There’s no such thing as the perfect number of suppliers. No matter how strong or weak one’s supplier relationships are, Procurement teams can never truly know whether they have too few or too many suppliers given that every business has its own unique needs, challenges, and strategies. But there’s one thing that Procurement can be sure about: supplier onboarding (or vendor onboarding) will always be an important process for the business.
Whether it's a new business or very mature brand, organizations will always need to onboard new suppliers to solve challenges, unlock opportunities, and remain competitive. And today, supplier onboarding is more critical than ever.
The global supply chain disruptions of recent years have ushered in a new era of risk, compelling many organizations to redesign their global supply chains via nearshoring, reshoring, or regionalization to build supply chain resilience. And with rising expectations for sustainability and efficiency, businesses must ensure their suppliers meet compliance, deliver quality, align with organizational goals, and can drive sustainable innovation.
This means that a business’s procurement and sourcing is only as strong as its supplier onboarding process. But what exactly makes a strong supplier onboarding process? And how can organizations optimize this process to drive procurement excellence and remain competitive in today’s volatile landscape?
By optimizing processes with new technologies like SRM software, Procurement can streamline their supplier onboarding to not only get down to business without the busy work, but also make smarter sourcing decisions that unlock top-line value.
Let’s explore what supplier onboarding is, its benefits, the challenges involved, and how you can build an effective process with this step-by-step guide.
Supplier onboarding, also known as vendor onboarding, refers to the process of collecting and verifying information about new suppliers to ensure they meet your company’s standards, policies, and requirements. This process includes gathering essential details such as:
By the end of the onboarding process, the supplier should be fully integrated into your systems, enabling smooth collaboration and procurement operations as you kick off your partnership.
A structured and comprehensive supplier onboarding process is important for many reasons, but here’s a few of the key benefits that it can deliver:
Improved Compliance – Effective onboarding ensures that suppliers adhere to regulatory requirements and meet your business’ standards and codes of conduct, which is crucial for mitigating supply chain risks, regulatory violations, and reputational damage.
Reduced Procurement Risks – The supplier onboarding process enables Procurement teams to identify potential issues that could cause supply chain disruptions and other risks early, such as financial instability, ethical misalignment, unsustainable practices, poor quality or delivery, etc.. While this due diligence may not be the most exhilarating of tasks, it’s a crucial part of supplier onboarding and laying the foundation for success throughout your supply chain.
Enhanced Supplier Relationships – Forging strategic partnerships with your best suppliers starts with strong supplier onboarding. With an effective process that facilitates communication and builds trust, Procurement teams can ensure that they’re always selecting the best suppliers and foster mutually beneficial supplier relationships where both parties are invested in each others’ success and win together. By establishing strategic partnerships with your suppliers, businesses can gain competitive advantages such as being customer of choice, solving challenges smarter and faster together with suppliers, accelerating innovation, and more.
Operational Efficiency – Unfortunately, supplier onboarding can be a tedious process (without the right technology, of course). But smart and comprehensive onboarding has an immense ROI by reducing errors in supplier data and minimizing delays in procurement workflows, allowing for smoother supplier relationships and streamlined processes throughout the entire supplier lifecycle.
Cost Savings – Bad suppliers are expensive. By ensuring the quality of every supplier with strong onboarding processes, Procurement can avoid the high costs of dealing with non-compliant or underperforming suppliers and only partner with the best suppliers who generate holistic value rather than bleeding time and money.
Vendor onboarding can be resource-intensive, especially without the right procuretech solutions than remove manual work, deliver automated insights, and streamline processes. According to industry reports, the TCO (Total Cost of Ownership) of onboarding a single supplier can range from $700 to $1,000, depending on the complexity of requirements. These costs arise from:
Thankfully, pioneering procuretech solutions (such as Kodiak Hub’s end-to-end platform) are empowering teams to automate and streamline their onboarding processes, which is drastically reducing these expenses while improving accuracy and speed. Below, we’ll get into the key steps of the vendor onboarding process and how these steps can be streamlined and optimized.
