Getting a product on the market before your competitors has always been an important goal for any business but getting things right is even more so (one of business history’s most famous stories – Apple’s iPod success – is testament to that).
And in today’s interconnected world, where any big decision often involves a “yes” from people on at least three continents, it makes a lot of sense to spend time and money getting day-to-day processes and communications working well with new suppliers as early as possible in the relationship.
For example, one procurement function in CEB’s client networks found that without a formal onboarding process, both suppliers and managers in the company struggled to communicate, which led to delays in work on new product development. The procurement team found that establishing communication protocols and expectations early on wiped out a lot of problems.
And, at another company, Procurement asked new suppliers to complete a risk questionnaire at the beginning of the onboarding process. The company’s supplier risk team reviewed completed questionnaires and passed on any issues they noticed, meaning the company could tackle potential problems with those suppliers before they affected the business.
How to Save Time and Money
Below are four pieces of advice taken from some of the most forward-thinking procurement teams in the world.
Find important contacts as early as possible: This way, the procurement function will be able to resolve issues and questions more quickly as they arise. You should determine who these contacts are at the supplier organization, but also provide vendors with a list of contacts at your company (for instance, whom to contact regarding a quality issue).
Keep senior managers updated on suppliers’ progress in the onboarding process: One procurement function decided to create executive summaries for top tier suppliers and house them on an internal company web portal so senior managers can quickly get up to speed on the status of a particular vendor’s onboarding process.
Procurement at a computer software company uses an Ariba web portal to track which onboarding tasks suppliers have completed; all stakeholders have access to this portal, so they can easily monitor progress.
Use segmentation to determine how to onboard your suppliers. Procurement at one biotechnology company conducts onboarding at the supplier’s location, working through items like the company’s technology system and the company’s plans for the relationship.
The company holds a shorter version of this training on site for “tier 2” suppliers, but rarely for tier 3 suppliers. This reduces the overall cost of the onboarding process. Although procurement teams should make sure they conduct onboarding of some sort for all suppliers so each vendor is clear on the basics.
Streamline your communication with suppliers to save time and reduce confusion. One procurement executive told CEB’s procurement research team multiple employees at her company would send new suppliers information, which often led to confusion.
She decided to reduce the number of employees interacting with new vendors to make sure the company’s communication was consistent and properly vetted.
Learn more about how to improve your supplier management.