Increase Supplier Onboarding Efficiency, Not Risk
Supply chains and logistics have been thoroughly tested in 2020, and for many companies, these areas have not held up. Many companies have faced the challenge of getting the products they need on time. Plus, businesses often have to be more cost-conscious in this environment, while also trying to position themselves for future success.
Amidst this backdrop, supplier onboarding takes on heightened importance. You might need to add new vendors quickly due to issues like:
- Previous suppliers going out of business
- Previous suppliers facing production delays
- A re-orientation of your supply chain to reduce geographic concentration (e.g, adding more local suppliers in case of future issues with international procurement)
- Budget constraints that cause you to find lower-cost vendors
However, businesses need to be careful not to increase risk by bringing on new suppliers too quickly, without careful scrutiny. Especially given the rise of remote work, which can lead to new purchasing requirements and processes, procurement teams need to develop a plan to improve supplier onboarding. Doing so can involve:
Leveraging Due Diligence Partners
In order to avoid working with suppliers that increase risk — such as because of unreliable production processes that affect your company’s ability to meet your own customers’ needs — you want to conduct due diligence on them first. Due diligence should even extend to small vendors, beyond Tier 1 suppliers.
However, trying to manually assess vendors can be a time-consuming process. If you need to quickly switch suppliers, you may not have time to assess everything from a supplier’s compliance track record to their commitment to sustainability and diversity. Instead, look for partners who can help you quickly yet effectively get up to speed.
For example, the Red Flag Group offers analyst reports that provide risk ratings on other companies by analyzing areas such as media articles, court records and financial information. Trying to conduct this research for each new vendor you want to quickly bring on board might not be possible without the help of another party.
Similarly, you could work with a procurement outsourcing partner like GoProcure that already has access to a large pool of approved suppliers. An outsourcing partner may also be able to provide additional staffing if you need flexible resources for times when you need to ramp up due diligence for supplier searches.
Utilizing Automation for Supplier Searches
Procurement teams can also turn to technology to help with finding, vetting and onboarding new suppliers. For due diligence, you can use automated tools like Marigold from Deloitte, which can provide ongoing alerts about suppliers, such as on legal issues, among other features.
But what if you’re unsure where to even start with finding new vendors? Procurement teams can leverage vendor management software to automatically send out requests for bids, depending on the products and services you need. From there, the software may be able to easily onboard the supplier you choose among the bids you received — after you or a trusted partner conducts due diligence on them, of course.
With GoProcure’s Buyer’s Desk, you can easily conduct RFQs and select a vendor that then gets integrated within your e-procurement platform. That makes it easy for employees to then purchase from approved suppliers.
Building a Pool of Pre-Approved Suppliers
Utilizing technology and partners like GoProcure can help you quickly find new suppliers, but ideally, you won’t wait to onboard new suppliers until you urgently need them. Consider increasing your pool of pre-approved suppliers even during slow periods for your business. That way, you’ll be more prepared if a crisis hits, such as if suppliers in a certain region face weather issues that cause major delays.
When building your pool of pre-approved suppliers, consider risks your company might be sensitive to or where you might have gaps in your current supplier pool. For example, if your company is particularly price-sensitive due to tight margins, you might want to onboard multiple vendors within the same category.
Price comparisons should be part of your procurement strategy normally, but you might not always choose the lowest cost supplier due to factors like customer service or shipping speed that matter to your business. Still, having the option to quickly switch to a lower-cost vendor could make a difference for your company.
Establishing Protocols for Procuring From New Vendors
While building a deeper pool of suppliers can help you prepare for otherwise unexpected situations, sometimes you still need to onboard new suppliers on an ad-hoc basis.
For example, with the rise of remote work, employees may be allowed to procure home office supplies according to what they need for their specific workstations. But you don’t want to encourage maverick spend. Even if remote employees make relatively small purchases, these can add up. And you still want to maintain visibility just in case there’s something wrong with a certain supplier, such as a compliance issue that an employee is unaware of.
As such, all employees should be clear on procurement processes, including what vendors they can purchase from and who they can submit purchase requests to if needed. Using an e-procurement platform like GoProcure, for example, enables purchase requests to automatically get routed to the appropriate approver based on the workflows you establish.
By maintaining this visibility, finance and procurement teams can also get a sense of whether you should integrate new vendors into your procurement system. You might allow one-off, small purchases, but if employees start to regularly purchase certain items, you might want to onboard a new supplier so employees can easily find them when using your system.
For example, you might allow a one-off purchase of headphones for a remote employee without digging too deep into that supplier. Yet if multiple employees start to request the same headphones for their home workstations, you might want to onboard that supplier as a vendor that you can then suggest to new employees. Perhaps you can even work out a bulk purchasing agreement to save money.
Save Time With Onboarding
You have enough to worry about with supply chain disruptions and cost concerns. Don’t let onboarding add to your list of concerns. Working with an e-procurement platform and outsourcing partner like GoProcure can help you easily source the suppliers you need to run your business efficiently, while still being mindful of the risk of working with new vendors.
Want to learn more about how e-procurement/spend management technology can help you increase supplier onboarding efficiency? Request a free consultation with our product experts today.