Supplier onboarding is not a ‘one size fits all’ process. It can be complex and for many large enterprises, it can take 3-6 months to onboard a new supplier. Finding a way to streamline supplier onboarding and reduce counter party risk can improve the relationship and expedite the process.
When looking at the common pitfalls of supplier onboarding, several challenges stand out:
- Multiple approvals: Approvals and negotiations carried out by multiple functional groups (e.g., procurement, legal, compliance) in a sequential manner.
- Lengthy contract negotiation times: Certain commonly create a lot of back and forth, even after the business terms have been agreed upon.
- Multiple disparate systems: Some use different systems that don’t really talk to each other.
- Multiple data sources: The use of multiple data sources requires recording and storing result.
In the effort to speed up supplier onboarding, many companies sacrifice risk controls. But in our previous discussion with our W2 Global Data, our KYC/AML partner, Richard , explains why this can be avoided with the right tools and strategy.
“Not only does the platform allow for instant access to data, but it also means that partners such as Trakti can integrate their solutions into the platform to provide an even smoother and simpler journey for customers. At W2 we strive to help our clients to be as successful by focusing on working in partnership to build mutual trust and help ‘to make the complex simple’.”Richard Evans
Head of Customer Success at W2
When you attempt to streamline supplier onboarding and reduce third parties risk, it helps to build an onboarding program
To achieve this, you’ll first need to establish supplier evaluation and approval policies. This means determining the guiding parameters for who you will and will not work with, and mapping out the steps for your team and the prospective vendors.
Introducing a supplier onboarding process works even if purchasing in your organization is decentralized. It allows risk management, and all areas of risk to be handled in one place. There is no need to re-vet suppliers for each engagement, but you want to integrate due diligence and restricted party screening into your onboarding system. Every time you manually copy and paste information provided by suppliers, you increase the possibility of an error as well as slow down the entire process.
A system that proactively pulls in data from all available and relevant sources drives the output by giving you a full picture of what risk exists for each vendor/engagement.
You absolutely do not want different systems for each region. Most businesses today operate globally so your system must be multilingual and understand tax and banking validations in every location your vendors are based.
Moreover, the supplier onboarding process should be intuitive enough to integrate KYC/AML, different risk scores and factors for multifaceted risk. There are a few additional steps in creating a more streamlined supplier onboarding process and reducing third parties risk. We will cover them in part 2 of this article. Keep in touch and if you want to discover more, see our “features” page.