Supplier onboarding checklist for a new Indian factory

Onboarding is not due diligence

Due diligence answers whether you should buy from a supplier. Onboarding answers how you will trade with it. The first produces a decision. The second produces a supplier record with documents, named contacts and gates that the first order must pass.

Start onboarding after selection and before the purchase order. It is not a second audit. It takes the audit findings and turns them into working arrangements: the entity that invoices, the person who signs a first article, the label that goes on a carton and the number to call when a shipment is held.

Entity, tax and bank records

The purchase order must name the same legal entity that owns the plant and the bank account. Ask for the certificate of incorporation, PAN, GST registration, import export code and Udyam registration where it applies. Add the factory licence and the environmental consent for the processes you are buying.

Record the exact legal name, registered address, plant address, GST state code and bank account name. A mismatch between any of them is a stop point, not a note for later. Paying a different company or a personal account weakens the contract and complicates the customs record.

Keep a document register with the issue date, expiry date and the process each document covers. A consent for one operation does not cover another, and a certificate for a head office does not cover a remote plant. Agree who renews each document and ask for the updated copy before it expires.

Commercial terms in the purchase order

Attach a signed price schedule to the purchase order. It should state the currency, unit, minimum order quantity, volume breaks, price validity and the Incoterm with a named place. A quotation that lives only in an email is not a commercial record.

Set the payment trigger by event, not just by percentage. State the documents required for each tranche, who pays bank charges and what happens if payment is late. If a deposit is involved, record the exposure and any security.

• Tooling ownership, storage location and the conditions for transfer
• Drawing, CAD and intellectual property custody
• Warranty period and the remedy for rejected parts
• Price adjustment basis for metal, currency or energy
• Governing law and the forum for a dispute

Quality agreement and inspection plan

The quality agreement should name the drawing revision, the inspection level, the records that travel with each shipment and the person who signs the first article. It should also state how a deviation is requested and how a corrective action is closed.

Agree change notification in writing. A change of material, process, sub-supplier, tooling or production site needs approval before the affected parts ship. Without that clause, a quiet change can reach your line before anyone reviews it.

• Control plan and process flow for the part
• Calibration list and the measurement system used
• First article format and the sample quantity
• Sampling plan for production shipments
• Record retention period and the reaction to a failed test

Packing, labels and shipping documents

Agree the packing standard before the first carton is made. State the pack quantity, the inner and outer protection, the maximum carton weight and the pallet footprint. A packing method that works for a domestic truck may fail in a sea container.

Set one label template with the part number, revision, quantity, batch, date and country of origin. Agree the HS code and the certificate of origin requirement with your forwarder, and make sure the invoice description matches the drawing and the customs code.

Build a document checklist for each shipment: invoice, packing list, certificate of origin, material certificates, inspection records and the transport document. Send the checklist to the supplier and the forwarder so both work from the same list.

Contacts, escalation and rhythm

Name the commercial owner, quality owner, accounts contact and logistics contact at the supplier. Record phone, email, working hours and the holiday calendar. A generic sales inbox is not an escalation path.

Agree response times for a quality hold, a document correction and a payment query. Then build a two level escalation map and test it once during onboarding with a real question. A chart with no names is decoration.

Set the communication rhythm for the launch. A short weekly call is usually enough to clear open documents, tooling progress and the first article schedule. Reduce the frequency once production settles.

The onboarding record

Use one table to track what has been received and which gate it closes. A blank cell is an open item, not an assumption. The record should be visible to buying, quality and accounts, because each team depends on a different row.

The first order gate

Release the first purchase order only when the entity, commercial, quality and logistics rows are closed. Then keep the first order small enough to test the route without putting a launch at risk. For illustration, closing the document and quality gates for a new supplier might take four to six weeks before a trial order.

Inspect the trial shipment against the agreed plan, check the documents against the checklist and pay on the agreed trigger. The payment test matters as much as the dimensional test, because a term that cannot be administered will fail under volume.

Review the supplier at 30, 60 and 90 days. Score the first article, the incoming reject rate, the document accuracy and the response times. Then update the supplier record and release volume, or keep the gates closed and fix the open items.