With the rapid growth of the contingent workforce, it has become a significant component of business expenditures for companies of all sizes. This growth introduces a new challenge: Rogue Spend. In this article, we delve into the concept of rogue spend and provide valuable insights into effective management strategies.
The expansion of the contingent workforce in businesses is not only increasing the demand for non-employee workers but also highlighting the necessity of utilizing vendors for sourcing, hiring, and invoicing these individuals. Additionally, the vendors fulfilling non-staffing needs play a crucial role in this process.
It’s not unusual for companies to have tens, hundreds, or even thousands (for international enterprises) of vendors supplying their business with products and services.
Alongside the growth of the contingent workforce and increased vendor use comes a new challenge, managing non-employee workforce spend. Unfortunately, the large majority of organizations, especially those with smaller contingent workforce volumes, are not implementing effective contingent workforce management trends.
This results in rogue spend that runs rampant through the business.
What is rogue spend?
There’s no denying it, managing a non-employee workforce and the vendors associated with it is a complex task. Some companies use manual processes such as spreadsheets, in-house databases, and SharePoint-like sites to manage all of these data points. While other organizations do not even manage contingent spend at all.
When either of these things happens, rogue spend will start to invisibly affect your business.
Rogue spend is essentially spending that occurs on sourcing, engaging, and hiring contingent workers in scenarios that are not accounted for, not approved, and have not followed a strategic approach to contingent workforce management.
How Does Rogue Spend Happen?
Rogue Spend occurs when your organization lacks a centralized strategy for managing the hiring of non-employee workers. Inadequate contingent workforce management programs lead managers across various departments to work with staffing suppliers outside of established rate agreements, hire temporary non-employee workers using their own methods at self-determined rates, and engage workers outside of authorized purchasing channels.
How do I Prevent Rogue Spend?
Rogue spend in the contingent workforce arises when managers act independently, but this isn't necessarily their fault. The absence of centralized management creates this risk, hindering organization-wide visibility into your non-employee workforce and leading to inefficient processes. To effectively address rogue spend, your organization should transition from outdated manual spreadsheets to automated technologies.
This is where a vendor management system (VMS) comes in.
How does a VMS Help?
VMS software is a cloud-based technology that allows you to consolidate your vendors and manage every step of your contingent workforce in one central database. Using a VMS will allow your organization to structure and optimize every process in relation to hiring non-employee workers and measuring vendor performance.
A vendor management system will automate transactions, store non-employee workforce data, facilitate onboarding, measure vendor performance, collect requisitions from managers and consolidate all of your vendors in one location.
By centralizing your entire non-employee process in one place, every stakeholder in your business will be aligned with your contingent workforce strategy and your business will have clear visibility into contingent workforce spend.
Learn more about the Benefits of a Vendor Management System and what to look for when choosing the best VMS for your organization.
Download our Free VMS Buyer's Guide here:
Take the Next Step with Conexis VMS
Conexis is an award-winning VMS tailored specifically for mid-market contingent workforce programs. Leveraging the latest technology, Conexis delivers the expertise, reliability and security of enterprise systems, while offering the flexibility, user friendliness and tailored service you require. Conexis delivers enterprise level software - without the enterprise level complexity and cost.
Learn more about our Company and why organizations Choose Conexis VMS.
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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!
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