Blog

 

19

Nov

The Business Case for Supplier Onboarding Assistance

Author: Rene Garcia

supply chain partners

Large or small, every business is part of a supply chain, but not every business knows exactly how large their supply chain is. Moreover, many businesses don’t know how or have the time to properly onboard new suppliers. Without this key information or processes in place, no supply chain can provide risk assurance. This is where supply chain management software can help businesses get the visibility they need on who their supply chain partners are and if they are providing their goods and services with the necessary quality and in compliance with laws and standards.

Getting the Whole Picture

Did you know that some supply chains have tens of thousands of suppliers in them? Proctor and Gamble has over 75,000. Walmart has over 100,000. At least one oil company has over 150,000 suppliers. When supply chains stretch across the world, it’s nearly impossible to keep track of what is being procured from where. As a result, this lack of visibility can cause major problems in the future when a disruption occurs.

Recall the several issues with food supplies in recent memory. E. coli and horse meat are just a couple of headline-making examples. Are the causes for disruptions like these easy to identify when supply chains stretch across the globe? Of course not. A major retailer may be purchasing from as many as 1,000 suppliers for a single product type. The bigger a supply chain is, the more complex it becomes, which creates more risk.

This is just one example for why supply chain management software is crucial for any organization of any size. SCM software helps businesses map out their supply chain, know what services and goods are coming from where, and what level of service quality each supplier is delivering. By having this database, companies can make data-driven decisions about which suppliers to work with and which relationships to terminate.

Creating a Supplier Onboarding Process

Every decision a company makes should have a business outcome; this includes choosing suppliers for your supply chain. Without having an onboarding process, it will be impossible to know which suppliers qualify and when suppliers fall below standards. Here are four basic areas to focus on when developing an onboarding process that works for your organization:

1. Create an Approval Process: Suppliers are usually onboarded to solve a problem. As such, organizations tend to prioritize onboarding speed rather than onboarding standards. This is where companies should dictate the minimum threshold for suppliers, like length of history, insurance status, certification, and proof of compliance. Having these standards in place will help prevent nasty surprises in the future.

2. Create a Checklist: Having a checklist that is shared within the company for approving suppliers is a great way to ensure that potential suppliers meet your standards before requests are made.

3. Add More Governance for More Important Suppliers: Strategic partners are different from ordinary suppliers in that strategic partners cannot be replaced easily. If they suffer a disruption, then your business could face an existential threat. More governance may be necessary to ensure safeguards are in place.

4. Officially Approve and Categorize the Supplier: Make sure the organization and the supply chain are aware that the new supplier has been officially approved. Doing so builds confidence in buyers and helps mitigate risk. Additionally, categorize the supplier so that you will know which suppliers to turn to if this new supplier is disrupted.

Reliable Supply Chain Management Software

The supplier onboarding process can be a slow and time-consuming task without a simple way to ingest supplier information. Avetta makes the onboarding process easy by vetting suppliers even before you consider working with them. When suppliers, contractors, and vendors use the Avetta platform, they’re able to conveniently upload credentials, proof of insurance, and certifications to prove that they can perform their services and are compliant with local, state, and federal laws. Public post-work reviews incentivize them to maintain high quality in all of their services and keep suppliers accountable for their work. Knowing that you can trust a supplier will minimize additional risk to your supply chain is the first step to any effective supplier onboarding process.

See how Avetta’s Supply Chain Software can help mitigate risk in your supply chain today!