A supplier onboarding process involves a series of steps to verify, assess, and approve a supplier. It typically includes:
While strong vendor onboarding processes might look different from business to business, here’s a few key traits that all world-class supplier onboarding should consist of:
Now that we've covered the high-level benefits and characteristics of an optimized supplier onboarding process, like get into the nitty-gritty with a step-by-step overview of how your onboarding processes should be structured:
The first step of any supplier onboarding process is to discover the supplier you’d like to onboard – either by going to their door or having them come to yours with a supplier self-registration solution (like Kodiak Hub’s sign(UP) feature). Once you’ve discovered a potential supplier, you need to request basic supplier information via a standardized questionnaire or online form. Focus on critical details like:
Once you’ve collected your basic supplier data, it’s time to cross-check the submitted information for accuracy and compliance with industry standards. This may involve:
Perhaps the most important step of the onboarding process is to assess supplier risks, which can be difficult and time-consuming since there are so many risk areas to evaluate.
Once all your supplier risk and compliance checks are complete, the next step of onboarding is to approve the supplier and integrate your supplier data into your procurement and ERP systems so your organization can get down to business with them.
After a new supplier in onboarded into your system, it’s important to communicate your company’s procurement policies, payment terms, and performance expectations with the supplier before you begin working together.
Since supplier onboarding is a complex and data-intensive process, it can be fraught with obstacles, including:
Obviously, Procurement is on the front lines of vendor onboarding challenges, but ineffective processes have far-reaching consequences beyond your Procurement team. Here’s how supplier onboarding can pose a problem for various parties in your procurement processes:
Supplier onboarding is challenging, but thankfully there are several actions that Procurement can take to minimize these issues and unlock the most value from their onboarding processes:
Standardize the Process: Use consistent templates and workflows to reduce confusion amongst suppliers and stakeholders alike.
Leverage Technology: Adopt an innovative procuretech solution (such as Kodiak Hub’s end-to-end SRM platform) to automate repetitive tasks and centralize supplier data for easy access and powerful insights.
Foster Collaboration: Improve communication with suppliers through transparent guidelines and codes of conduct, and by leveraging new supplier collaboration tools to improve supplier engagement and collaboration (once again, Kodiak Hub’s SRM platform can help with this!)
Automation is the key to transforming supplier onboarding from a cumbersome task to a seamless process. Technology can help by:
Supplier Self-Registration: Reduce the time spent on searching for new suppliers by leveraging supplier self-registrations tools that let suppliers come to you. Kodiak Hub’s sign(UP) solution allows you to create a customized registration form tailored to your needs, which you can email to suppliers or host on a website to effortlessly discover new suppliers and gather their information into your SRM platform.
Centralizing Supplier Data: Use Supplier Relationship Management (SRM) software to store and access all documents in one place, empowering your organization with time savings, improved efficiency, and, most importantly, automated intelligence that drive faster, smarter sourcing decisions.
Streamlining Workflows: Automate data validation and compliance checks with an SRM platform or procuretech solution that removes the manual work and streamlines all your onboarding processes. Kodiak Hub’s Smart Actions and Process Orchestration tools are great for creating workflows that work for you.
Enhancing Collaboration: Strengthen your supplier relationships with cutting-edge collaboration tools that provide real-time communications and updates, drive trust and transparency, empower strategic alignment, and foster mutually beneficial partnerships.
While smart supplier onboarding has never been more critical for organizations, it’s also never been easier thanks to innovative procurement technologies – the most powerful of which being Supplier Relationship Managment (SRM) software. By adopting a world-class SRM platform such as Kodiak Hub, you can optimize your onboarding process by:
Supplier onboarding isn’t just a formality—it’s a strategic process that sets the tone for long-term supplier relationships. By adopting a structured, technology-driven approach, procurement teams can not only save time, reduce costs, and mitigate risks, but also gain competitive advantages such as improved quality, accelerated innovation, and strategic partnerships that keep your business resilient and ahead of the cure.
There's many ways you can improve your organization’s vendor onboarding, but there’s no quicker or more powerful way to transform your onboarding than adopting a smart SRM system such as Kodiak Hub.
Our end-to-end platform empowers your business with automation, solves key challenges, and creates a transparent process to ensure supplier onboarding becomes a catalyst for operational excellence and supply chain resilience. Oh, and onboarding your business into Kodiak Hub’s platform is easy and smooth.
So what are you waiting for? It’s time to transform your supplier onboarding and get down to business without the busywork!