How to Integrate New Suppliers (or Vendors) into Your Supply Chain

Supplier Onboarding encompasses the procedures and activities by which you introduce and integrate new suppliers or vendors into your company’s ecosystem. This is a critical process for your business, with a series of steps ensuring that suppliers understand and meet your company's expectations regarding product quality, compliance, ethical standards, and shipping requirements. Ideally, you want to streamline a supplier's entry into your company's supply chain, facilitating a seamless transition that supports your mutual operational efficiency and strategic goals.

An optimal supplier onboarding process requires that you

• Collect and verify important supplier information, including business licenses, insurance certificates, and compliance documents
• Set up payment systems and terms
• Ensure suppliers review and agree to requirements documentation 
• Define, review and and approve vendor terms
• Formally indoctrinate your supplier with your company's values, ethical standards, and quality expectations.
• Onboard the required EDI transaction sets 
• Grants access to the transportation management system (TMS)

 

Why is a Strong Supplier Onboarding Process Important?

Effective onboarding is crucial for building a solid foundation for long-term partnerships, enhancing supply chain reliability, and optimizing performance and cost efficiency.

Risk Reduction

A clear, repeatable supplier onboarding process significantly mitigates your risk by ensuring that all suppliers meet your company's compliance and quality standards from the outset, thus reducing the likelihood of costly disruptions, legal issues, or damage to your brand's reputation.

Efficiency Improvement

A well-structured onboarding process also enhances operational efficiency by minimizing errors, delays, and miscommunications arising from unclear expectations or procedural inconsistencies.

Profitable Partnerships

Finally, prioritizing supplier onboarding underscores the importance of establishing transparent, mutually beneficial relationships with your suppliers. By clearly communicating your expectations and providing the necessary tools and information from the start, you foster a sense of trust and collaboration with your supplier, leading to improved innovation, flexibility, and responsiveness within your supply chain. This strategic focus strengthens your supply chain's resilience against disruptions and supports sustainability and ethical practices by ensuring suppliers align with your company's values and standards.

How to Develop a Supplier Onboarding Process

Define Your Requirements

Clearly outline what is expected from your suppliers regarding documentation, standards, and performance.

Example: A retail company could create a detailed supplier requirements guide that outlines product quality standards, packaging requirements, transportation modes, and delivery timelines.

Pitfall to Avoid: Failing to communicate your requirements clearly can lead to misunderstandings and non-compliance, impacting product quality and the customer experience.

Leverage Technology

Utilize supplier management software to automate and track the onboarding steps, ensuring a consistent and efficient process.

Example: Implement a cloud-based supplier management platform that automates information collection, document submission, and compliance tracking.

Pitfall to Avoid: Overcomplicating the technology stack can deter suppliers, especially smaller ones, from efficiently completing the onboarding process.

Communicate and Train

Establish clear communication channels and provide training materials to help suppliers understand your processes and expectations.

Example: Develop an online training portal for suppliers to learn about your procurement processes, ethical standards, and compliance requirements.

Pitfall to Avoid: Assuming that all suppliers have the same understanding or capability to adapt to your processes can lead to gaps in compliance and performance.

Evaluate Continuously

Implement regular onboarding process assessments to identify improvement areas, ensuring it remains effective and efficient.

Example: Set up quarterly review meetings with suppliers to discuss performance, challenges, and opportunities for improvement.

Pitfall to Avoid: Neglecting to regularly review and update the onboarding process based on supplier feedback and changing business needs can make it obsolete.

Build Relationships

Foster a positive relationship with your suppliers through regular communication and feedback, creating a partnership rather than a transactional relationship.

Example: Host annual supplier days to foster a sense of community, share strategic insights, and recognize outstanding suppliers.

Pitfall to Avoid: Treating the relationship as purely transactional, without investing in mutual growth and understanding, can lead to disengagement and a lack of innovation from suppliers. 

The Case for Supplier Onboarding Automation

The supplier onboarding process does not exist in a vacuum. Its success or failure has downstream implications for your entire organization. You don’t need to be told that there is a tension inherent in the process with many potential costs and benefits. 

It’s not unusual for a retailer, wholesaler,  or manufacturer to bring on 100–500 new suppliers each year. Each of these suppliers has a different technology stack to integrate with and may or may not have much onboarding experience. Responsibility for onboarding new suppliers (a.k.a. vendors) is spread across your business, just as complying with your onboarding process is spread across each supplier’s business. Numerous systems support activities involving onboarding. These systems are not all centralized (e.g., email and spreadsheets), and few are designed for the supplier onboarding process. 

Force this existing, mashed up process to onboard new vendors too quickly, and you will face the consequences of downstream supply chain errors and inaccuracy. Let this amorphous process operate at its own speed, and you will suffer the consequences of being late to market with new brands and products. Both paths damage your top and bottom lines, brand, and relationships with your supplier partners. 

Automation removes this tension. It speeds up the onboarding process, which contributes to your competitiveness. It simultaneously reduces or eliminates the opportunities to make revenue- and profit-killing errors. 

The cost of business as usual.

Relying on disparate manual systems for supplier onboarding imposes significant time and labor costs. Phone calls and emails are inefficient. Manually moving data across systems increases the risk of errors, financial exposure, and compliance failures. And less-than-complete supplier/retailer integration can lead to inefficiencies or even breakdowns in your supply chain. 

The benefits of automation.

According to Informatica, automating the onboarding process can lead to up to 80% less time spent onboarding new suppliers. Our experience suggests that automating supplier onboarding offers significant labor savings, typically two or more FTEs. It also dramatically reduces costly and time-consuming data errors. Eliminating missteps, mistakes, and delays in the onboarding process results in faster speed-to-shelf and speed-to-stock. And automation within and across organizations breaks down organizational silos, which means fewer bottlenecks and speedier resolution of issues. 

Rivet Automates Supplier Onboarding

Rivet, Traverse Systems’ business process automation solution, combines software and professional services to automate your preferred process for bringing on new suppliers. It incorporates your existing documents, data, and, where desired, data repositories and applications. Rivet can automatically collect supplier data, removing the need for costly data entry at both ends of the supply chain. It automates deadline tracking and follow-up. It automatically alerts appropriate personnel of erroneous, incomplete, or late tasks. And its customizable dashboards give you visibility into the status of processes, risk exposure, and the need for action.

The result is a machine-driven experience supporting the online completion, tracking, and verification of all onboarding documents, signatures, and approvals. It presents you and your suppliers with industry-specific tasks, data, supporting documentation, follow-up actions, and alerts. And its dashboards offer real-time status of onboarding processes.

Rivet is a transformative solution for retailers facing the intricate task of supplier onboarding. It can unlock a series of substantial benefits:

1. Streamlined Onboarding. Rivet automates the entire process, from data collection to compliance verification, making it faster and more efficient.
2. Labor Savings. Rivet significantly reduces the need for manual data entry and administrative oversight, allowing your team to focus on strategic initiatives.
3. Error Reduction. Rivet minimizes costly data errors that can delay onboarding and impact supply chain operations.
4. Enhanced Visibility. Rivet’s customizable dashboards provide real-time insights into the status of onboarding tasks, facilitating better decision-making and process optimization.
5. Improved Supplier Relationships. Rivet helps foster stronger, more collaborative relationships with suppliers by simplifying and speeding up the onboarding process.

Incorporating Rivet into your supplier onboarding process optimizes operations and balances speed and diligence. This balance is crucial for maintaining quality standards while achieving faster time-to-market for new products. With Rivet, retailers like you can confidently navigate the complexities of supplier integration, securing a competitive edge in today's fast-paced market.