Over the past few months, we have been breaking down the 7 Steps of AT Kearneys defined Strategic Sourcing Process and have now reached the point where we can discuss integrating the new suppliers into your business.
This integration phase occurs after you have successfully completed all the necessary planning, sourced suitable suppliers, selected the ones you hope to work with, and negotiated mutually beneficial contracts with them. You should, by now, have a clear idea of exactly what you want to buy, who you want to buy it from, and how much it will cost your business.
In the implementation stage of the strategic sourcing process, transparency is crucial. So, it is essential to include your suppliers, stakeholders, and all personnel involved in the supply chain in the relevant meetings and discussions to ensure they are up-to-date with any changes and updates.
In this blog, we will be discussing some important factors of supply chain integration and the steps you should follow when integrating new suppliers into your business.
Prepare Vendor Transition Plans for New Suppliers
Being prepared is probably the first step in any process of importance. Integrating new suppliers into your business is no different. You may have all of the hope in the world that your supplier relationship will be successful, but you need to be prepared for any eventuality. This is where vendor transition plans come in.
So, what is a vendor transition plan? A transition plan is essentially a preventative measure to help you through problems with your suppliers so that you don’t need to scramble at the last minute to find new suppliers or materials. Supply chain management, procurement, and strategic sourcing are complex processes, so a vendor roadmap is critical in helping track the potential of loss, contract termination, or replacement of materials and/or suppliers.
When entering into a contract, outline the vendor transition before signing the agreement so that you will minimize risk as much as possible. You need to go into the relationship knowing what you will do if it ends. All relationships will eventually come to an end. Businesses evolve. There is the possibility of them being acquired or otherwise disrupted, and that can have ripple effects on your supply chain. Avoid unnecessary chaos by planning ahead.
Establish a dedicated vendor management team with clear roles and responsibilities. As part of your job, you are responsible for establishing, managing, and maintaining contracts that benefit your company. If a vendor relationship deteriorates, how will you protect your organization with termination, survivability, and exclusivity clauses?
Potential switches should be taken into account in transition plans. Why might a vendor relationship need to be terminated? Have you already defined multi-vendor award contracts with alternative suppliers?
Manage the Implementation and Integration of New Suppliers
During your supply chain management and procurement processes, you will be dealing with your suppliers a lot. You will need to ensure that your chosen suppliers are properly briefed on what is expected of them, how your business works, deadlines, and any other relevant specifics. The importance of transparency and communication cannot be overstated.
This may mean that you will need to provide more resources, training, and access to your suppliers than you have been used to, but the return on investment will be worth it in the long run. When you put the effort into building a symbiotic relationship, your supplier relationships will move from a supplier-customer relationship to a partnership. Suppliers will be more likely to go above and beyond to fulfill your business needs if you show them they are valued by investing in them, communicating with them, and working to improve your supplier management strategies.
How to Onboard New Suppliers
You should keep these steps in mind when you start an onboarding process in your company:
- Establish Vendor Evaluation and Approval Processes
- Establish vendor requirements and expectations, including clear policies and expectations. In this way, efficiency would be improved, confusion would be reduced, and potential friction could be avoided.
- Establishing a vendor registration and data collection platform - allowing vendors to submit the information that helps you vet them quickly
- Creating a separate onboarding process for strategic partners - strategic partners have a significant impact on your company and should be onboarded separately.
- Establish a system and culture of communication - communication is the key to improving efficiency, eliminating mistakes, and strengthening relationships with suppliers.