The supplier onboarding process is not an easy task.
It requires the supplier to fill out different kinds of documents, some supplier verification methods, and so on.
Suppliers can be the missing link to a perfect work process. Many businesses and even SaaS companies work with suppliers but only a little percentage of these businesses do it right.
That’s why it is important to know how to onboard your suppliers. The right way.
So without further ado, let’s talk about:
What is Supplier Onboarding?
Supplier onboarding is the process of adapting your suppliers to your business and the workflows you will be following together in the future. By creating the necessary documentation and preparations while assessing the risks, businesses can build a better relationship for both sides. Thus, it’s important to make supplier onboarding a part of your supplier management strategy since it will help you save time and money in the future.
It is also important to keep in mind that supplier onboarding is not supplier management. It is the preparations and precautions you make to prevent supplier management from getting out of hand.
So, if you are facing problems in managing your suppliers, that is a big fat sign that you might want to revisit your supplier onboarding processes.
Why Is Supplier Onboarding Important?
You might be thinking that supplier onboarding is something that should be done only if there are problems with suppliers.
It is always better to detect and solve the problems before they even turn into problems. True, you can’t undo mistakes, but you can start not making the same mistakes.
If you try to empower your supplier management without improving supplier onboarding, you would be doomed to forever trying to solve problems. But if you have a solid, streamlined supplier onboarding process from the beginning you can start seeing forward.
And that is exactly why supplier onboarding is so important.
Furthermore, supplier onboarding isn’t only about preparing your suppliers for work; it also helps you keep track of their work and documentation.
Adopting a smooth supplier onboarding process allows you to create an organized supplier directory which will make supplier management much easier.
Lastly, let’s not forget the hardships and risks of working with a supplier.
By implementing a supplier onboarding process, you can put more critical thinking and planning into your supplier affairs and make the other party feel as safe as you are.
Who Should Do Supplier Onboarding?
If supplier management is on your agenda, then so is supplier onboarding.
If supplier management isn’t in your job description, then it makes sense for you not to do supplier onboarding; instead, you can work with supplier management agencies.
But of course, it is up to you to take the first step toward supplier onboarding.
In the end, supplier onboarding is a team effort that requires all supplier managers to collaborate and create a supplier onboarding process that suits your business. And if you decided to go with a supplier onboarding agency, you still need to be involved in the process.
How Much Does Supplier Onboarding Cost?
Onboarding suppliers can range from $1k-10k and up to many more thousands of dollars, especially for an enterprise-level company.
However, one thing is for sure: the price of NOT onboarding suppliers is way higher than the price for onboarding suppliers.
during a supplier onboarding process, money can go to expected and unexpected expenses including:
- Working with a supplier onboarding agency,
- Hiring a supplier onboarding manager,
- Using tools such as analytics or database software,
- Other expenses,
6 Steps to a Successful Supplier Onboarding Process
There are often discussions about supplier onboarding best practices; however, it is clear that there is no set of rules for supplier onboarding.
Every supplier onboarding process should be tailored for your specific business – taking into account the size, the field, and of course, the suppliers. You must have a clear picture of your needs and the way you work with suppliers.
However, regardless of who does the supplier onboarding when and where, if supplier onboarding is completed in these six steps, chances are it will be successful.
1- Prepare for the supplier onboarding process
As you might have caught up already, a supplier onboarding process is not really a walk in the park.
So obviously, a lot of preparation goes into making a supplier onboarding process a successful one. You might want to start with deciding whether you want to handle the process in-house or get third-party help.
Another thing to prepare for is, of course, the financial part of the onboarding process. Most of the time, onboarding suppliers is pretty affordable.
Unless you are on the verge of bankruptcy, you’ll be fine.
2- Set the standards
Half of the supplier onboarding process is deciding which suppliers you want to work with. And to do that, the best thing to do is to come up with a set of evaluation and approval criteria.
