10 hard truths about supplier onboarding

August 9, 2019 Tradeshift Editorial Team

Pairing electronic invoicing and B2B connectivity can turbocharge a business’s efficiency. But frankly, getting the results you want can be a different beast when compared to other enterprise software. Success is predicated not just upon typical goals like successful application integration, deployment and internal end-user adoption. It’s all about getting a big enough chunk of your supplier base to use your chosen solution. You need critical mass to justify your business case. Whether you need to onboard for supply chain messaging, electronic sourcing, or anything in between – it’s no easy feat.

Where do the hard truths start?

1. Supplier master data – Poor master data is the biggest issue when beginning an onboarding project. It sounds kind of obvious, but the main reason onboarding can be hard is… well… you don’t actually know who you’re trying to onboard. This missing information seems to be an issue in nearly every project.

2. “Why should I?!” – The next most common problem is the “WIIFM” question, or “what’s in it for me?”. Traditionally, these systems are put in place to benefit the buying enterprise, but at the cost in hard currency (and certainly hassle) to the suppliers. When you aggregate all the value to one side of the equation and the costs to the other, it’s no wonder not a lot happens! Of course, you can use a big stick as the buying enterprise, but don’t forget you probably need these guys as much as they need you – and some of them more than they need you. The reality is there has to be network benefit for real network growth.

3. The technical challenge – Many small and midsize businesses do not have the capabilities to easily produce the data formats that you demand from their back office systems. Therefore having plug-and-play integration for common SMB ERPs and standardisation of formats is critical. You need to provide a set of steps to climb, not a wall to scale. Incidentally, Tradeshift’s CloudScan™provides a simple bridge to that first step by allowing SMBs to capture and convert invoicing data.

4. Lack of ownership – You are asking the supplier to engage in a project. Even if it’s a small one, it’s definitely a project. However, this isn’t a project initiated, blessed and resourced internally, but by you, an outside actor. Therefore, it’s often a project without ownership and therefore without results. My experience shows that it can work to make sure the supplier’s commercial people are involved, not just functional teams. If an Account Executive thinks he will lose business because of failed integration/onboarding with his customer, you tend to find ownership.

5. Lack of time and resources – Time is money. Having to spend time integrating or onboarding yet another customer system can be burdensome. However, it can also be time well spent and result in better, closer relationships with customers, especially if you are onboarding onto one network for most of your customers and most of their processes! This is why we at Tradeshift believe in “all of your suppliers in one place”.

How these problems are compounded, and what to do about them.

6. Lack of communication and education – As we said in point two, there needs to be benefits for both parties. But you also need to get this message to the right people. The benefits can be concrete and immediate; maybe there will be access to earlier payments, higher efficiency, increased trading opportunities or better reporting data. But if we don’t tell the right people the right messages, then you end up with inertia, plain and simple. Good marketing is fundamental to onboarding, which leads directly to the next point.

7. Motivating the right people – Your suppliers may be carrying around memories of past technology vendor contracts gone wrong – or even ongoing legacy issues. Unfortunately, some vendors have viewed a new supplier as a burden rather than a potential win-win-win (buyer-supplier-provider). Too often, a new technology solution may have been an exercise in fighting legalese and bureaucracy. The objective shouldn’t be to reach out three times, run a marketing campaign and tick whatever other contractual boxes, all in some off-shored onboarding centre. The objective should be to create the shared benefit of a transacting supplier.

8. A matter of perspective – It’s easy to forget that many of your suppliers will be bigger than you are, or may own brands or components critical to your business. All of a sudden my P2P process that everyone has to follow, is really someone else’s order-to-cash process which we need to follow! This is why you need clear categorization of supplier groups (I prefer trading partner, which works in both directions) and to offer them varying flexibility in how they connect to the given process. The more you can convince them onboarding is central to doing business with you, the better.

9. Focusing on the wrong business documents – There has been a natural emphasis on the invoice message in recent years, because of the paper it generates and its unique regulatory position. But what about the rest of the conversation? Asking someone to onboard only to submit invoices is like trying to sell them a phone that only lets you say “bye”. What about delivering POs, sharing shipment progress, being able to view invoice status, chatting with the current owner of the given process step, and receiving early payments? All of sudden we have something worth onboarding for.

10. The whole process is not in one place – There can be hundreds of interactions between trading partners at a given company. Onboarding multiple times in multiple places is a recipe for fatigue. Unfortunately, if you don’t embrace a sustainable model, this problem is set to get worse before it gets better. As the sharing economy and other new suppliers hit B2B networks, there will be a whole new set of interactions to account for. I’d recommend getting your process streamlined and finding a solution that’s more than a temporary patch!

These 10 problems are certainly frustrating, but believe me, getting a solution in place that works for you is well worth it. Here at Tradeshift we address a bunch of these historic challenges head on – so the market is certainly moving on!

About the Author

Tradeshift connects buyers, suppliers, and all their processes in one global network. We help you transform the way you work with suppliers today – and adapt to whatever the future brings.

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