Organizations cannot survive without vendors. They serve as a building block that needs to fit into the operations of procurement. They help in leveraging economies of scale and ensure the smooth running of steam of supplies. To make that happen, potential suppliers need to be welcomed and valued through a good vendor onboarding process.
The process of gathering information that is required to approve a company is called Vendor Onboarding process. Once the vendor is onboard, the organization can purchase goods, and services and make all necessary payments. It is also very vital that the prospective vendor must comply with the rules standard and regulations as required by the company.
A well-designed vendor onboarding process is very helpful as it may save companies from expensive errors. The process contains several steps which assist in moving the vendor relationship through a stage of onboarding.
Vendor Onboarding Process
Following are the ways through which organizations can make an effective and efficient vendor onboarding process.
Understanding the Vendors
Before understanding the vendors, the organization should first be aware of all the internal local, global, legal, and compliance issues that may apply to businesses.
Then it should start by understanding the vendor through gathering their information such as product catalog, business details, pricing, and contacts, making a concrete collection of documents, and verifying their documents.
The process is followed by an assessment of their compliance and potential risks. Once both parties have a formal understanding of each other, now they should exchange the below-mentioned information.
- Company overview
- The company’s mission vision and values
- Code of Conduct
- Information regarding billing
- Avenues for feedback
- All necessary and required documents
- Final contract and pricing list
Aligning People, Processes, and Approaches
Good communication collaboration will play a big part in achieving overall success with the vendor. The informal introductory meeting should be conducted between the key players who will work together. This meeting will provide both parties the opportunities to gather all the necessary and relevant information.
They can ask questions regarding each other’s processes, procedures, and practices. This will enable both of their teams to grab the value of the partnership and all their team effort will grow strong.
Some of the questions may include:
- Who will be their point of contact and their information?
- Who will be given rights to access the company data?
- How shall the vendor engage through the user?
- Who will be responsible for reporting, troubleshooting, and account management?
In this step, the vendor and company will discuss in detail the measurement of success and what they should be expecting from each other. Once the goals and objectives are established, they both should create key performance indicators to evaluate the performance.
Quarterly to yearly performance reviews must be conducted. This will further help in ensuring compliance. Use the following measure to evaluate your vendor:
- Complaint history
- Commitment towards growth and feedback
Some Mistakes to Avoid in Vendor Onboarding
Any mistakes during the vendor onboarding process can be detrimental to the organization. Therefore, it is vital to stick to the above practices and avoid the following mentioned pitfalls.
- Failure to get support: One of the mistakes of vendor onboarding is failure to get support from top management. Companies should not move forward with vendors until they receive approvals and support from the CEO.
- Failure to assign: The organization must assign a team with the responsibility of handling all affairs-related vendors. At times companies may fail to assign the team their responsibility which can be damaging to their relationship
- Failure to communicate: Failure in communication can occur when there is limited feedback, lack of clear goals and objectives, lack of trust, etc. Strong communication and collaboration help in building a strong and long-lasting relationship with vendors.
- Failure to plan: Organizations must be responsible for planning. Having a laissez-faire attitude will lead to bumpy relationships and performance problems. Planning will make their process and implementation strong.
In conclusion, a vendor onboarding process can be a launching point for a valuable partnership. It is very crucial to have a smooth hassle-free onboarding that attracts the right vendor to partner with you.
It helps in further reducing any friction in relationships and makes it easy to identify problematic suppliers early, minimizes chances of errors, and results in satisfaction and commitment at both.