Vendor management software is crucial for any organization that wants to take a strategic, efficient and risk-based approach to better manage their staffing agencies and contingent workforce.
But with so many vendor management systems on the market, how does your organization know which solution to use?
To help you make your decision, this blog will take a look at what a VMS actually is, the benefits it brings to your contingent workforce program and what factors you should consider when making your VMS choice.
Let’s start with a quick look at what a vendor management system is..
A vendor management system - also known as a VMS or VMS software - is a software platform that allows your business to procure and manage the end-to-end lifecycle of contingent workers and staffing agency services.
By centralizing and automating your externally-sourced workforce program in one platform, a VMS has the functionalities that enable you to engage staffing agencies, procure contingent workers, hire permanent employees through staffing agencies, measure vendor performance, track payments and many other processes related to your contingent workforce.
A VMS captures and stores all of the data you need to fulfill your workforce requirements and build more strategic staffing agency relationships.
How do organizations benefit from the implementation of VMS software?
When your business implements a vendor management system into your contingent workforce program, you’ll realize huge benefits such as:
- Gaining complete visibility into your contingent workforce.
- The ability to monitor and track the performance of your staffing vendors.
- Improved efficiencies through organization and automation.
- The ability to correctly classify externally-sourced workers and ensure compliance.
- Gaining control of contingent workforce spend.
- A centralized contingent workforce management strategy that standardizes rates and vendor engagement across your business.
- Reduces workforce costs.
- The consolidation of staffing agencies into one centralized platform.
Top questions to consider when choosing a VMS solution
There are a number of vendor management systems out there, many of which have complex functionalities and are designed specifically for enterprise organizations. Yet, despite this, most organizations are managing smaller volume contingent workforces and these more complex systems are simply overboard.
With that in mind, here are some of the top questions to consider if your business is looking for a VMS that will help you better manage your smaller volume contingent workforce.
How much does the VMS cost?
The majority of vendor management systems are priced based on a percentage of contingent workforce spend. When priced that way, a VMS can have a significant impact on your bottom line. For companies with smaller volume spend, we recommend looking for a solution that charges a software licence fee, as this will typically be a more cost-effective option.
What functionalities do you need?
To manage your contingent workforce it’s possible that you may need more complex functionalities, but most organizations (especially those with smaller volumes) can get away with less functionality. In fact, the functionality of most VMS software solutions make it complex, time-consuming and inefficient for companies with smaller volumes of contingent spend. Instead, look for a scaled-back solution with functionalities such as vendor consolidation, process automation, vendor guidelines, program centralization, and vendor performance data. This is likely all the functionality you’ll need for a successful contingent workforce program.
Do you need to manage permanent hiring through staffing agencies in your VMS?
Some vendor management systems only allow you to manage contingent workers, others allow you to manage all externally-sourced workers while others operate as total talent management platforms for your entire workforce. Consider which type of workers you want to manage in the VMS solution you choose.
How long will VMS implementation take?
Implementing any new platform into your business processes can be daunting. The more complex the system, the more daunting the task will be. Before implementation, make sure you properly define the goals you want to achieve within your contingent workforce program and when you want to achieve them. Some VMS implementations may take a reasonably long time, while others are seamless and can be done in a matter of days. Weigh up your company’s objectives and VMS implementation time to find your optimum ROI.
Want to see a vendor management system first-hand? Get a demo from Conexis VMS today