor are then validated, verified and are documented for future reference. Usually a team focus for the verification process works with much attention to get the prospective vendor onboard. While verifying the team will look for: defined supply clause and their implementation,Contracts & SLA, Agreements and taxation,ISO 9001, SOC 2 certifications. 

This is mostly automated to avoid any costly mistakes as vendor onboarding is a crucial step of any organization to have fruitful benefits in the long run. Also, good vendors are known to be the backbone of your procurement process and only effective planning and streamlining of the vendor onboarding activity will reflect a seamless bookkeeping, contract agreement and other accounting activities like taxation and audit.

Validated information is then taken care of by the team as assigned by the top management. Discuss and engage the appropriate members in the required activity so that there are no unnecessary confusions. SChedule meetings and discuss the activities involved, team working and other considerations to be clear and transparent.

This can accomplish a clear picture on considerations like:

• Who is the stakeholder and the corresponding vendor contact to work with?
• What is your/your team’s role and whom do you interact / communicate with?
• Who is the point of contact and who has access to the company data portal?
• Who manages the account and how/whom to communicate any queries?
• How to know the new updates and who takes the charge in case of absence of a particular team member?

The verified vendors will be integrated into your internal system and get access to your portal and start working on them. If a vendor is rejected, the validation team will ask for further documents to get clarity and resolve the issue. Approved or rejected vendors’ details will be forwarded to the onboarding team and they proceed with integrating the qualified vendors to the portal.

Define your needs and requirements-Precise plans with clearly defined needs and requirements from the organization’s end is essential to make the onboarding experience more light-weighted. This boosts the easy engagement of the vendor in knowing what is expected from their end and facilitates a seamless supplier relationship management.

Usually, companies do share a form  to the vendors to update them with their policies and make them review their key performance indicators (KPI).

Ensure to share the details like IT team contact or other past records to the vendor to help them onboard smoothly. Support and engage vendors with all their needs to onboard as the more engaged onboarding process will let you off the process which is an efficient time-saver for the future.

Conventional vendor onboarding includes these steps where multiple departments are involved in the process and requires some data to contribute to their responsibilities. Vendor onboarding indirectly is linked to an organization’s purchase and invoicing, tax and contract agreements, legal documentation, finance and accounting, supply chain management, procurement and logistics etc. So, there is indeed a necessity for a centralized hassle-free solution,  a self-serve vendor portal/ workflow solution to make these activities simple and streamlined. Such web portals or software solutions aid vendor onboarding and other interlinked business activities function more seamlessly building a fair relationship with the vendor.

Why Is It Necessary To Automate The Vendor Onboarding Process?

As said, there is a lot of ground work involved in the vendor onboarding process, so making a simple change to your tactical onboarding process and conventional system can save your day.  Strategic vendor management with automation software can be the key to automate the vendor onboarding process. 

This can help you make arrangements to set a single ownership to the process so that there is no misconception on the point of contact. Pick the one who feels comfortable taking ownership about the process and is confident working with the vendors. The vendor onboarding process should suffice you that the vendor you integrate to your system should also bring the values you believe to the table. Regularly review the setup, evaluation and approval process to reap most benefits. 

These activities when done by a single source of contact or a team that takes ownership of the onboarding process will be time-consuming and tedious. The exchange of hundreds of emails everyday and phone calls to onboard a new vendor is actually overstimulating in terms of money and time. Every nuance in this onboarding process progresses towards building a fair supplier relationship between the vendor and the company. 

This urges the organizations to set up a standard centralized platform  to onboard a vendor which makes all the behind the scenes simple. This automated setup attracts more prospective customers and associates a long-term relationship with your business. 

This fast-paced digital environment hovers to automate such processes in an intention to improve the efficiency of the business. A self-service supplier portal or existing workflow solution like Cflow can automate the vendor onboarding process with ease which would automate tasks like:

• Vendor information collection
• Tax and remittance details
• Vendor validation
• Due diligence
• Vendor risk assessment
• Sourcing and approval
• PO and invoicing
• Delivery & payment
• Vendor management metrics
• Alerts & notifications at different payment stages.

Benefits of  automated vendor onboarding

A smooth vendor onboarding is an essential step to commence a seamless and long-lasting vendor experience with your organization. With an effective vendor onboarding in place, you can understand the capability of a vendor and serves as an opportunity to get a knowledge of what is to be expected from both ends. Besides the benefits of managing your supplier relationship/ procure-to-pay process to measure your performance in a seamless manner, there are few other solid benefits with a standardized/automated vendor onboarding process. Automated vendor onboarding can be facilitated using a self-serve portal, tools or software for vendor onboarding, helping you save your money and time while engaging your employees to focus on value-added tasks.

• Vendor onboarding involves so much data collection and automated systems help you do this at high speed and mitigates the risks associated with human errors. The redundancy and replica errors are almost null with supplier onboarding software.
• Invoice handling and payments are easy-breezy with supplier onboarding software tools.
• Real-time supplier relationship management is live with the status and performance check in the automated vendor onboarding software system.
• Reduction in payment errors and delays. Automated systems notifies the user about the payments, reducing delays with the payment for supplies.
• Automated systems aid you to improve your competitive edge by critically allowing you to focus on vendor management and procurement.
• By implementing strategic vendor onboarding using the Delolitte model or the Kraljic matrix , you can categorize the vendors based on the profitability with the relationship to the threats they bring in. This allows you to mitigate risks and redundancy and the associated costs with approving vendors that do not align with your policies and setup. By doing so, you can ensure that the cost you spend on vendor/  supplier management is worth it to build the relationship stronger. 
• Removing redundancies from the procurement equation can eliminate the cost wastage while giving a boost in your business performance, efficiency and profitability.
• Vendors and their relationship also determines your brand identity and reputation. Automated systems make sure you choose the right vendor who aligns with your business values and brings the same to the table by automating many behind the scene vendor onboarding activities encouraging your potential workforce to engage themselves in more strategic and value-added business tasks.
• Defining the workflow in a self-serve vendor portal will get you a clear picture on effective collaboration and how to enforce it? Also it can provide clarity over the key players and their engagement, mitigating compliance and other  risks as a measure to improve ROI and efficiency. 

