What is vendor onboarding? Vendor onboarding, also known as supplier onboarding, is an external collaboration in which the new vendor is integrated into a company’s internal systems to ensure effective collaboration. It has two parts: vendor-facing activities, which are focused on collecting information from the vendor and providing training, and internal-facing activities, which are focused on configuring internal systems to support purchases and payments.
Vendor onboarding is an external collaboration during which a new vendor is integrated into a company’s internal systems. The best vendor onboarding tools make the process of integrating a new vendor easy and quick for everyone involved. They can also help organizations reduce risks, improve efficiency, foster stronger relationships, save costs, and ensure compliance.
When choosing a tool around which to design your vendor onboarding process, it’s important to consider the critical capabilities required to accomplish vendor onboarding. In this article, we’ll review and assess tools commonly used for vendor onboarding and discuss why security features in particular are of the utmost importance.
Critical security capabilities needed before, during and after onboarding
The information exchanged during the vendor onboarding process is very sensitive. It’s a key reason why many of the critical capabilities of vendor onboarding tools are focused on security. While it’s easy to produce a laundry list of technical capabilities, a more practical approach could be to look at the required capabilities by phase and objective. Below we examine the required security capabilities before, during, and after vendor onboarding takes place.
Pre-onboarding: Helps the team meet security needs before the vendor onboarding process begins. Example capabilities include:
Need-to-Know Restrictions: Restrict access to the external vendor collaboration to only those participants who need it to perform their job functions.
Verified Participants: Verify the identities of all participants involved in the onboarding process.
During Onboarding: These capabilities help protect sensitive information and ensure transparency while the onboarding process is taking place. Examples include:
Secure Data Exchange: Ensure the platform offers robust security features to protect sensitive vendor information exchanged during onboarding. Consider features like encryption and secure channels.
Communication Transparency and Monitoring: Maintain clear visibility of communications and file exchanges.
Audit Trails: Comprehensive audit trails to track all activities and changes made during the onboarding process. As a bonus, if the audit trail is easily accessible, you can also see the vendor's progress through the onboarding process.
Post-onboarding: Once the vendor onboarding process is complete, we need capabilities that help us protect and manage the exchanged data and dispose of it properly.
Ephemeral Storage: To maintain data privacy, sensitive data should be stored temporarily and purged after vendor onboarding is complete.
Support for Archiving: Capabilities that help ensure necessary documents are archived and prepared for document management/records retention to meet policy and regulatory requirements.
Critical capabilities needed to streamline the onboarding process
Of course, security is not the only concern. Vendor onboarding tools should also provide the following capabilities to help organizations streamline their vendor onboarding process:
Document Collection/Requests: Extremely critical for vendor onboarding, this capability involves organizing and tracking document collection requests in a structured way, streamlining the process of gathering necessary documents from vendors.
Centralized Communication and Document Management: Keeping all communication, documents, and tasks in a central location accessible to both your team and the vendor fosters transparency and simplifies information retrieval. Ensuring that relevant personnel across departments can access the central location during onboarding, eliminating redundant requests.
Requested Actions: A method for each party to request specific actions from each other—e.g., document reviews.
Deadlines: Set deadlines to prevent delays and ensure the timely completion of tasks by all parties involved.
Program Dashboard: The tool should provide a view of all open onboarding initiatives so your team can identify bottlenecks and adjust timelines accordingly.
Ease of Use: The tool should be user-friendly for both your internal team with varying technical skills and the vendor. A simple and intuitive interface minimizes training needs and ensures smooth adoption.
Best Tools and Technologies for Vendor Onboarding
When examining the tools and technologies most frequently used during vendor onboarding, we see a wide range of tools including: email, document collection utilities, file sharing tools, and vendor management software. That said the reality is that most organizations use email (despite its security risks) through their process. It’s for that reason that we see organizations moving to external collaboration platforms for both vendor onboarding and their other supplier/vendor collaboration needs.
When evaluating the tools and technologies against the critical capabilities from above, we can assess the tools against the critical security capabilities:
And the critical capabilities need to streamline the onboarding process.
Detailed Assessments of Vendor Onboarding Tools and Technologies
External Collaboration Platforms
External Collaboration Platforms are software applications that allow you to work together with people outside of your organization. This can include vendors, clients, vendors, freelancers, consultants, or anyone else you need to involve in a project.
Need-to-Know Restrictions: (Only invited participants can access documents and files)
Verified Participants: Good (All participants are verified)
Secure Data Exchange: Good (Encryption and access controls keep maintain security, sensitive data is removed when onboarding is complete)
Communication Transparency and Monitoring: Good (Chat and notes/messages history is accessible throughout the onboarding process)
Audit Trails: Good (Comprehensive audit trail)
Ephemeral Storage: Good (All data is purged when the onboarding process is complete)
Support for Archiving: Good (All content can be packaged for easy extraction and archiving)
Document Collection/Requests: Good (See what requests have been fulfilled and what requests are outstanding at a glance)
Centralized Communication and Document Management: Good (All communications, documents, and files live in one place)
Requested Actions: Good
Deadlines: Good (Set deadlines and get notified when updates happen)
Program Dashboard: Good (See all your vendor onboarding initiatives on one page)
Ease of Use: Good (Simple interface, works with your preferred tools, flexible)
Vendor Management Software
Vendor management software (VMS), also sometimes called a vendor management system, is a tool that helps businesses streamline their relationships with external suppliers and vendors.
