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A Complete Guide on Implementing a Vendor Management System (VMS) Program

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Human Resources and Procurement leaders are at a crossroads. The COVID-19 pandemic has made the need for an efficient external workforce more vital than ever. But with the Great Resignation going strong in 2021 and expected to continue in 2022, it's harder than ever to source, onboard and retain top-level talent.

So what options does an organization have to increase productivity through people, process and technology? Implementing a robust Vender Management System can deliver massive return on investment for not only HR and Procurement teams, but for Finance, IT, Legal and Management as well. Below is a complete on VMS tech and how this program can help organizations better manage their external workforce.

In this blog, we're going to discuss:

  • What is the definition of a VMS?
  • Why implement a VMS?
  • How to select the right VMS?
  • Who should implement a VMS?
  • Let's Talk to get started on selecting, implementing and adopting a VMS Program

 

What is the Definition of a VMS?

 

A cloud based software application that automates the sourcing, engaging, managing, time tracking, and invoicing of external workers sourced either directly through an organization or their Managed Services Provider (MSP). According to Staffing Industry Analysts, over 70% of large companies (with 1,000 or more employees) use a VMS. 

40% of the U.S. workforce are Contingent Workers - U.S. Government Accountability report

 

Why Implement a VMS?

 

1. Increase Business Agility

Rigid workforce models are a relic of the HR past. Large, fast-growing organizations need both a traditional full-time equivalent FTE workforce and a substantial external workforce to have effective business agility. 

 

2. Track and Improve DE&I Metrics

Without substantial data into diversity, equity and inclusion performance, the path to progress is stalled. A centralized, cloud-based VMS helps HR leaders better measure diverse supplier spend and the number of diverse suppliers. Read our blog on How to get started with you DE&I Workforce Tech Stack.

 

3. Achieve Effective Cost Management

VMS adoption can extract hard cost savings including reducing maverick spend, eliminating labor misclassification, align sourcing to competitive rate data and resolving invoice rate errors. This is achieved through streamlined and transparent management of labor types, taxonomy and financial elements of the sourcing process.

 

4. Optimize User Experiences (UX)

Better UX for candidates, contractors, suppliers and employees is another ROI organizations can expect. Automated VMS processes can decrease the procurement and requisition cycle times. thus saving time and money.  Great supplier and worker experiences also increase the chances that the best talent and services are sourced.

 

5. Mitigate Risk

Significant penalties that cost millions of dollar can be owed with worker misclassification and services misclassification. Co-employment issues are common in large enterprises without rigorous management of external workforce. VMS technologies provide visibility into external workforces that Maintaining all legal and regulatory information in one system enhances compliance. 

 

6. Obtain Actionable Analytics

VMS technology is designed with the external workforce in mind. Leading players in this industry track metrics and data elements that will enable companies to make smart decisions about their talent.  Intelligent dashboards and predictive analytics are available within a VMS, while still offering broad capabilities export large datasets to enterprise repositories through feed automation.

 

7. Speed and Quality of Talent

Balancing cost and quality of talent is a challenge that organizations face when looking at their workforce. In the space of external workforce, a VMS can speed up cycle times during the process of sourcing candidate, while still providing organizations the mechanisms to ensure quality. Automated processes coupled with real-time data visible during hiring enables organizations to realize these goals.

 

How to select the right VMS?

 

The marketplace for VMS is expansive and software companies are driven by license sales, so it is difficult to choose the right tech.  QuantumWork Advisory (QWA) firm is best equipped to honestly guide teams on selecting their VMS software for three key reasons. First, its advisors have decades of deep domain expertise in Worktech and have experience in designing and implementing 120+ VMS programs. Second, QWA is backed by the Allegis Group: the world's largest privately-held human capital firm. Third, the firm has an exclusive partnership with Talent Tech Labs (TTL), the world's leading worktech research company. TTL has reviewed and demoed over 2,000 technology vendors so you don't have to.

"We optimize the power of Worktech to develop predictive insights & enjoyable, intuitive experiences for users" - Andrew Grant, Founder & Managing Partner, QuantumWork Advisory.

 

Who should implement a VMS?

 

  • Companies that are quickly growing and are at risk of losing sight of the scope and effectiveness of their workforce technology stack. This could lead to redundancies and insufficient business processes.

  • Companies with a global presence, a large external workforce and complex SOWs.

  • Companies with an under resourced internal Talent Acquisition team that is struggling to meet recruitment demands on time and within budget.

  • Companies with an under resourced internal Procurement team that is struggling to meet sourcing demands on time and within budget.

  • Companies that have experienced generic consulting, but the one-size-fits-all approach isn't cutting it. Generic consulting may find what's wrong, but there isn't a roadmap on how to make it right.

  • Companies with suboptimal VMS software that has insufficient data, insights and processes.

 

Ready to get started on selecting, implementing and adopting a VMS Program?

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