Vendor Onboarding Trends in 2023: Prediction #2
Experts Weigh In On Vendor Management Trends in 2023. Part Two of a Three-Part Series.
Cultivating a diversified supplier base has been an initiative for many organizations for years.
But it was 2020 when the moral imperative of actively supporting diversity was prioritized to the top of the list.
Of course, wanting to do it, doing it, and tracking it are three different beasts.
Today’s blog offers several takeaways about how to know your vendors better and invest in minority suppliers.
First, an overview of the current state of supplier diversity, then actions that organizations are taking to embrace it, and finally, an explanation for why vendor compliance and automation are crucial components of truly knowing your vendors.
For an overview of what a diverse and inclusive (D&I) supplier base looks like in 2023, we turned to the experts.
“This has moved from conversation into action for many organizations,” said Titus Martin, Director of Diversity, E&I Cooperative Services.
He goes on to say, “In 2023, to deliver on the promise of KPIs, we predict a rising demand to capture DEI and ESG information during the vendor onboarding process. Attempting to collect after the fact, when work has already been completed, will no longer be acceptable to business leaders.”
PaymentWorks’ Director of Customer Success, Cyndi Fields, concurs. “Over the past 18 months, we’ve seen our customers responding to increasing demands to support HUB and diverse businesses.”
She continues, “It’s not enough to continue to have a policy in place. The importance of reporting and measuring the impact of supplier diversity have made it to the c-suite level.”
Sean Neal, Business Development Executive for Digital Transformation & Technology at Withum, believes that ESG belongs next to all compliance processes related to onboarding vendors.
Sean says, “Sustainability is not a buzzword, it’s a business imperative. Improving documented compliance in this area will lead to maximizing production and manufacturing value for an organization.”
He continues, “Vendor management is the process of controlling costs and risk to an organization. ESG matters to both.”
Vendor management is the process of controlling costs and risk to an organization. ESG matters to both.
Sean Neal, Business Development Executive for Digital Transformation & Technology at Withum,
The experts have spoken. Staff and leadership in all kinds of organizations have taken–and will continue to take–serious action on working with diverse and ESG-focused vendors at the vendor onboarding stage.
How are organizations already doing this? And how can more organizations do it too?
Tying the collection of any and all compliance documents to the vendor onboarding process makes sense.
Additionally, automating this collection process also will ensure one repository can be the source of truth for your vendor data. This includes DEI vendors, but doesn’t stop there.
Collecting Certificates of Insurance, conflict of interest, and BAA agreements—in 2023 all of these should be collected before a vendor number is issued.
“When you consolidate, especially with a cloud-based platform,” says Rahul Chaudhari from TCS, “You will create clearer lines of communication and have an easier time managing your vendor relationship.” But Chaudhari didn’t stop there.
Chaudhari also argues there is only one way to get vendor relationships right: “Automation ensures compliance processes are addressed. Financial, payments, diversity, child labor, audit—all of this must be considered from the very beginning of the vendor/customer relationship. The overhead costs of non-compliance are simply too steep.”
Vendor compliance might not the most electric of subjects at first glance. However, 2023 will see organizations of all sizes and in all industries focusing intently upon who they are doing business with.
No longer are organizations willing to ignore the imperative of cultivating a diversified supplier base or ensuring airtight compliance among vendors.
Rather, 2023 will be a time of high vendor scrutiny. The frequency of business payments fraud is too high and the financial and reputation consequences for organizations are just too steep.
Additionally, this year will see organizations capitalizing on the financial opportunities that supplier diversity offers. For example, minority groups such as Black, Hispanic, and Native Americans have major buying power, which shot into the billions in 2020. Strategic organizations will take advantage of this.
Similarly, more organizations will begin to measure the effectiveness of their supplier diversity program by metrics other than just spending with diverse businesses.
Economic impact and job creation have become vital KPIs to measure the success of an organization’s diversified supplier base.
Source: The State of Supplier Diversity in 2022
What does vendor compliance have to do with supplier diversity?
Vendor compliance is an important aspect of supplier diversity that helps to ensure fairness, transparency, and risk mitigation in the supply chain.
By requiring all vendors and suppliers to meet the same standards and requirements, a company can build trust with its diverse suppliers and promote a more inclusive and equitable procurement process.
Furthermore, vendor compliance can also help to mitigate risk in the supply chain. By ensuring that all vendors and suppliers are meeting certain standards, a company can reduce the risk of fraud, corruption, and other unethical or illegal activities. This can help to protect the company’s reputation and brand, as well as its bottom line
In other words, when you have a compliant vendor file, everything is easier. And more and more organizations will recognize that in 2023.
Here’s the thing. The output of a compliant vendor file touches risk, finance, supply chain, procurement, ESG, even HR, as our experts above told us.
Here’s the other thing. The inputs of a compliant vendor file, can be tricky.
Manual, ad hoc processes simply can’t enable diversity and sustainability initiatives like an automated platform can. They also put you at higher risk of being the target of a successful business payments scam.
That is my cliffhanger to get you ready for our final 2023 vendor onboarding prediction, which you can find here.
A diversified supplier base requires a strong vendor management foundation, vendor onboarding process, and vendor compliance.
Our resources below will help you strengthen and secure your processes so that you can identify and welcome diverse suppliers seamlessly.
For anyone in higher ed vendor management, this blog is for you: The Business Benefits of Implementing a Supplier Diversity Program in Your School or University
How E&I Can Help You Implement a Supplier Diversity Program
Key Vendor Tips and Takeaways–From the Experts Themselves
Prediction #1 in Vendor Onboarding for 2023
We’d love to walk through your process with you and talk about security, compliance, efficiency and sleeping better at night.
200 Berkeley Street, 19th Floor
Boston, MA 02116