Supplier Portals: Best Practice in Supplier Onboarding and Enablement
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Supplier onboarding is a critical process for organizations, ensuring that new suppliers are seamlessly integrated as partners for the enterprise. With the increasing complexity of supply chains and the supplier landscape, and the need for efficiency and risk management, optimizing the supplier onboarding process has become more important than ever.
In a recent webinar, industry experts Anthony Payne, CMO at HICX, and Kurt Alberton, Principal and North American Practice Lead at The Hackett Group, delved into the best practices and key insights regarding supplier onboarding and enablement.
In the following article, we explore:
- The True Cost of Bad Supplier Onboarding
- What are the Current Supplier Onboarding Best Practices
- How to Evaluate Supplier Onboarding Solutions
The True Cost of Bad Supplier Onboarding
In a recent study, The Hackett Group identified that 50% of companies primarily rely on email, Word, Excel, or ERP systems for supplier onboarding, while only about 35% of companies have implemented best-in-class point solutions or supplier self-service portals.
Furthermore, out of the companies that have tried adopting technology, 43% of companies reported that their supplier onboarding portals fell short of expectations, indicating mixed results in achieving business objectives. As a result, “We don’t always make it easy to do business with us withforfor our suppliers,” Kurt explains.
This inefficiency has tangible costs. For a median company with $5 billion in annual spending, supplier onboarding costs over $1 million per year in labor alone. In addition, according to Kurt, the median organization onboards about 10% of new suppliers from their overall supply base annually. For a company with $5 billion in annual spending, this translates to approximately 2,600 suppliers onboarded per year. For the top 25% of organizations, this number is nearly double, with over 5,000 suppliers.
Cycle time for onboarding high-risk suppliers without a risk assessment can take up to 50 days, impacting operational agility and competitiveness.
What are the Current Supplier Onboarding Best Practices?
To start we need to think about supplier onboarding in the right way. Anthony explains, “We should think about supplier onboarding as laying the foundations for what you might think of as world-class supplier management.”
Standardize Data and Processes
Standardizing data and processes within supplier onboarding is essential for organizational efficiency and risk management. By laying a solid supplier data foundation, companies can better manage risks, ensure compliance with regulations, and fulfil Environmental, Social, and Corporate Governance commitments.
This standardized data foundation not only enhances risk management but also improves overall operational efficiency across the business. With the increasing demand for data from organizations, effective supplier onboarding becomes imperative to meet these requirements.
Using Technology to Improve Supplier Onboarding
Technology plays a vital role in streamlining supplier onboarding processes. Kurt emphasizes the need for a user-friendly environment, which is essential, “to become this ‘customer-of-choice’ to have internal satisfaction and be able to onboard suppliers in a timely manner,” he explains.
Automation plays a crucial role in the standardization effort, allowing for the streamlining of processes, reduction of costs, and mitigation of risks associated with manual tasks. Moreover, the flexibility of the data model and workflow is paramount for effectively managing supplier onboarding, enabling organizations to adapt to evolving requirements and ensure seamless integration into existing systems. However, each new technological addition often introduces a new database for supplier data, emphasizing the importance of standardization and orchestration to avoid data silos and inefficiencies.
The efficiency gains from leveraging supplier onboarding technology promises are manifold. Reported benefits include consolidation of onboarding steps and checklists, improved data availability and quality, risk identification, and reduced cycle time. In numbers, a median company saves approximately half of the labor costs through efficiency gains, resulting in about $500,000 of savings annually.
What are the key metrics to track during supplier onboarding?
Tracking key metrics is crucial for measuring performance and identifying areas for improvement. “Reducing cycle times in onboarding can lead to a better business case for projects dependent on new suppliers,” Anthony explains. He urges us to explore time-to-value metrics to articulate the benefits of reducing cycle times in supplier onboarding.
What are the top 10 supplier onboarding metrics?
- Cycle time
- Quality of the data
- Stakeholder satisfaction
- Cost per supplier onboarding
- Efficiency metrics: time-to-value
- Supplier satisfaction
- Compliance metrics
- Process improvement metrics
- SLA adherence
- Risk identification and mitigation
How to Evaluate Supplier Onboarding Solutions
In evaluating supplier onboarding solutions, organizations should focus on flexibility, automation, and alignment with business objectives. Anthony advises, “Think about onboarding for your company, not just for a particular piece of software.” Conducting proof of concepts ensures vendors can test workflows and manage expectations effectively before selecting vendor onboarding software. Time-to-value metrics articulate the benefits of reducing cycle times, driving a better business case for onboarding projects.
Supplier portals are essential for optimizing supplier onboarding and enablement. By implementing best practices, tracking key metrics, and leveraging technology effectively, organizations can enhance efficiency, mitigate risks, and foster stronger supplier relationships. Supplier onboarding is not just a process; it’s a strategic imperative for organizations aiming to excel in today’s competitive landscape.
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