How to Manage Vendors in a Contingent Workforce Program with a VMS | Complete Guide

What is Vendor Management?

Vendor management is the process that businesses use to strategically manage their vendors. This includes every step in the vendor management lifecycle, from sourcing vendors, negotiating contracts, mitigating risk, analyzing vendor performance and offboarding.

When it comes to a company’s contingent workforce management program, vendor management is the process of managing the entire staffing vendor (also known as staffing firms or staffing agencies) lifecycle.

What are the Steps in a Vendor Management Process?

There are a few steps in the vendor management process:

1. Vendor selection
2. Risk assessment
3. Contract negotiation
4. Onboarding
5. Managing/monitoring performance, and mitigating risk
6. Offboarding

Through successful vendor management in their non-employee workforce program, organizations can realize significant soft and hard savings, as well as benefits such as better performance and monitor tracking, improved vendor visibility and significant efficiency gains.

How to Manage Vendors Effectively through Automation

Organizations that are using spreadsheets, in-house databases or Share point-like sites to manage their vendors face several challenges.  

Using these time-consuming and error prone methods leads to a lack of visibility into vendor information and vendor performance that impacts your entire non-employee workforce strategy. The result is wasted time, a lack of vendor consolidation that leads to hidden risks, no insight into how vendors are performing, rogue spend across your contingent workforce program and significant room for human error.

How Automating your Vendor Management Leads to Huge ROI

To revolutionize how you manage your vendors, vendor management best practices calls for the implementation of cloud or web-based vendor management software.

A vendor management system (VMS) will automate your entire vendor process in one centralized software platform, allowing you to monitor the performance of your staffing suppliers from request to payment.

By consolidating both your vendors and all contingent workforce program data in one centralized location, your organization will have clear visibility and control over its vendor relationships, vendor analytics, pay rates and much more. 

The result is significant cost savings, standardized processes set for all hiring managers across your organization, improved efficiencies and more strategic insights into how your vendors are performing. 

Why a VMS is Essential in Managing a Contingent Workforce Program

Many organizations are still using manual spreadsheets, in-house databases or Sharepoint-like websites to manage their contingent workforce.

This is simply ineffective - and where a vendor management system will help.

A VMS is a cloud or web-based platform that acts as a mechanism for an organization to procure and manage its non-employee workforce. It’s a software platform that supports a company in structuring and optimizing every process related to contingent workforce management. 

By automating every process in contingent workforce management and consolidating all vendors and information into one centralized location, a vendor management system significantly improves how you manage each step in the contingent workforce management process from sourcing, hiring, tracking and invoicing non-employee workers.

This leads to better visibility into your program, significant cost savings, improved process efficiencies, and contingent workforce compliance. 

What are the Benefits of a Vendor Management System?

A VMS will bring a huge ROI to your company’s contingent workforce management program, and that’s because it’s capabilities will significantly improve your processes, reduce costs and lead to far greater visibility into your program.

Improved efficiencies:

The automation of processes such as onboarding, time entry and approval will save your organization countless hours and lead to better internal efficiencies across your company. 

Complete visibility into your program:

Since your entire contingent workforce management program is now stored in one location, instead of being fragmented across different departments and hiring managers, you’ll have complete visibility into where you may be overpaying vendors or mismanaging contingent workers.

Vendor consolidation:

With your vendors consolidated into one location, your VMS will act as a central hub that gives you all the information you need to evaluate whether each staffing agency you use is helping you to meet your company’s unique workforce targets. This leads to more insightful and strategic vendor choices. 

Reduce costs:

By helping you to get the lowest prices from vendors, cut down on rogue spend in your contingent workforce management program and save money on process efficiencies, a VMS can help your business improve its contingent workforce management expense - to improve your bottom line and become more profitable.

Choosing the Right VMS for Your Contingent Workforce Program

Here are some considerations when choosing the right VMS for your organization:

The ability to consolidate vendors:

For clear visibility into your staffing agencies and vendor performance, a VMS should be able to consolidate all of your vendor information into one centralized location. This will improve how you manage, and analyze the performance, of those vendors.

Automation of processes:

A VMS solution is a significant improvement from managing your contingent workforce using spreadsheets because the software should be able to automate your processes. Look for a vendor management system that can automate all of the time-consuming processes associated with managing your vendors, from sourcing, onboarding, analyzing performance, payment processing and much more.

Vendor standardization:

Want to prevent rogue spend from occurring across your contingent workforce program? A VMS solution will improve vendor standardization across your business. This will act as a framework for how hiring managers across your entire company use and pay vendors. 

Centralization of your program:

Contingent workforce programs require a large amount of data, including both vendor information and worker information. The ability to centralize this in one centralized location will ensure your company has complete visibility into its program and that company policies around this workforce are being followed by all departments. This increased visibility ensures you are also able to view program performance and make better vendor/hiring decisions moving forward.

Additional VMS Features:

Other top features that you should look out for in a VMS solution should include: Simplicity of use, Invoicing, Process requisitions, Process approvals, Onboarding tools, Scalability for company growth and Visibility into vendor performance.