Vendor onboarding doesn’t have to be a slog

When you contract with a new vendor, a handful of best practices can ensure your new relationship gets off on the right foot, without unwarranted effort.

In the quest of ambitions to become leaner and nimbler, businesses are increasingly outsourcing non-strategic functions to third parties, but the process of bringing those vendors onboard is typically anything but nimble. Vendor onboarding often takes six months at large organizations, according to the Institute of Supply Chain Management.

Due diligence can be exhausting. Background checks, risk assessments, and legal approvals have always been a given, but complexity has grown in recent years as privacy regulations, reputational audits, data exchange procedures, and corporate social responsibility policies have become part of the equation.

“When you combine all of these checks that are needed for companies to work together—and we haven’t even discussed the contract—it’s a lot,” said Jagmeet Lamba, CEO of Certa, which makes third-party risk management software.

Certa has a purpose-built solution, but Lamba says that there are plenty of improvements companies can make to their vendor onboarding processes that do not require investing in new software.

Scoping out the onboarding workflow

A big part of the problem is that companies don’t think much about vendor onboarding. The result is that years-old processes calcify into routines upon which new requirements are layered without enough thought being given to workflow redesign. Serial paper-based processes aren’t converted to digital form, creating chokepoints that cause delays.

Fixing things starts with understanding the workflow from end to end. Like the blind men and the elephant, each function in the organization knows its role but not the entire process. Getting all the players in a room is a start. Map the workflows and identify what can be processed in parallel. Establishing concurrent workflows is the number one thing organizations can do to make onboarding more efficient.

Email is a terrible project management platform. Take advantage of the collaboration tools, which you probably already have, to get everyone on the same page. Microsoft Teams, Monday, Asana, ClickUp, Slack, and others can be rejiggered to manage workflows. The goal is to create a common reference point.

Use notifications, so a task added to the collaboration platform automatically triggers a message to the person to whom it’s assigned. Timestamped flowcharts help move things along by specifying deadlines and identifying bottlenecks. If a single department is holding everybody up, it should stand out like a sore thumb.

Template and reuse

There’s a lot you can do outside of fixing the process, Lamba said, and it starts with templating as much as possible. Instead of sending the same questionnaire to every vendor, create categories that fit different scenarios. For example, if you aren’t going to be exchanging sensitive data, then you don’t need to ask about it.

Use your contracts—not the vendor’s—as a default to simplify everything on your end. State this requirement up-front during negotiations and use contract templates that are preapproved by your legal team. “Vendors have incentives to move fast because they want revenue,” Lamba said. “Your negotiating power is highest in the evaluation phase.”

Set up scenario-based service level agreements within your organization that everyone can agree upon. For example, contracts below a certain spending threshold that don’t involve the exchange of personally identifiable information with a vendor with a strong credit rating may be greenlighted through some checks automatically. Get your review teams to commit to turnaround times based upon factors like the size of the contract or the length of the engagement.

Vendors can help

Vendors can also help streamline the process. “Imagine a company that signs up two or three clients per week,” Lamba said. “Each involves a data collection fire drill from HR for diversity, compliance for regulations, IT for security, and so on.” He’s seen as many as 2,000 data points collected for a single onboarding.

Instead of creating bespoke responses to each question, vendors should create an answer bank, which is essentially a FAQ of responses to the most common questions. Negotiators can simply cut and paste the appropriate answer into the questionnaire.

Finally, the best way to streamline the onboarding process is not to start one in the first place. Look to give new business to vendors that are already approved. “Most companies do not have a way to search their existing pre-vetted list of vendors, so they Google a new one,” Lamba said. He estimated that about 30% of the contracts that go out to bid can probably be fulfilled by preapproved providers. That saves time and money while moving projects along more quickly.

This practice also creates an incentive for vendors to work hard to get add-on business. Lamba recommends an internal rating system like Yelp. When people can share great experiences, everyone in the company wins.

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