Supplier Enablement and Onboarding Lesson: Use Carrots, Not Sticks!

Spend Matters recently spoke to a P2P process owner at a Fortune 500 beverage company. The hour-long conversation turned out to be a treasure trove of tips and tactics for improving the supplier enablement and onboarding process for e-invoicing and trade financing (see the earlier installments in this series here, here and here). Today, we continue the analysis looking at how this organization got more from the careful use of carrots rather than sticks as it brought suppliers up and running with Taulia (after previously using Xign).

With supplier enablement and trade financing programs, this large food and beverage company found that carrots (and frequent, active and friendly communications) tend to work better than sticks, especially with strategic suppliers. The organization had previously adopted an approach with all suppliers that told them “this was a required” part of doing business and that contractually they could be eliminated if they did not adhere to the requirements.

Free Research: The Industrial Supply Chain and the Internet of Things

Based on their first experience going through the process (earlier with Xign), the company learned this approach had the potential to negatively impact supplier relationships and ultimately had the same results, if not worse, than the “carrot approach.”

The second time around they “encouraged” all suppliers to participate, but only required participation from non-strategic vendors (which comprise the long-tail of suppliers in most cases). However, new suppliers are immediately introduced to the process, and onboarding and enrollment in the e-invoicing and supplier portal program is a mandatory component of the business relationship.

Making this part of the initial vendor onboarding process before a PO can be issued is key to ensuring expectations are properly set with new suppliers. Active communication and setting expectations from start to finish is key – albeit with the caveat that the expectations will vary based on supplier type (incumbent/new)!

Our key takeaways:

  • Mandated requirements (when long-term relationships with vendors exist) can backfire …
  • … so don’t mandate a process with existing suppliers – encourage it
  • Make enrollment part of the standard onboarding process for all new vendors – the time investment is part of cost of doing business

Share on Procurious

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.