Need-to-Know Restrictions: Good (Most have some level of access control)
Verified Participants: Good (Participants are usually invited by email)
Secure Data Exchange: Good (Usually integrates directly with internal systems)
Communication Transparency and Monitoring: Poor (Requires a separate communication channel)
Audit Trails: Poor (No audit trails)
Ephemeral Storage: Poor (No way to remove data)
Support for Archiving: Poor (Difficult to extract files and data for archiving)
Document Collection/Requests: Good (Automates requests for necessary documents, offers templates for organizations onboarding many vendors)
Centralized Communication and Document Management: Poor (Requires a separate communication channel)
Requested Actions: Good
Deadlines: Good (Support deadline management)
Program Dashboard: Good (Most have a dashboard)
Ease of Use: Poor (Requires significant investment and set up, best for organizations onboarding many vendors via an unchanging, rigid process).
Email
Though email platforms are really communication tools, they can be used to collect the information and documents that are required during vendor onboarding.
Need-to-Know Restrictions: Poor (No control, messages can be forwarded, people can be added to the thread, etc.)
Verified Participants: Poor (Emails are often “spoofed” to accomplish VEC)
Secure Data Exchange: Poor (Email is notoriously insecure)
Communication Transparency and Monitoring: Medium (Difficult to maintain transparency when threads are messy)
Audit Trails: Poor (No audit trails)
Ephemeral Storage: Poor (Messages and attachments can be persisted indefinitely)
Document Collection/Requests: Medium (It is easy to make requests in email, but difficult to track fulfillment and collect attachments across many threads)
Centralized Communication and Document Management: Medium (Email can be used for both but typically requires great manual effort)
Requested Actions: Poor
Deadlines: Poor (No support for deadlines)
Program Dashboard: Poor (No dashboard)
Ease of Use: Good (Everyone has and uses email)
File Sharing Tools
File sharing Tools are online services that allow you to store and share digital files with others.
Need-to-Know Restrictions: Medium (File sharing tools usually allow for access controls if set up properly, but default security can be poor. Often accessible to anyone that has the link)
Verified Participants: Medium (See above)
Secure Data Exchange: Good (If properly configured)
Communication Transparency and Monitoring: Poor (Requires a separate communication channel)
Audit Trails: Poor (No audit trails)
Ephemeral Storage: Poor (Files usually persist indefinitely unless they are manually removed)
Support for Archiving: Medium (Files usually need to be manually extracted)
Document Collection/Requests: Poor (No fulfillment tracking)
Centralized Communication and Document Management: Poor (Requires a separate communication channel)
Requested Actions: Poor
Deadlines: Poor (No support for deadlines)
Program Dashboard: Poor (No dashboard)
Ease of Use: Medium (Most are relatively easy to use)
Document Collection Utilities
Document collection utilities are web-based tools designed to streamline the process of gathering documents from external parties.
Need-to-Know Restrictions: Medium (Usually allow for access controls)
Verified Participants: Medium (Usually invited by email)
Secure Data Exchange: Medium (Some offer encryption)
Communication Transparency and Monitoring: Poor (Requires a separate communication channel)
Audit Trails: Medium (Can track how requests are fulfilled)
Ephemeral Storage: Poor (Files usually persist indefinitely unless they are manually removed)
Support for Archiving: Medium (Files usually need to be manually extracted)
Document Collection/Requests: Good (Tracks request fulfillment)
Centralized Communication and Document Management: Poor (Requires a separate communication channel)
Requested Actions: Medium
Deadlines: Medium (Some platforms notify vendors of outstanding tasks)
Program Dashboard: Poor (No dashboard)
Ease of Use: Medium (Most are relatively easy to use)
Consider an External Collaboration Tool
External Collaboration Platforms like TakeTurns can significantly improve the vendor onboarding process. While specialized vendor management software can serve organizations that onboard many vendors via a standardized process well, that process is often inflexible. Additionally, these solutions are often expensive and serve only one dedicated purpose within the organization.
In contrast, External Collaboration Platforms like TakeTurns are flexible and can accomplish both standardized and customized onboarding processes, depending on what best suits the particular vendor. Additionally, External Collaboration Platforms can be used to support other supplier collaboration processes such as: RFx processes, Contract Negotiations, Due Diligence, and more.
External Collaboration Platforms such TakeTurns act as a central platform for all communication and document exchange with vendors. This eliminates the back-and-forth of emails and ensures everyone involved has access to the latest information at all times. Security features such as participant verification, encryption, and content expiration ensure the confidentiality and integrity of all sensitive vendor information exchanged during and after onboarding.
Overall, External Collaboration Platforms like TakeTurns can transform vendor onboarding from a disjointed process into a streamlined, transparent, and efficient experience. This benefits both your company by saving time and resources, and your vendors by providing a clear and positive onboarding journey.
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