The procedures for a supplier onboarding process are used to protect the quality of your procure-to-pay operations and to protect your business relationships with your suppliers. You should carefully develop a process for supplier management that reflects your special requirements, such as guaranteed delivery times for shipments and a two-hour time limit for receiving a reply for an email message that had been sent to a supplier. The foundations for your business relationships with suppliers are established during the supplier onboarding process.
Quality of your Supplier Onboarding Process
When you initiate the negotiations process for a new supplier, you should research the qualifications of the supplier and should ensure that the services from the supplier will not impair the quality of your business operations, such as with defective products or late deliveries. Following the selection of a supplier, you should ensure that all necessary measures are in place for them to be onboarded as efficiently as possible, allowing them to begin delivering against their set goals.
There are some special techniques for establishing amicable and successful business relationships with suppliers during the onboarding process.
Supplier Onboarding Strategies
Strategy 1: Develop Procedures for your Supplier Onboarding Process
If you make a list of the problems from suppliers that could quickly affect your business operations, then you could develop some methods for avoiding those problems. According to a recent report by Levvel Research, increasing supply chain efficiency and improving supplier relationships, compliance and response times rank amongst the top supplier management goals, and your supplier onboarding process should be geared towards achieving these goals.
There could be several inspections for a shipment before you make a decision about accepting the shipment. You could also require that the supplier should cover the shipping costs for late deliveries and for replacement shipments for defective goods.
Strategy 2: Develop a Process for Managing your Suppliers
The professional business relationships between you and your suppliers should be friendly to control social problems but should also be structured with specific procedures for helping you and the suppliers to quickly resolve a problem. With detailed information about the procedures, there would be lower risk factors for problems from confusion that could cause problems for your business. Suppliers should be required to review and accept such procedures during the onboarding process. In a recent blog, we talked about some of the supplier management best practices that help establish strong working relationships.
Strategy 3: Develop a Plan for Attracting Suppliers with your Website
According to Levvel’s Sourcing Report, organizations seek to improve their sourcing process due to poor supplier performance, high processing costs, and a struggle to find high quality suppliers.
With that in mind, you could make your sourcing and subsequent onboarding processes and lot smoother by including a web page on your website for any supplier to conveniently apply online for the opportunity to become a supplier for your company. There should be a list of the qualifications for suppliers on the web page to help them assess if they are the right fit and also to layout your expectations for a smoother onboarding and management process.
Strategy 4: Develop a Communication Process for your Suppliers
The comments from your suppliers can be used to help you to make a decision about improving your procedures, such as procedures for ordering supplies or for submitting a payment for an invoice. With a convenient method for receiving feedback, you could be quickly informed about problems from invoices and from shipments. The suppliers would have a simple process for completing a transaction if you install some special software for sharing messages with your suppliers.
Strategy 5: Develop a Standard Contract for your Suppliers
The contracts should include a summary page to help a supplier to save some time by quickly reading a list of the key requirements for the contract. You should also plan to meet with a supplier to discuss a contract. The supplier onboarding process should be used to help a supplier to quickly become familiar with your procedures.
Strategy 6: Assign a Level of Strategic Importance for Each Supplier
Your suppliers should be evaluated during the onboarding process for a level of importance for your business operations. The importance factor should be associated with the risks for stopping your business operations, such as problems from late shipments and defective manifolds for cars, which could stop your assembly lines. The problems from suppliers have different risk factors for impairing the quality of your business operations.
Deloitte refers to supplier relationship management as being a continuous cycle of activities that begins with segmentation.
You should segment your suppliers by priority during the supplier onboarding process for better governance, performance management, and supplier development.
Strategy 7: Evaluate the Reliability and Quality Factors for Services from Suppliers
You should research information about a supplier to evaluate the reliability and quality factors for the services. The information about the financial history is an important indicator of the level of financial stability for a supplier. The professional reputation and public image of a supplier can influence the public opinion about your business. According to Levvel’s Supplier Management report, poor supplier data is one of the top factors contributing to poor supplier relationships.
The phase for researching information during the supplier onboarding process is crucial for helping your management team to decide on a supplier.
Strategy 8: Request Feedback from Several Managers for Information about Suppliers
The decisions during the supplier onboarding process should be made by a management team that can evaluate the information about the financial history and the customer reviews for the services from a supplier. There is a high level of quality for the decisions from a management team because several employees can provide feedback about suppliers.
Strategy 9: Management Teams for Final Decisions for the Supplier Onboarding Process
With precautions for controlling the risk factors, your management team can make a decision about a supplier. The prices from a supplier should not be the top priority for the decisions because suppliers can control costs by avoiding stringent methods for inspections. You should assign one contact person for a supplier and should also organize a team of employees to help your suppliers, which would give suppliers several opportunities for resolving a problem.
A supplier can influence the quality of your business operations. With some new techniques, such as more software for messages, you could enhance your business relationships with your suppliers by sending regular messages to request feedback. You should also share a welcome message about a new supplier as an announcement for your managers during the supplier onboarding process.