Your Best Practice Guide to Supplier Onboarding: How to Do It Well

Supplier onboarding can be complex – you’ve got to gather the right information, make sure they comply with any relevant regulations, and avoid confusion. If you don’t have a clear supplier onboarding process in place, the whole thing can drag out, leading to frustration on both sides.

But supplier onboarding doesn’t have to be a chore. We’ve written a guide on how you can make sure the process goes well and the needs of both parties are met.

Supplier onboarding, also known as vendor onboarding, is the process of collecting relevant information from a company so you can source goods or services from them and incorporate them into your supply chain.

Suppliers are traditionally either prequalified or not prequalified.

When a supplier is prequalified, they have been vetted by you to make sure they meet your organisation’s requirements. This might include making sure they will comply with any laws, regulations, or standards you have, such as having the relevant insurances.

If you’re dealing with preferred suppliers, you’ll likely be adding them to a register maintained by your organisation, commonly known as a preferred supplier list. In a decentralised or centre-led procurement model, staff can then source from these suppliers with greater confidence.

Being a prequalified supplier does not mean they automatically winning business from you, or that offers should not be vetted as part of a shortlisting process.

When a supplier is not prequalified, it simply means they have not gone through the vetting process. It does not mean they are not qualified – the term has nothing to do with the quality of their goods or services. It also does not mean they should be given less consideration.

There are many times prequalifying suppliers is impractical. For example:

• You’re not going to be procuring from them very often.
• There’s a limited market supply since what they’re offering is highly specialised.

• It’s a standard ‘off-the-shelf’ product where you’re not going to get a lot of benefit from trying to get better pricing or performance improvements.
• It’s going to cost you more to set up and maintain the prequalified list than to just approach the market and vet them as part of the process.

If you’re manually maintaining a supplier list, prequalifying every supplier is also impractical because the data becomes out of date if it’s not frequently updated. For example, a supplier might be on a list because they meet certain insurance requirements, but these may have expired.

Wondering how to onboard a new supplier, or an existing supplier onto a new system? Here's a checklist with nine steps to success.

1. Identify Your Evaluation Criteria

The first and most important thing is to identify your deal breakers. Ask yourself who you would work with, and who you wouldn’t. This will determine the questions you ask, the compliances and insurances they need to provide, and how you evaluate their track record.

2. Make Sure There’s a Set Process

Probity in procurement is about acting fairly and impartially, which is hard to achieve if you subject different suppliers to different selection processes. Decide upon and map out your onboarding process, then stick to it.

One way to do this is to design a flow chart using tools such as Draw.io (Free) or Lucidchart (Freemium). Map out every step in the evaluation and approval process, including what happens if a prospective supplier or their products/services do or don’t meet your requirements.

3. Let Them Know Your Expectations

Make sure they know exactly what you're after, what you're offering and what you're not. There’s nothing worse than mixed messages when it comes to supplier relationship management. One way to mitigate this is to share your policies and business processes with them, and any requirements they need to meet.

4. Use a Vendor Portal or Marketplace

Not everyone can join your preferred supplier lists, but they still might want to have the opportunity to win work with you. One way to achieve this is to allow them to sign up to a supplier portal or marketplace that your buyers can search when they need to find a supplier beyond your pre-vetted lists.

Suppliers should be able to sign up to this marketplace by filling out a form with any information you require such as their ABN, contact details, compliance and insurance information, and more. Depending on the solution you use, the suppliers will be the ones responsible for keeping these details up to date and get automated reminders to do so.

Depending on the marketplace, you may be able to search for suppliers geographically, allowing buyers to easily identify local suppliers to buy from.

5. Get Important, Consistent Information

When you’re gathering supplier information, make sure to get what you need, and that you get the same thing from every vendor. At a minimum, this should be:

• The supplier’s ABN
• The supplier’s business name and contact details

• The primary contact’s details (email, name, role, and phone number)

The most important information is the supplier’s ABN because it is a unique entry. A supplier may have multiple emails and points of contact, so mapping this to an ABN helps you deal with duplication.

The best way to capture this information is through a form. This can be connected to a vendor portal or marketplace as mentioned earlier or sent out via a dedicated procurement system. In the case of the latter, the details are then captured in the system.

6. Group Your Suppliers Properly

When creating multiple supplier lists, there are many ways you can categorise them. For example, you could group suppliers by service category (corporate services, professional services) or by risk level (low risk, medium risk). Whatever you choose, the most important thing is to be consistent.

It’s helpful to have a designated list administrator or administrators who invite suppliers to the list and approve any compliances they upload.

7. Leverage Regional Collaboration

Depending on your industry, you don’t always have to onboard suppliers yourself if someone has already done it. For example, if you are part of a local council, a neighbouring council may have lists they can securely share or vice-versa.

This can allow you to access new vendors and economies of scale, as well as valuable supplier background information. Don't underestimate the power these business relationships can have!

8. Use Templated Communication

If you are using a procurement platform that allows you to onboard suppliers, your vendor may be able to provide you with templated communications and strategies. The vendor has a strong interest in making sure your suppliers are onboarded properly. They have also been through this process with many organisations, which means any templates have been widely tested.

Depending on the vendor, they may be able to provide you with:

• A supplier onboarding campaign plan
• PDF documents explaining the benefits of onboarding to a supplier marketplace
• EOI templates
• Email campaign materials
• Facebook advertising campaigns
• Video promotion materials
• Press releases

Other forms of support might include hosting supplier success webinars, or helping you create a sign-up link for new suppliers on your website.

9. Have a Plan for Supplier Management

Once you’ve onboarded your suppliers, how are you going to handle the supplier list they’re added to? Consider the following when it comes to your management processes:

• How is the list going to be kept up to date? (Contact details, supplier compliance documents)
• Will the organisation be responsible for updating these, or will it be automated?
• How is spend under contract going to be tracked?
• How will supplier performance and buyer feedback be captured?
• What safety measures are in place to help buyers avoid non-compliant suppliers?
• Are there any methods to encourage buyers to use preferred suppliers (E.g. Local, Social Enterprise, Low Risk, etc)? Can you track how much spend is going to these suppliers?

Automate processes where you can, to reduce the potential for human error and try to keep everything in one system. One system means you can track and report on how buyers are interacting with your suppliers and keep your master data consistent.

Having a solid supplier onboarding process in place helps create a positive experience, streamline processes, improve tracking, reduce risks, and save money. Make sure you’re known as an organisation that’s great to do business with and set up processes that makes life easier for everyone involved.

Simplify Supplier Onboarding with VendorPanel

VendorPanel provides a single sourcing platform for preferred suppliers, external lists, public tenders, and supplier marketplaces. Inviting suppliers to join your local lists or a digital marketplace is easy. You can securely share supplier lists within your organisation or with partners, use geo-location to find new local suppliers, and more.

Want to learn more about how VendorPanel can streamline your sourcing process and help you with vendor management? Contact us today to chat about our solutions or to get a quick demo.