Depending on your field of work, these criteria could range between:
- Service record of the supplier
- The financial history of the supplier
- The pricing provided by the supplier
- The potential for a mutually benefiting partnership
And a lot more.
What matters is that you are aware of your supplier standards and are able to reflect them onto your supplier onboarding process.
3- Talk about what to expect & what you expect
Now that you have picked eligible suppliers for your company/platform, it is time for a talk. And ideally, write it all down.
Ask what you need to know and be prepared for what your suppliers would want to know. For example, some mutually important questions are:
- What does the supplier need to set up in order to start working with your platform?
- How can you streamline supplier information and communication in general?
- What is the supplier onboarding process going to look like for you and how can it be improved?
- Are supplier meetings in person or online allowed/expected/required with the supplier in general?
- What are the supplier onboarding deliverables in terms of milestones and deadlines?
By quickly identifying possible frictions through these questions, you will not only guarantee a way smoother supplier onboarding but also create a healthier partnership with your suppliers-to-be.
4- Connect and collaborate (online)
It would be super medieval if you had to meet up with your suppliers every time you had something to discuss.
That’s why supplier portals (a.k.a. vendor portals) exist.
If you don’t have a vendor portal, do set up one right now. You’ll need it.
And if you do have a vendor portal, let’s get those suppliers onboarded there too. And, yes we all know that adopting technology is hard. But I have just the right solution for you.
Supply your suppliers with the best onboarding tool: UserGuiding
Just like you know your supplier, they probably also know you and your company. So sending them a 5-page email with legal terms for supplier onboarding won’t be the best idea.
Instead, create an interactive guide with UserGuiding to give suppliers an overview of your platform or just the vendor portal.
With UserGuiding you can make sure your suppliers get the idea behind what you show them with features like:
✅ Interactive guides,
✅ Product walkthroughs,
✅ Hotspots and tooltips,
✅ Resource centers,
✅ Powerful analytics,
✅ User segmentation and targeting
And more 😎
5- Create a working culture for suppliers
You are almost done onboarding your suppliers, and what this means is, they are a part of your business now.
To keep everything running smoothly, you need to include them in your own inner workflows and let them have a taste of your company culture.
One important action to take here is to make sure it is easy enough to communicate with the suppliers for everyone on the team or throughout the company, whoever is a stakeholder.
Thankfully, you already have the supplier portal to rely on. But if your supplier onboarding processes require the suppliers to be active within your organization too, you might want to review and improve the suppliers’ workflow.
After all, it is the company culture that helps us engage in healthy communication.
6- Revise and repeat
It didn’t turn out as good as you imagined?
Revise and repeat.
There is no bigger mistake in supplier onboarding than abandoning the process altogether. If it doesn’t work, make it work. The most rewarding processes take time to perfect. Savor the experience.
What’s more, chances are you didn’t mess up worse than when you didn’t have a supplier onboarding process at all.
Get up and start again.
Free Supplier Onboarding Checklist to Download (in Excel, Word, PDF, Notion, and PNG formats)
Onboarding your suppliers can get messy and it is always good to have a piece of reference.
That’s why we have prepared a free supplier onboarding checklist you can download in Excel, Word, PDF, Notion, and/or PNG formats.
The checklist has three stages:
- Before contact with the supplier(s)
- In contact with the supplier(s)
- After agreeing with the supplier(s)
It’s completely free, we’ll send you a notice for you to download it. Don’t forget to let us know if you want to get the checklist.
Successful supplier onboarding is still unknown territory to many. But hey, it’s time to explore that territory now. And to make sure you are not lost, there is the free-to-download checklist we have prepared just for onboarding suppliers.
If you are ready to start your successful supplier onboarding process, don’t hesitate. Even if you get lost along the way, it’s the experience that counts.
Frequently Asked Questions
How do I onboard new suppliers?
Onboarding suppliers is an intricate process that requires preparation beforehand, clear communication, and a fair load of research.
How long does it take to onboard a new supplier?
In general, the supplier onboarding process can take less than a day and up to several weeks.