Supplier onboarding comes with its own set of challenges. The process can get inefficient in medium or large enterprises due to the numerous stakeholders and moving parts involved. Delays and anxiety often characterize this process.
What is Supplier Onboarding?
Supplier onboarding or vendor onboarding is the registration of a supplier in the company’s records so that the company to transact with them to source & purchase goods or services. It is a part of the larger purchase-to-pay (p2P) process.
The steps before supplier onboarding are Purchase requisition, Purchase order, and Supplier selection. Once the supplier selection is approved, supplier onboarding occurs, and invoices and payments follow.
Supplier Onboarding Challenges
Employees are unaware of the exhaustive list of suppliers the company is working with: this leads to superfluous suppliers getting onboarded to provide the same services and goods. This duplicate vendor onboarding costs the company time and money.
Inefficient line of communication with the supplier: Most times The supplier’s PoC is in the middle of all communication between the finance team and the supplier leading to inefficiency. However, opening this line of communication can lead to a lot of chaos as a direct line to the finance team can overwhelm them with too many supplier concerns.
Lack of transparency in the supplier onboarding process: Apart from the lack of visibility with regards to who all are onboarded, there is also a lack of transparency when it comes to sub-processes. Even though multiple parties are involved, processes are carried out in silos, leading to confusion and lack of preparedness.
An outdated approach to seller onboarding: A traditional manual way to onboard sellers leads to errors, avoidable delays, and broken communication chains.
Supplier onboarding challenges make life at work difficult for employees, the proves, the procurement manager, finance person, supplier, and other key stakeholders.
How can you overcome these challenges?
For starters, keep the ERP or spreadsheets with supplier information updated and gives access to these to employees. It streamlines the process and prevents redundancy associated with hiring new vendors to provide existing services. It also leads to time and cost savings.
Make the entire process centralized. Solutions such as AI-powered supplier onboarding are available and leverage technology to make this process more efficient.
Digitization gets rid of manual processes prone to error. The comprehensive systems allow departments to talk to one another rather than operating in silos, thereby overcoming the challenges that arise from it.
State-of-the-art technologies can compare vendor’s live images with their national identity documents with the help of biometric anti-spoof algorithms. It makes sure that only vetted suppliers come on board.
Supplier onboarding tools come integrated with KYC solution that highlight inconsistencies and can avert the risks caused by partnering with fraudulent and duplicate entities. It enhances operational efficiency, but it also safeguards the company from massive financial and reputational risks.