Conexis VMS | Blog

Vendor Management Systems: The Top 4 Misconceptions About VMS Software

Written by Wayne Burgess | Mar 10, 2022 4:29:48 PM

As we move into the second quarter of 2022, one thing is for certain - businesses continue to be challenged by a  significant shortage in workers and the increasing need to adapt to a ‘post-pandemic’ world that is driving new business models.

Simply put, the market right now is more competitive than it has ever been. To gain a competitive advantage, successful businesses this year will focus on flexibility and agility.

To achieve this, they will not only need to increase their use of the contingent workforce, they’ll need to manage it better as well. That’s where the importance of a vendor management system (VMS) comes in. 

In short, a vendor management system makes it easy to manage your contingent workers and staffing agencies by automating processes and storing data in one centralized location. 

Companies that use a VMS to manage their contingent workforce management program are able to improve their visibility and control of the program, standardize rates and processes across their entire organization, better monitor staffing agency performance and many other benefits.

The result? Higher ROI from your contingent workforce program.

Yet, despite this, many organizations with smaller volumes of contingent workers are still failing to see the benefits of VMS implementation. With that in mind, We’ve listed the top four misconceptions when it comes to vendor management software.

We hope this blog helps your organization realize the value in a VMS platform that’s perfectly designed for the needs and functionality of your business. 

#1 - I can manage my contingent workforce program effectively with a spreadsheet

For businesses that haven’t invested in a vendor management system, many are using spreadsheets, in-house databases or Sharepoint-like websites. Yet these manual methods of managing a contingent workforce program are ineffective. 

Managing your contingent workforce with a spreadsheet is time-consuming, leaves your business prone to making errors and results in fragmented processes across departments that impacts the visibility and control of your company’s contingent workforce program.

How a VMS helps: A vendor management system acts as a centralized record for your business to consolidate all contingent workforce management processes and data into one easy-to-manage location. This gives your business clear visibility and control over vendor relationships, staffing agency performance, how much you’re paying and so much more. 

#2 - My contingent workforce volume is too small for the implementation of a vendor management system

It’s unfortunate, but it’s true. The traditional vendor management systems have all been designed for enterprise organization with huge volumes of contingent workers. These systems have complex functionalities and are time-consuming to use.

Due to the complex nature of these traditional vendor management systems, VMS software has long been too expensive, too complicated and too frustrating to use for the vast majority of businesses. Let alone the sheer amount of time it takes just to implement them into your organization.

That doesn’t mean your company can’t use a VMS: It just means you need to look for the right vendor management system partner. There’s a growing number of VMS platforms that have scaled back the complex and highly-expensive functionalities of the traditional VMS players, giving your business more options to choose from. 

#3 - A vendor management system is too expensive for my business

Similarly to our last point, the traditional VMS players have left many organizations with smaller volumes of contingent workers believing that the implementation of a vendor management system is too expensive for their business.

That’s because those VMS providers charge a percentage of every dollar the processes through the system. Those costs can quickly add up, and bring down the ROI of VMS implementation for businesses that only have a small volume of contingent workers. To make it even worse, most VMS providers have a minimum spend requirement. 

How Much Does a Vendor Management (VMS) Cost? 

There’s VMS providers with a new pricing model: There are new VMS providers, including Conexis VMS, that use the software as a service (SaaS) pricing model instead. With this pricing model, your business will only have to pay a monthly license fee, significantly improving the ROI you realize from your VMS system. 

#4 - I can’t manage my externally-sourced perm employees in a VMS platform

Traditionally, vendor management systems have been reserved for the use of managing contingent workers and not permanent employees - even if those permanent employees were sourced through the same staffing agency that your temp workers were.

This means companies in the past have had to invest and implement different systems to manage their contingent workers and permanent employees, even if they were sourced from the same location. 

How a VMS helps: Some VMS systems are now including the functionality that allows businesses to source permanent employees via staffing agencies within the platform. This is particularly useful for smaller organizations, where one person (or a small team) is responsible for the management of both contingent workers and externally-sourced employees. 

Interested in learning more about Vendor Management Systems?

Whether you are looking to change your VMS solution, or just getting started, we are here to help. Contact Us for a Free No-Obligation Consultation to discuss your workforce challenges (and get immediate actionable insights). See how easy Conexis is to use by taking a quick 2 minute Self-Guided Tour, or Book a Personal Demo Today!