A Guide to Supplier Onboarding Software

Eric Hansen
Contributing Writer

Supplier management is an ongoing challenge for process manufacturing companies. The ability to consistently meet safety and quality outcomes starts with high-quality ingredients, raw materials, and other supplies. And, this process begins by selecting suppliers who are capable of meeting your robust requirements. While proper supplier onboarding is a crucial link in the supply chain, it can be time and labor-intensive. For this reason, many companies, when looking for a supplier onboarding solution, choose to adopt supplier onboarding software.

What Is Supplier Onboarding?

Nearly all manufacturers have suppliers from whom they receive raw materials, packaging, and other supplies needed to produce their products. Supplier onboarding is the process of gathering information from a company to approve them as a supplier and getting their vendor account set up so your organization can conduct business with them.  

How Do I Onboard a New Supplier?

Each company may have their unique supplier onboarding process. In general, however, you’ll want to be sure you’re at least completing the following basic steps:

1. Evaluate the risk of partnering with the supplier.

Look into their track record and assess the company’s financial health. Investigate their compliance with regulations, and make sure they’re willing and able to comply with any requirements your company has.

2. Collect information about their products.

Look into the volume, nature, and frequency of orders, and provide specifications to ensure they can meet your company’s demands. Inquire about lead times, and familiarize yourself with the order placement process. You’ll also want to find out about payment terms, such as Net 30 days, as well as the delivery, returns, and account crediting process.

3. Gather basic vendor information.

For tax, recordkeeping, and payment purposes, you’ll need to know about the company’s registered name and contact details, licenses and insurance, and banking details.

4. Share information with internal parties.

Your company’s purchasing department, accounting department, and warehousing team should be kept in the loop whenever you add a new vendor.

5. Share your company’s details with the vendor.

Provide a copy of all agreed terms for their approval, along with invoicing information and contact details for your personnel.

How Can We Improve the Supplier Onboarding Process?

As you refine your supplier onboarding process, consider getting C-suite involvement. Having buy-in from the top can help to facilitate support from the rest of the company.

Additionally, you’ll want to appoint an individual to manage your checklist for vendor onboarding. This will ensure smooth communications and prevent missed steps.

Keep in mind that your supplier onboarding process may also need to be revisited in the future. Be flexible and adapt to evolving needs. Additionally, keep in mind that each product and supplier may have unique qualities that could call for additional due diligence.

Finally, consider investing in supplier management technology to facilitate seamless vendor onboarding. A vendor onboarding solution can help your company efficiently manage all of its supplier data with features such as automated notifications and alerts.

What Are Vendor Onboarding Solutions?

These robust cloud-based solutions transform your vendor management activities using features like automation and analytics. They allow you to achieve requirements management at the supplier and item level through portals and communication tools designated exclusively to your company and its vendors. Instead of relying on spreadsheets, emails, or binders for supplier management, the technology eliminates the opportunities for errors and oversights.

How Do Supplier Portals Work?

Supplier portals alleviate the traditionally tedious, paper-intensive onboarding processes by providing a user-friendly outlet through which vendors can log in, upload, and update documents. Because the portal is online, it can be accessed from anywhere and at any time, thereby promoting instant visibility and streamlined communication for both parties. With traditional processes, procuring compliance data and documentation can be an overwhelming task, but portals make it easy and fast. In addition to supplier portals, tools like mobile forms simplify supplier audits and shipment verifications.

Is Supplier Onboarding Software Right for My Company?

Supplier onboarding involves a large number of documents and processes. For companies with a vast amount of incoming materials and ingredients, these activities will continue to become more complex and challenging to manage using outdated approaches. A SafetyChain survey of food and beverage companies shows that just 37% of companies consider their supplier onboarding a successful, controlled process. If your organization falls within that group, implementing software will help you drive success in vendor onboarding and supplier management overall.

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