10 Benefits of Supplier Onboarding
Supplier Onboarding is becoming an ever more important element for organisations, as new regulations come into force and governments continue to legislate. The scope of supplier onboarding has also grown and now is commonly referred to as Third Party Onboarding as well, as it encompasses all entities which end up in the vendor master as payees.
This also means that Supplier Onboarding or Third Party Onboarding is expanding its relevance to more than just Procurement or Finance and is also of growing importance to other compliance and legal functions as well.
Whether you have a defined process or not it’s something which every organisation does, whether big or small, in order to create a new supplier in their ERP or Accounting System to facilitate ordering and payments to them – you are onboarding a supplier.
Taking the time to have a defined process and system to automate the Supplier Onboarding process can provide a lot of benefits for Procurement, Supply Chain, Finance, and Compliance functions. Here we list the top 10 benefits which you can create value with.
Provide a tailored approach to ensure you comply with all internal polices and external regulations. No need to worry about different forms for different types of suppliers and communicating the latest excel spreadsheets and PDFs to your team when they need a new supplier. Run automated checks against third party databases to further validate the supplier exists and does not have any politically exposed shareholders or appear on any sanctions lists from the US, EU, UN, etc.
Reduce Maverick Spend
Not all suppliers will need a purchase order or be relevant to procurement and things will always fall through the cracks. Having a solid workflow for business users to request suppliers with approvals before inviting them will help procurement to channel volumes to existing contracted suppliers. You can even have suppliers recommended at the time of onboarding to the requester for specific categories.
Remove the Middle Man
Procurement and/or Finance are often the middle men/women passing data back and forth to suppliers. With an onboarding solution the system becomes the middleman facilitating communications with suppliers removing the transactional burden away from Procurement and Finance. A life made easier and more efficient.
Automatically quantify risk upfront and segment suppliers to ensure the appropriate level of due diligence is done and any risk are mitigated on the on-set. This can vary by industry from basics like insurance to more complicated requirements like Health & Safety, Environment, Conflict Minerals, Anti-Corruption, Anti-Bribery, Quality, Export Controls and the list goes on.
Reduce Transactional Workload
Remove the effort of data collection and data entry from internal users by allowing suppliers to submit their data electronically and update it on a periodic basis. Let your team focus on value add and strategic activities to further improve processes rather than policing and managing them.
Reduce cycle times for internal customers
By having a more automated process you can reduce the cycle time it takes to bring in a new supplier dramatically. The average for most customers is two days for a national supplier and five days for an international one.
Remove Duplicated Efforts
By having a centralized platform, larger organisations can benefit even if they don’t have a shared service by not duplicating efforts done by other business units or within other ERP systems. Shared services will also benefit in the same way by doing the work once and then extending the supplier as needed to other organisations/systems.
Improve Data Quality
The Supplier Onboarding process is actually the best time to ensure there are no duplicates, have the system correct and validate data in real time at the time of entry from the supplier. Data is automatically fed to all relevant systems (ERP, P2P, etc.) without any manual hand offs.
Better Visibility and Audit Trail
Easily search for suppliers across a rich set of attributes with sophisticated google style search capabilities, beyond what is available in traditional ERP and P2P systems. A full audit trail of any data changes and workflow tasks provide forensic level capabilities to track down who did what and when.
Improve Supplier Relationships
Streamline and make it easier for suppliers to do business with you. No more long paper forms to fill in and send via email or to carry out duplicate work because they are now working with another one of your business units.
This is just a short list of the potential benefits that an organisation can realise by investing in a robust supplier onboarding process assisted by technology to fully automate it.