JAN 25 2023 Blog Supplier Management

Quick Guide to Vendor Offboarding

What happens when you run a report and you see your company hasn’t used a particular vendor in a few years? It’s time to deactivate the account or offboard that vendor.

What Is Vendor Offboarding and Why Is It Important?

Vendor offboarding is the process of formally ending a vendor relationship and transitioning to a new vendor or terminating the use of vendor services altogether. It is important because it ensures a smooth transition, protects sensitive data, and allows for proper closure of contracts and obligations.

Removing a vendor’s access to your internal systems, data, and corporate infrastructure when terminating a contract, helps to ensure your company maintains security and reduces risk of data breach.

Most companies today don’t properly offboard vendors with whom they no longer engage. This opens the organization to potential risks by leaving vendors with direct access to sensitive information, intellectual property, and IT systems that can result in data breaches, compliance violations, and more.

Creating a well-defined supplier offboarding process that you can uniformly apply across your business is a best practice to ensure the vendors you no longer work with are properly terminated.

Use this offboarding checklist to help you take the right steps to secure and close the vendor relationship:

Vendor Offboarding Checklist

Supplier Offboarding Checklist
  • Perform a final vendor’s contract review — Go over the contract terms and necessary documents to make sure the vendor provided all products and services.

  • Settle outstanding invoices and final payments — Once you’ve reviewed the contract to confirm that the vendor (and your company) lived up to contractual obligations and contract deliverables, check with your finance department to ensure any outstanding vendor invoices are paid.

  • Revoke physical access — Revoke access to entry codes and physical buildings to reduce risk of insider threats and data breaches.

  • Review data privacy and information security compliance requirements — Depending on your business, you may be bound by several data privacy and information security compliance requirements. Review your compliance requirements to be sure that your vendor termination process is in alignment with your legal obligations.

  • Update your supplier management database — Deactivate the account in your vendor management system to avoid unnecessary costs. Having a record of all communication, documents, and the termination steps you’ve taken gives you a point of reference in case any issues come up for your company in the future.

  • Return property — If either you or your vendor has possession of each other’s property, access to intellectual property, access to data systems, or any form of property, return it to the rightful owner.

How Can You Ensure a Smooth Vendor Offboarding Process?

Clear communication is key to ensure a smooth vendor offboarding process. Provide your vendor with a detailed offboarding plan, including timelines and expectations. Conduct regular check-ins to address any concerns or issues. Document all offboarding activities to maintain transparency and accountability.

Also be sure to communicate with your stakeholders to mitigate risk. Everyone should be on the same page and sharing full documentation of the different conversations taking place so there are no legal repercussions, especially when contractual obligations are in place. Then, if you need to, create a plan for transitioning to a new vendor.

Graphite Connect makes supplier offboarding and management simple. We can help you create a streamlined step-by-step workflow to effectively manage your suppliers throughout the entire lifecycle

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