Vendor Onboarding: Common Challenges and How to Solve Them

Vendor Onboarding is the process of verifying and integrating a supplier in the company’s system to keep engaged in business activities with the said vendor. 

Let us analyse common issues which companies face with supplier onboarding on an everyday basis:

Challenges Associated with Vendor Onboarding

  1. Employees are never aware of all the company’s vendors: Large organisations often have multiple suppliers for the same product or service. Having duplicate vendors not only leads to wastage of time and resources, but it also affects the negotiation capacity since the company fails to establish an exclusive relationship with so many suppliers onboard.

    The most prominent reason for employees not knowing about the existing suppliers is the non-availability of information at a specific location. Vendor information is available in the company’s ERP system, which most employees do not have access to. Supplier information can be found in spreadsheets, maintained by different employees and departments, and are often outdated. In the absence of an updated vendor information database and direction, employees cannot ask for a new vendor to be onboarded. It is a futile exercise that can be avoided by availing relevant and updated information by the concerned team or individual.

  2. The only direct line of communication exists between the business POC and the vendor: The absence of a direct link between the various company departments and the vendor makes the communication process highly inefficient. E.g., if the finance department finds an issue with the supplier onboarding form and needs clarification from the vendor. A direct communication link seems reasonable, but the finance team could easily be overwhelmed when flooded with query emails from various vendors.

  3. Lack of transparency with the boarding process: Not just the boarding process itself but the sub-processes too are carried out in siloed systems. Thereby preventing the concerned parties from knowing where or with whom any specific process stands. As a result, employees find it difficult to prioritise their tasks and prepare for forthcoming events. Lack of clarity and confusion makes people involved in the process lose sight of the sole reason the need for supplier originally arose, leading to further inefficiencies.

An outdated approach to vendor onboarding is a waste of time and resources and frustrating for all the parties involved. Let’s take a look at all the affected parties:

  1. Employee: With no clear information on existing vendors, there is a very high possibility the requestor is wasting his time and his colleague’s time in requesting to onboard a new vendor. With no factual information on the process, the matter is further complicated.

  2. Procurement manager: All the information related to the vendor is kept at business POC. His needs might differ from that of the requesting employee. Bringing the procurement manager late in the picture causes further delays.

  3. Finance team: The vendor onboarding form has around 50 questions uploaded manually in the ERP. The process is time-consuming, and there exists a very high possibility of errors. When the finance team reaches out to resolve the issue, it might be weeks since the form was filled. Digital onboarding solutions help automate this tedious process and improve work efficiency.

  4. Supplier: Delays and lack of transparency may not leave the vendor a good impression. 

Solutions to Vendor Onboarding Problems

Let’s look at what an efficient supplier onboarding process looks like and the prevailing best practices.

  1. Up-to-date supplier database: The first and foremost requirement is an updated vendor database. This provides a clear picture of whether there is a real need for a new vendor or not. It eliminates the possibility of duplicate vendor onboarding, which saves time and resources for the organisation. It also keeps the company actively engaged with the existing suppliers, strengthening the relationship between the two entities.
  2. Involving procurement manager early on: Once the employee has identified the need for a supplier to procure specific goods and services. The procurement manager must approve the request before the requestor initiates contact with the said vendor.  A framework like this which allows the requestor and the procurement manager to work together makes the entire process more productive and goal-oriented. 
  3. Digitisation: The entire vendor-related forms and agreements and the information entered in the ERP by the finance team must be digital to minimise errors and turnaround time.
  4. Centralised onboarding platform: All the processes and communications related to supplier onboarding must move out of emails and spreadsheets and towards a centralised platform. Siloed systems are on the way out.

Automation, digitisation, syncing, and tracking are ways for organisations to propel various businesses. With AuthBridge’s AI-driven vendor onboarding process, you can quickly accelerate business decisions without delay.  We help reduce your onboarding time and reduce your operational costs by 90%.  Contact us today!