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  • Writer's pictureRobert

A Helpful Guide To The Vendor Onboarding Process


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Vendor onboarding refers to the process of collecting the information needed to approve a company as a supplier and enabling your organization to conduct business, purchase goods and services, and make payments to that company. One of the most important aspects of the vendor onboarding process is making sure the prospective supplier complies with laws, regulations, and standards required by your organization.


Why having a vendor onboarding process is important

Vendor onboarding is the first step towards vendor management. Without it, you won’t be able to increase your efficiency, reduce your risk and costs, and achieve a higher ROI. By creating a vendor onboarding process, you can avoid most of the pitfalls resulting from poor supplier management.

Just like you’re nurturing relationships with customers, you should also nurture your relationships with your suppliers. A vendor onboarding process will not only help you strengthen business relationships, but it will also help you:

  • mitigate risks;

  • streamline processes and increase efficiency;

  • ensure compliance with regulations;

  • develop a positive reputation in the industry;

  • increase ROI;

  • reduce redundancies;

  • track data and workflows;

  • automate basic tasks;

  • reduce time to approve and activate new suppliers;

  • cut out intermediaries and reduce human error.


How to create a vendor onboarding process

When you start an onboarding process in your company, there are a few steps you should keep in mind:

  1. Creating the evaluation and approval process - establishing vendor evaluation and approval processes

  2. Establishing requirements and expectations - clear policies and expectations increase efficiency and reduce confusion and potential friction

  3. Implementing a vendor platform for registration and data collection - a form where vendors can fill in details that will help you quickly vet them

  4. Developing the process for strategic supplier partnerships - because strategic partners have a significant impact on your business, you should create a separate onboarding process

  5. Establishing a communication system - always keep communication top of mind; this will help you improve efficiency, eliminate the risk for delays of human mistakes, and strengthen relationships with suppliers.

Having defined the basic principles you need to determine the exact steps, responsible departments or people and the flow of the onboarding process.

Here is an example of such a process:

Steps to help your organization maintain efficiency and an effective vendor onboarding process

The vendor onboarding checklist

To make sure you’re not missing any details, here’s a checklist example you can use whenever you’re onboarding a new supplier:

Step1: Evaluate supplier risks:

  • Check business product and service track-record

  • Check creditworthiness (financial health)

  • Assess vendor compliance with regulations and governance

  • Ask the vendor to sign an ethical code of conduct

  • Come up with backup plans

Step 2: Gather information about products/services offered and commercial condition:

  • Expected nature, volume, and frequency of requirements

  • Product or service specifications

  • Lead times

  • Extras required (ex.: packaging, labels, etc.)

  • Order placement requirements and format

  • Pricing and discounts

  • Payment terms

  • Delivery process / logistics

  • Returns and accounts credits process

  • Supplier training requirements or orientation sessions (if needed)

Step 3: Gather vendor information:

  • Registered name, address, and contact details

  • Licenses, insurance, or documentation

  • Banking details

  • Contact details of vendor reps

Step 4: Make all information available for internal use. Share it with:

  • Accounts department

  • Purchasing department

  • Warehousing and inventory control

Step 5: Share information with the vendor

  • Record all agreed terms and send for formal approval

  • Provide invoicing details

  • Give contact details for purchasing manager, accounts, and warehousing/logistics

  • Provide training and orientation sessions as needed


Vendor onboarding best practices

No two organizations are alike, so your vendor onboarding process might not be similar to your industry or even direct competitors’. But here are a few best practices everyone can follow:

  1. Get the C-Suite involved. Having top-down buy-in from the beginning makes it much easier to bring the rest of the company on board with your supplier onboarding process.

  2. Assign a person in your organization to manage the vendor onboarding checklist. Mistakes or miscommunication can happen, so it’s best to have someone who can verify each item on your checklist and ensure all steps were covered.

  3. Be flexible with your vendor onboarding process. As no two buyers are alike, suppliers are also different. Be flexible and adapt your onboarding process to each vendor’s uniqueness.

  4. Set expectations. Make sure your vendors know what’s expected of them in terms of approval time, documents required, certifications, and compliance standards.

  5. Invest in technology. That goes without saying that’s a must in order to efficiently manage all of this data, take advantage in real-time, and secure all your information.


How Prokuria can help you streamline your vendor onboarding process

Whenever possible, you should look to automate paper-based processes to increase efficiency and reduce human error, and the vendor onboarding process is no different. Prokuria can help you build a seamless onboarding process for your vendors that will save you hours of manual work of collecting documentation and filling in the information in different spreadsheets and systems.

We can help you ensure compliance, segment and approve vendors, and customize your vendor registration platform. Prokuria covers the entire sourcing and vendor management process, addressing all the needs of the Procurement Departments.

Automate your vendor onboarding process


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