Vendor Onboarding vs Vendor Management

Vendor Onboarding vs Vendor Management: A company’s array of vendors that it relies on is core to how it retains and develops its competitive advantage.

Managing existing relationships and cultivating new ones is vital in helping companies quickly respond to new challenges and opportunities, whether through launching new products and services, finding more efficient ways of delivering existing services, or developing new channels to market, for example.

Vendor onboarding and vendor management are key elements in supply chain management. While complementary, they are different and must be well understood and seamlessly integrated if a business is to optimise its supply chain.

Let’s explore them in more detail and see how technology can help a company achieve its goals and objectives.

How Vendors Add Value to Your Business

It is easy to fall into the trap of thinking that vendors fulfil the junior role in supplier/vendor relationship, but the reality is often more complex.

The dynamic of this relationship will vary. A company supplying a commodity item – say, bathroom products – will have a different relationship and profile than a business delivering a comprehensive and strategic outsourced IT service.

However, it is unusual for a company to buy purely on price, with other considerations like terms and conditions, payment terms, size of business, responsiveness, areas of expertise, geographic location, certifications and other issues usually being essential considerations too.

In short, commercial relationships are often more complex than meets the eye, as customers seek to seamlessly integrate the supplier’s service into the BAU to help launch new products, cut costs, or reduce risks, for example.

Let’s look at how vendor onboarding vs vendor management can help better manage this complex and fluid situation, reduce the management overhead, and maximise business value.

Vendor Onboarding

Vendor onboarding is the process where potential and new vendors are identified and assessed in terms of a business’ procurement policies. This process ensures that these vendors are systematically brought into the contractual and procurement systems and processes that dictate how they will provide services and ultimately be paid.

This process must also capture the details of the products or services commissioned by senior managers or a project team.

How does vendor onboarding typically work?

Validating Vendor Information

The first step in vendor onboarding is validating a vendor’s key business information. Companies typically conduct eight reviews to assess their vendors’ suitability, over and above their ability to provide a service. This will generally include basic checks to confirm a business’s incorporation details, tax registration, banking details, physical location, company accounts, directors, etc. There may also be deeper background checks regarding any PR issues, previous commercial relationships, or anything else that may prove problematic.

Issues around sanctions enforcement, modern slavery, and child labour may also be checked, as well as potential background checks on a supplier’s supply chain. After all, a company will not want to carry out extensive due diligence only to be caught out by a small business that has never heard of being involved in a serious PR issue, for example.

Delivering a Supplier Portal

The customer/vendor relationship involves overhead for both sides that can’t be avoided but must be minimised. Many companies require potential and actual vendors to register before they can do business with them. At the very least, this will involve providing accurate and up to date information about the products and services they offer, their areas of expertise, pricing, certification, contact details, standard contracts and much more.

Vendor onboarding often means providing a vendor portal so that potential and current vendors can post all this information and that commercial, compliance, and risk teams can start performing their due diligence when needed. It also allows customer employees to find pre-approved companies they can work with on their projects.

As you might expect, a vendor portal also provides a solid foundation for the next stage – vendor management.

Vendor Management

Once a vendor is onboard and performing, the next step is to ensure that they perform according to contract and specification, a process typically referred to as vendor management.

Performance Tracking

Commercial relationships can be complex and change as requirements change and business needs evolve. Operational teams may need to capture multiple quantitative and qualitative measures and monitor them with legal, procurement, and compliance teams.

Metrics about products received and services delivered, as well as feedback, need to be captured and consolidated from across the business quickly and efficiently while still capturing the full complexity of the contract. Dashboards are an essential element of this management so that managers can see at a glance whether a supplier—or their suppliers – is performing as needed and highlighting issues early before they become significant business issues.

Workflow capabilities can be utilised to define, capture and approve all this information, as well as approve contract changes and authorise payments.

All this information can be consolidated in the vendor portal, centralising data and metrics from across the business so that the customer and the vendor can have the same perspective on the progress of a contract or engagement.

Contract Management

Contractual frameworks can be complex, with framework documents that define the scope of the relationship and specific contracts for defined engagements, not to mention the individual specification documents.

All these documents must be created, approved, and stored, ready for a contract review, renewal, or use during a contractual dispute. There is a significant workflow process in all these areas, and comprehensive security is required to ensure that sensitive documents are not shared with the wrong people.

How Technology Can Help

The end-to-end vendor onboarding and management process lends itself well to automation, with a mix of data capture, secure storage, workflow automation, and reporting. AI can also be invaluable in reducing the workload.

Technology platforms can help:

• Simplify and streamline vendor management processes
• Deliver enhanced compliance and risk management, operationally and commercially.
• Deliver significant efficiency savings
• Support and enhance collaboration in a business and between businesses.

How Can Telic Digital Help You?

Telic Digital has long experience helping clients significantly enhance their vendor management capabilities. Our solutions and toolsets allow you to easily manage your list of registered suppliers, products and services, certifications, locations, areas of expertise, and contact information. Our solutions help you manage the end-to-end contracting processes and monitor your suppliers’ performance.

We can tailor solutions based on a detailed understanding of how companies buy products and services, enabling you to generate business value quickly.

Learn more.

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