How Long Should It Take to Onboard New Suppliers?

The past couple of years are unparalleled in terms of supply chain disruptions, and businesses worldwide are feeling the strain. The onboarding of new suppliers—a critical process in ensuring the flow of goods and services—has never been more essential. Supplier onboarding involves vetting, validating, and integrating new vendors into a company's system, ensuring compliance and alignment with the organization's standards and practices. In today's fast-paced business environment, effective supplier onboarding is not just a formality but a strategic necessity to mitigate risk and enhance operational resilience.

The Time

Each and every supply chain is a unique environment, which means that while we can present you with others' experiences, it doesn't mean that your results will be identical. Onboarding a new supplier can range from a few weeks to several months, depending on the size and complexity of the organization. According to the Institute for Supply Management, it can take up to three months at many large organizations to fully onboard a new supplier, involving multiple steps such as background checks, risk assessments, and contract negotiations.

This extended timeline can have significant effects on a business, from delaying production schedules to increasing operational costs. Slow onboarding can lead to missed market opportunities, strained supplier relationships, and a reduced ability to respond to market changes. Additionally, it may affect a company's competitive edge if critical supplies are delayed or procurement becomes cumbersome and time-consuming. Companies must find a balance between thorough vetting and a streamlined process to minimize these risks.

Moreover, as onboarding times lengthen, the strain on internal resources intensifies. The need for multiple departments to align—from procurement to finance to legal—adds layers of complexity and can slow down decision-making. These delays may frustrate suppliers and impact the overall efficiency of the supply chain, highlighting the need for more efficient onboarding strategies.

The Solution

Last year, Harvard Business Review shared insights on how innovative supply chain platforms could reshape the future of supplier onboarding. These platforms provide a centralized hub where businesses and suppliers can exchange information seamlessly, automating many of the time-consuming steps that traditionally slow down the onboarding process. By leveraging artificial intelligence and machine learning, these platforms help predict and mitigate risks, reduce paperwork, and ensure compliance.

Additionally, supply chain platforms can facilitate real-time communication and transparency between businesses and suppliers, creating a more collaborative environment. These tools make it easier to verify supplier credentials, conduct risk assessments, and complete contractual agreements in less time. Harvard Business Review highlighted that companies adopting these platforms have experienced significant improvements in efficiency, reduced costs, and strengthened supplier relationships, offering a glimpse into the future of streamlined supply management.

However, while these technological solutions promise substantial improvements, they also require a commitment to change management and digital transformation. Organizations must be prepared to invest time and resources to integrate these platforms into their existing systems and processes effectively.

The Cost

It's amazing to hear what these procurement platforms can do, but often they cost much more than they are worth for South African and even international businesses. While these platforms offer numerous benefits, such as streamlined processes and reduced onboarding time, the associated costs can be prohibitive for many companies. Licensing fees, implementation costs, and ongoing maintenance expenses add up, making these platforms a considerable investment.

For many businesses, especially those in markets with tighter budgets or more volatile economic conditions, the return on investment might not justify the expense. That is why we developed B1 Link, a procurement platform that allows you to compete for a fraction of the cost.