Vendor Onboarding – Best Practices And Examples

Building a standardized vendor onboarding process is essential to avoid any potential compliance or legal risks. Here is a checklist highlighting the efficient vendor onboarding best practices. This guides you to build an efficient framework that gets you started on plan without missing out any essential step of vendor onboarding.

• Know the need for new vendors in your business landscape. List your needs and requirements from the vendor.
• Get to know your vendor’s credit history and their past business engagement.
• List all the applicable compliance policies. Attract vendors who fit into your internal and external compliance guides.
• Analyze the current business framework and find out the challenges to onboard a new vendor in your business environment.
• Choose the vendor based on factors like their capability, their values and their compliance model etc. This aids you in eliminating frauds at the start of the process itself.
• Quote the contract in such a way that it is both safe and flexible to work with all types of vendors. Make policies to govern unique use cases and the  associated vendors.
• Make security a priority in all the process stages, as most of the steps in the process involve payment from or to the vendor. Opt for advanced security software and implement them in your framework.
• Make the process plans clear by designing many connection points. Assist internal staff to be the point of contact so that you never miss out helping a vendor. This approach builds trust among the vendor community and helps you attract potential suppliers and conduct business for a longer period with them.
• Document all the vendor information, their values and their deal so that you can categorize and prioritize them accordingly.
• Implement software tools so that data track and spend analysis is under control.
• Schedule meetings to make the onboarding vendors list transparent to your team members and other stakeholders. This allows easy collaboration among them and catches up with the process by having a clear understanding of all the nuances.
• Hold training sessions to educate your team work with the new implementation/ integration for vendor onboarding. Do the same with vendors so that they also stay on the same page.
• Ensure designing a stern but also flexible vendor onboarding policy and monitor their performance after implementation to know what works and what not.
• Make sure to choose the right tool for vendor onboarding which makes the whole process simple and efficient.

Examples of Vendor Onboarding Checklist

Here is a sample checklist which intends to make sure that you perform all the activities to make the vendor onboarding process seamless without missing out anything from the ground work involved in connecting to a vendor to making them work with your workflows or AP systems.The checklist by walmart- Walmart-Supplier onboarding checklist helps in gathering the informations from the vendors and make you organize them using a RFP management system. Few other examples include a checklist by home improvement retailer Lowes and EFTSure Checklist.

Mistakes to Avoid While Onboarding a vendor

A small mistake in vendor onboarding will cost you dearly as it impacts many efficiency of other business processes like invoicing, vendor management, accounting etc. A divergence from this checklist can emerge to be a future mistake as you fail to get support from top management or the hierarchy. Inefficient team where the point of contact is opaque to vendors and other stakeholders keep your vendor onboarding stale. Few other blunders can be lack of proper plan, training, communication setup or building a flexible and strategic onboarding framework that works with all types of vendors.

Vendor Onboarding Tools and Software

Giving the vendor a perfect checklist can make you feel satisfied about your part, but the right onboarding tool that is easy to use and simple to navigate would be the user’s voice. We have enlisted a few such vendor onboarding software tools that entitle some unique features to aid seamless vendor onboarding.

Cflow

Cflow is a cloud-based workflow solution that can streamline all your business processes including vendor management. All the aspects of vendor onboarding and handling is done with ease in Cflow. 

The digital forms help you collect all the information from the vendors and you can store them in the cloud. You can access them whenever required and Cflow helps you refine the best fit vendor from the vendor pool as per the rules defined by you. Once the data has been stored you can reuse the data in all other upcoming activities like billing and invoicing, our forms are capable of auto populating the required data in/from any workflow as deployed in the current process/ system. 

The dynamic approval workflows are easy to design with the drag-and-drop visual builder and you can fix the approver defining appropriate rules at each stage. Cflow is easy to integrate with your existing system and is scalable when your business expands in operation. With Cflow as a supplier onboarding software, you can make contracts and agreements in compliance with the SLA as it is a completely rule-based workflow. Cflow caters to provide deep insights based on the reports and analytics that help you make data driven decisions.

Process Street

Process Street is a comprehensive vendor onboarding software that aids you build and integrate the workflows when specific criteria as mentioned by the user are met. With this tool, it is easy to build vendor onboarding checklists, tasks, procedures, file requests and other to-do lists as it is capable of triggering new workflows automatically. You can automate the vendor onboarding  with triumph with process street features of document management, compliance checks, and performance monitoring.

Logic Manager

Logic Manager is a vendor onboarding software and contract management tool that includes features like workflows for vendor registration, approval processes, and document management. It also offers features for collecting vendor data, verifying them for any risk, compliance checks, performance monitoring, and reporting.

Final Thoughts

When your business grows and your vendor lists are more likely to grow even bigger where scalable options are the way to go, cloud based solutions. Make investment on a tool like Cflow, where the review and approval process are transparent and aid in reducing data silos across global landscapes. Being a cloud based solution, Cflow caters to provide a central repository for document management, validate and verify vendors for risk and make compliance checks. The tool also provides metrics for evaluation of the process with analytics and reports. Cflow offers an enriched feature set to facilitate sequential or parallel tasks, approval hierarchies maintenance and you can even customise/personalise the alerts and notifications. What else can you ask for your vendor onboarding to be perfectly seamless? Let us start by signing up for the free trial now!