Suppliers are often the backbone of a company, and although supplier onboarding is a tedious process, it’s often crucial. However, most companies spend their energy on strategic suppliers and lack management of the non-strategic or tactical suppliers, including marketing, IT, and services.
Although non-strategic suppliers represent only 20% of the procurement expenditure, they can be up to 80% of the supplier database – something called ‘tail spend’. That’s a big database with a lot of potential to work with.
The main problem is:
Supply chain resilience is crucial to business health and growth. Managing a growing network can be a challenge, but this article will show you how supplier onboarding can prevent issues down the line, and how technology can leverage your existing supplier base to improve business relationships and save money.
Supplier onboarding consists in registering a prospective supplier in a company’s system. It’s not simply purchasing goods and services, but sourcing them – which involves more complexity. Overall, supplier onboarding includes integrating the following:
- Data collection,
- Background checks,
- Risk assessments,
- Legal approvals,
- Sustainability compliance,
- Privacy compliance,
- Corporate social responsibility policies,
- Supply chain integration.
Supplier onboarding is specific to procurement teams, and can sometimes be overlooked in the company. Although there are many ways to improve this process, many companies are stuck with years-old processes and unidentified bottlenecks.
Supplier onboarding allows companies to conduct more efficient businesses, purchase goods and services, and organize supplier payments – not only in enterprises but in small and medium businesses as well. More than that, a structured onboarding process drives a more transparent supply chain – and will help your organisation to meet the legal requirements like the Supply Chain Act, since it can ensure the exclusion of unwanted suppliers and improve risk-based supplier selection.
In the light of these regulations, the task of onboarding new suppliers, owned by most procurement teams, will also gain greater importance in the future, as Dr. Elouise Epstein - futurist and a supply chain and procurement author, argues:
“The profession will be responsible for facilitating value creation with third parties. It will go from serving the business to being the business. Enterprise ESG goals will be owned by procurement, with CPOs adopting the mantle of Chief Sustainability Officers.”
Mitigating risks, increasing efficiency, streamlining processes, and strengthening business relationships are only a few of the benefits that come from taking supplier onboarding to the next level. The more organised the onboarding, the more a company can benefit from their supplier relationship.
If the benefits have piqued your interest, here are three crucial steps to start implementing a more optimized supplier onboarding:
Specialized Tools for Enforcing Compliance in onboarding new suppliers
In the realm of supplier onboarding, ensuring compliance is paramount. Specialized tools have emerged as invaluable assets in this endeavor, offering tailored solutions to address specific challenges and requirements. These tools not only streamline the onboarding process but also ensure that every supplier aligns with the company's compliance standards and industry regulations.
Here are three notable tools that have made a significant impact in the supplier onboarding space:
LexisNexis: A renowned name in the world of risk management, LexisNexis provides businesses with comprehensive solutions to assess and manage supplier risks. Their platform offers in-depth background checks, financial risk assessments, and global news monitoring, ensuring that companies have a holistic view of their suppliers' profiles and potential risks.
EcoVadis: Focused on sustainability, EcoVadis offers a platform that evaluates suppliers based on environmental, social, and ethical performance. Their detailed scorecards provide insights into suppliers' ESG practices, helping companies make informed decisions and promote sustainable supply chains.
IntegrityNext: IntegrityNext brings to the table a cloud-based platform that automates supplier compliance checks. Covering a wide range of compliance topics, from anti-bribery to environmental protection, their platform ensures that suppliers adhere to global standards and regulations.
By leveraging these specialized tools, companies can ensure a more thorough and compliant supplier onboarding process, fostering trust and transparency in their supply chains.
Lhotse offers a holistic intake solution, integrating various tools, including those for supplier onboarding, into a unified workflow. This seamless approach ensures compliance and efficiency, allowing businesses to truly harness the potential of their supplier relationships.
Discover the transformative potential of intake forms and workflows in one of our webinars, and firsthand experience how Lhotse can be an integral part of your interconnected future.
