What are the Benefits of Supplier Onboarding?
In light of increasing regulation and legislation related to issues such as data protection, modern slavery and fraud, supplier onboarding is continuing to grow in importance.
Supplier onboarding, otherwise referred to as third-party onboarding or vendor onboarding, is not just a consideration for procurement or finance functions anymore – it also touches upon areas such as compliance, risk and legal affairs.
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Whether you have a defined process for it or not, it’s almost certainly something that you’re already doing in some shape or form. If you create a new supplier in your ERP or accounting system in order to make orders and payments, you are onboarding that supplier.
However, even though it’s something your organisation may already be doing without having a defined structure for it, there are many positives that come from putting a more concrete process in place. We’ve listed the top 10 benefits of supplier onboarding software below which you should be aware of.
Strengthen compliance and enable automation
Taking a more structured approach to supplier onboarding will help you ensure that you are complying with your organisation’s internal policies, as well as external regulations. No longer will you need to worry about deciding between W-9 and W-8 tax ID forms for different suppliers or circulating up to date spreadsheets to the rest of your team when they need a new vendor. You will also benefit from the ability to run automated checks against external databases to guarantee the supplier’s existence and regulatory compliance.
Create solid workflows
Not every new supplier or third party is going to be relevant to procurement. Putting in place a workflow will allow other business users to request approved suppliers and even recommend them at the time of onboarding to those who’ve made the request from specific categories.
Streamline the onboarding process
Those in procurement and finance often find themselves acting as the middleman, spending time passing data back and forth. However, with supplier onboarding software in place, the system can play this role instead. By using it to facilitate communications with suppliers, the transactional burden can be lifted from the procurement and finance functions.
Reduce vendor risk
Automatically assess risk factors upfront and segment vendors appropriately to make sure the right level of due diligence is applied and risk is reduced. This includes everything from basics such as insurance to more complicated checks, such as health and safety, conflict minerals and modern slavery, quality control and so on.
Allow suppliers to register their details
Save time by allowing suppliers to submit their information themselves and update it when necessary, rather than making this an internal task when it doesn’t need to be. This will allow your team to focus on more important and valuable tasks, instead of spending time on data entry.
Reduce data duplication
With an onboarding process and centralised platform in place, organisations that work with a lot of vendors can prevent duplicates being created by other business units or within ERPs. Shared services will also benefit by being able to record the supplier’s information once and then extend it out to other systems.
Improve the quality of your data
The best time to ensure the quality of your data and make sure you are avoiding duplication is during the supplier onboarding process itself. The information will then be fed into all of the other relevant systems (e.g. ERP, P2P, etc) you use.
Provide better visibility of your information
A better vendor onboarding process and system will improve your ability to search for and keep track of suppliers, much more easily than you can do in ERP and P2P systems. As a result, you can also establish an audit trail for any data changes or workflow tasks, giving you complete visibility.
Speed up the supplier onboarding process
With an automated onboarding process in place, you can cut down the amount of time it takes to bring in a new supplier.
Benefit from better supplier relationships
Streamlining everything and making it easier for vendors to do business with you will also help to create more beneficial business relationships. You can remove the need to keep a paper trail of interactions or ask them to submit their details again if they need to work with another part of the organisation.
While this is just a short list of supplier onboarding benefits, to provide you with an idea of how a better process can support both you and the vendors you work with, we have plenty of insightful resources that can provide you with more detail. Click here to find them ->
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