Choosing a Vendor Management System? 5 Success Factors Companies Often Overlook

Choosing a technology to manage your contingent workforce and staffing vendors is a high-stakes assignment—especially for organizations undergoing rapid growth in their contingent workforce.

To maintain agility and business continuity, companies need a vendor management system—or VMS—that works with their business logic and at scale.

If your contingent workforce program is ready to transition from decentralized, manual tools like spreadsheets and email to a single platform, you’ll need to know how to compare the many VMS technologies on the market.

Across the market, vendor management systems share many common features and functions. Narrow down your selection quickly by focusing on 5 factors that many companies overlook.

By selecting a VMS that delivers these success factors, you can minimize the stress of change management, deliver on the most critical needs of your contingent workforce management team, and accelerate ROI.

1. Flexible Delivery Models to Manage Your Contingent Workforce Program

When choosing a VMS, it’s important to consider how you plan to structure your program.

The most common models for a contingent workforce program are

  • Managed entirely in-house, typically by procurement, HR, or a dedicated contingent workforce manager
  • Outsourced entirely to a managed service provider (MSP)
  • Outsourced in part under what’s called a shared managed services (SMS) model.

It’s not uncommon for an organization to shift between these models as the program evolves.

So the technology you select should be flexible enough to accommodate your needs over time.

If you plan on using one or more MSPs, your VMS will need role-based security access and personalized views, and you’ll need to ensure that data access controls are in place. You’ll also want to ensure that the system can produce custom reports that MSPs need to effectively support your program.

If an SMS or hybrid model best suits your organization’s needs, look for a VMS provider who offers tailored services to augment your in-house contingent workforce program.

For example, you may want your SMS team to take on elements such as billing and invoicing, rate rationalization, and vendor reviews.

2. Auditable Compliance Tracking Throughout the Contractor Engagement

Regardless of delivery model, it’s imperative to select a vendor management system that can manage and track compliance directly in the application from pre-engagement through disengagement.

When assessing a candidate VMS, confirm that its compliance feature tracks

  • Onboarding items
  • Off-boarding items
  • Position-specific requirements
  • Location-specific requirements.

Your VMS should give you a time-stamped, auditable record of when a background check was completed, a laptop was distributed, and all other requirements your contingent workers must meet.

It should also trigger alerts when a compliance item is due to expire. This functionality will enable you to ensure, for example, that your contingent workers’ certifications and licenses remain current throughout their entire engagement.

Read this next: 6 Ways to Mitigate Risk in Your Contingent Workforce Program

3. Configurable Workflows to Automate and Streamline Your Processes across the Contingent Lifecycle

At most organizations, sourcing and onboarding/off-boarding follow the same general process. But nearly all companies have one or more unique steps or requirements. that apply to elements such as

  • Requisition templates
  • Distribution
  • System notifications
  • Approvals
  • Onboarding and offboarding compliance items
  • Engagement workflow
  • Time and expense logic.

Your VMS should allow your procurement and HR team to tailor forms and templates for requisitions, compliance requirements like background checks, drug screens, and onboarding tasks by location, department, and/or role.

So look for a VMS technology that allows configuration at the data and process level, ideally without extensive service engagements with the provider or significant burden on your in-house IT resources.

A readily configurable VMS allows your HR and procurement team—and the hiring managers across your organization—to adapt and change at the speed of business, whether in response to corporate directives or market conditions.

Bottom line: Your VMS should automate and streamline your workflow, not change or dictate the way you work because of its limitations.

4. End-to-End Business Analytics and Reporting

For organizations that use spreadsheets to manage their contingent workforce program data, one of the most significant pitfalls is inaccurate reporting and lack of visibility into program metrics. Extracting data from spreadsheets is time-consuming, meaning your business analytics are already out of date before reports are submitted.

A vendor management system should solve this challenge with real-time analytics and robust business intelligence and reporting capabilities.

Look for a VMS that captures and analyzes data on the quality, efficiency, risk, and costs associated with your contingent labor program. Key criteria for selection must include a robust reporting engine that gives you

  • Preformatted, out-of-the-box reporting
  • Ad hoc reporting
  • Custom reports
  • Scheduled or automated report delivery.

Examples of reports that are critical to driving success in your program are vendor scorecards, time-to-fill analysis, rate comparisons, and compliance tracking.

5. Streamlined Implementation

When transitioning from manual tools to an automated and centralized system, speed matters.

It’s important to find a VMS provider who understands that process can, based on experience, provide a streamlined and proven approach to implementation, including

  • Defining processes and workflows
  • Importing data from your currently distributed sources
  • Testing and validating the new VMS with stakeholders.

When looking for vendor management technology, vet your provider to ensure they have a standard process and methodology in place to manage your implementation.

Remember that communication is the keystone. In addition to their overall approach to implementation, a best-in-class vendor will be able to articulate clear lines of communication to ensure mutual success.

A best-in-class vendor will also be able to recommend best practices for organizations like you—in size, industry, and contingent workforce program model.

The Right VMS is a Competitive Advantage

Contingent workforce program needs vary by industry and company, and by the preference and style of your procurement and/or HR teams.

The vendor management solution you want is one that can adapt to your program structure, process, and workflows throughout the contingent lifecycle. By taking time to vet VMS providers for these critical capabilities, you can quickly narrow down your search.

And you can be confident that the VMS you select will deliver on the value of automation—and give you total visibility and control over your contingent workforce program.

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Meet the Expert
Taylor Ramchandani – VP of Strategy

Taylor Ramchandani is responsible for the management and strategic planning of the VectorVMS vendor management system. Taylor is committed to client satisfaction and to ensuring VectorVMS technology meets the current and future needs of clients and managed service providers (MSPs). She uses market research and in-depth industry experience to create products and services that make extended workforce management efficient and intuitive. Taylor oversees product development, marketing, and business partnerships for VectorVMS and is responsible for driving innovation for contingent workforce management. Connect with her on LinkedIn.