The Essential Supplier Onboarding Checklist

Sonia Pearson

in Tallyfy Workflows and BPM

When you start working with new suppliers, supplier onboarding is an essential first step. The alternative is a stressful, ad-hoc process that could result in a breakdown of relations, loss of productivity, and lost income. Onboarding before you even begin to buy eliminates this possibility and allows you and your suppliers to enter a business relationship with eyes wide open.

Both companies know how to do business with each other, who to talk to, and what processes to follow. It’s a lot like employee onboarding – after all, even though you don’t directly employ suppliers, they still do work for you.

Your business will have unique characteristics, so you may want to add a few things to the list, but our essential onboarding checklist is a great way to get started!

Copy and Paste This Checklist onto Your Letterhead

We’ll go through each point in greater detail shortly. But to get you started, here’s the basic list:

Evaluate Supplier Risks

  • Check business product and service track-record
  • Check creditworthiness (financial health)
  • Formulate contingency plans

Discuss and Agree

  • Expected nature, volume, and frequency of requirements
  • Product or service specifications
  • Lead times
  • Any extras required (g. barcodes, labels)
  • Order placement requirements and format
  • Pricing and discounts
  • Payment terms
  • Delivery process / logistics
  • Returns and accounts credits process
  • Supplier training requirements or orientation sessions (if required)

Gather Information

  • Registered name, address, and contact details
  • Any licenses, insurance, or documentation you need
  • Banking details
  • Supplier contact people and their roles

Share All Information Internally

  • Accounts department
  • Purchasing department
  • Warehousing and inventory control

Share Information with the Supplier

  • Record all agreed terms and send for formal approval
  • Provide invoicing details
  • Give contact details for purchasing manager, accounts, and warehousing / logistics
  • Provide training and orientation sessions as needed

Why Evaluate Supplier Risk?

Your business depends on its suppliers – it therefore makes sense to see whether the supplier is dependable! You will want to know how long the company has been in business, what its industry reputation is like, and whether it has sufficient capacity to meet your needs. You also need to examine the company’s financial health. A struggling company could unexpectedly close its doors leaving you in an awkward situation.

When there is a limited number of suppliers to choose from, you might have to compromise a little, but at least you’ll know what the risk is and formulate a contingency plan.

Rules of Engagement

This is the most important part of your checklist. What are your expectations? Can the prospective supplier meet these needs? How will you work together and who will do what and when? What are your supplier’s obligations if things go wrong? This is particularly important if you are trying to minimize waste by implementing a Kanban inventory management system.

Ultimately, this information will go into a formal, written agreement that will govern your business relationship. Generic templates are available, but it would be best to draft a customized agreement. You will also share this document with everyone in your company who is expected to deal with the supplier, allowing them to deal with any problematic situation that could potentially pop up.

For example, when can an inventory manager or quality controller reject goods? How should the accounts department handle invoices and payments? Who places orders and how should they be placed? Who approves orders? Both your staff and your supplier must know these details if they are to work efficiently together.



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Information Gathering and Sharing

Basics like contact people and how to get in touch with them are pretty obvious, but many businesses overlook the need to actively train suppliers. The training needs analysis should include everything from order placement methods to tech specs, product presentation, and delivery processes.

For example, most retailers expect stock with barcodes already allocated and on the label or package. They need to link these with pricing in-store databases. Some retailers prefer to stock their own shelves, but others expect suppliers to handle restocking and merchandising and will require frequent visits to ensure they don’t end up with empty shelves.

No matter how simple your purchasing and goods receiving processes are, it’s advisable to schedule a physical supplier onboarding and orientation training session on-site at your business premises.

Final Tips for Successful Supplier Onboarding

Having a great checklist isn’t going to help you if you don’t make someone responsible for making sure you’ve checked all the boxes. Allocate a specific person to oversee the supplier onboarding process. Needless to say, this person must have excellent communication and organizing skills.

When onboarding new suppliers, always look at ways to save time and money. For example, a supplier portal will show suppliers routine details they might otherwise have to inquire about in person. The more you automate routine tasks and processes, the easier doing business will be – both for you and for your supplier. However, software can be costly, so choose an adaptable package that can be used for more than one function. Tallyfy’s workflow management software fits the bill, allowing you to strealine any business process (onboarding included), as well as acting as an information portal for the supplier.

And lastly, remember: suppliers are more than just companies you buy stock or materials from. They’re partners in a relationship that should be mutually beneficial. They help your business to grow, and you help their business to grow. Keep this in mind throughout supplier onboarding, since this is the time to plot a route towards mutual success and a satisfying business relationship.

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One thought on “The Essential Supplier Onboarding Checklist


  1. Alexandria Martinez Reply

    I know that my fiance has been talking about looking into getting a supplier onboarding service. He is thinking about the various benefits that will come from using this service. It would be useful for him to know as well that having one person to go through the checklist is important.

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