How many contractors do you use? How many suppliers?
Are your labor rates at true market price or better?
What percentage of your contract spend goes through preferred suppliers?
Drawing a blank? If you are not sure what the answers are, that’s OK. It’s likely that you are either new to using a vendor management system or you are currently researching VMS solutions for possible implementation. If you’re not familiar with VMS solutions at all, you’re in for a treat.
You see, by the end of 2017, experts predict that 45 percent of the world’s total workforce will be contingent workers. That includes temporary workers, independent contractors, SOW-based labor, and freelancers. Most organizations report that they expect their need for non-employee workers to grow. The problem is that every other organization is also looking for non-employee workers to grow their businesses. So how can you source and manage your extended workforce effectively and efficiently so that you don’t lose the war for talent?
The short answer: VMS.
In fact, more than 70 percent of U.S. companies use a vendor management system to source and manage their extended workforce. If you are new to the VMS world, how do you to select a VMS solution with the right combination of capability, usability, and configurability to meet your particular needs?
Draw on the experience of experts in the contingent workforce space. Luckily, on November 17, 2015, Beeline and ProcureCon hosted a webinar titled “The ABCs of VMS: What to Look For in a Vendor Management System” to shed some light on this important topic. Hosted by Christopher Minnick, Executive Vice President at Brightfield Strategies, and Benjie Hanson, Director of Consulting at Beeline, the webinar was jam-packed with useful information for procurement and HR professionals who manage contingent workers. If you need some help choosing the right VMS, we are here to help.
To the business unit or project team who will settle for nothing less than best-in-class
If you are involved with contingent workforce management, you are likely either in human resources or in procurement. After all, research shows that when we break down the service units that manage VMS, 40 percent are in procurement, 40 percent are in HR, and 20 percent fall into the category of “other.”
Regardless of the name of your team or department, your goals are probably similar to other organizations using a VMS. You want to save time and money. VMS can deliver your organization cost savings, reduced risk, and better quality candidates. Here’s an important factor to consider: you do not want just any VMS. You want the right system for your particular needs. So how do you choose?
The first step is to understand the five core benefits of a VMS—for both procurement and HR. Those benefits include:
Cost Savings:Contingent workforce expenditures rank among the top spend categories in most organizations. Perhaps more troubling is the fact that most contingent labor is not taken into account when conducting financial planning, forecasting, and budgeting. That means that you may be spending more than you should. In fact, VMS users report 80 percent higher year-over-year cost savings compared to non-VMS organizations.
Visibility:Lack of visibility is one of the key reasons organizations do not know what they are spending on contingent workers. Ardent Partners research indicates that organizations only maintain visibility into 45 percent of their total contingent workforce.
Compliance:When it comes to contingent workers, if you do not know “who” is doing “what,” “where” they’re doing it, and “how” it is being done, you are setting yourself up for failure. Two important examples that come to mind are misclassification of non-employees and allowing unauthorized individuals access to systems or facilities.
Quality:The entire goal of leveraging the contingent workforce is to attract, retain, and utilize the best possible talent. A VMS can reduce time to fill and expand your access to quality talent. Some vendor management systems even allow you to source talent directly from the VMS!
Operational Efficiency:A VMS also drives efficiency by allowing you to automate procurement cycles, consolidate billing, and ensure invoice accuracy. It also makes it easier to measure and monitor your supplier performance. That will help ensure process and performance consistency.
So, will a vendor management system do all of the heavy lifting when it comes to contingent workforce management? Not exactly. According to Benjie Hanson, “The technology enables good business processes so that cost, quality, efficiency, and compliance of the contract resources is ensured.” In other words, using a VMS in tandem with CWM best practices is what sets you up for success. That’s why it is important to select the right technology partner for your organization’s needs.
Vendor Management Systems: A Quick & Dirty Overview
Before we get too far ahead of ourselves, what exactly is a VMS?
According to Staffing Industry Analysts, Inc.: VMS Marketplace Profile, “A vendor management system is an Internet-enabled, often Web-based application that acts as a mechanism for business to manage and procure staffing services—temporary, and, in some cases, permanent placement services—as well as outside contract or contingent labor.” Coincidentally, Benjie Hansonmentioned that the leaders in the VMS space are all Software-as-a-Service (SaaS) solutions.
When you begin comparing VMS solutions, there are some important questions to ask. Two big ones are:
What features and capabilities are available?
Which of these may be most important for you?
Of course, even once you answer these questions, you are only scratching the surface.
Contingent workforce experts show you how to evaluate VMS solutions as they do
If you want to evaluate potential vendor management systems like a pro, here are some of the insights Benjie Hanson and Christopher Minnick shared during the event.
When choosing a VMS, remember:
It is all about fit.You should understand your company’s needs in order to evaluate a vendor’s capabilities and experience meeting similar needs for other companies.
Understand the landscape and focus on true differentiators. In other words, what can your technology partner bring to the table that competitors cannot?
Not every organization has the same needs but a few items belong on every VMS checklist:
Demonstrated performance – capability, usability, and configurability
Analytics and reporting – how do you turn data into insight?
Lifecycle service – more than a help desk, must be collaborative and strategic
Real-time visibility – see your entire extended workforce anytime, in real time
Robust services procurement solution – for SOW sourcing and management
Data security – you can’t risk a data breach or loss of personal information
Source talent directly from VMS – reach talent not available from vendors
Global capabilities and experience – full localization for global programs
Commitment to innovation – to keep you informed of market changes
Customer-centric culture – honesty, openness, creativity, and accountability
Here are a few important questions you should ask potential VMS providers:
How extensive are the report building capabilities?
Who provides strategic and operational lifecycle services for your VMS—you or your MSP partners?
Can I see my entire global extended workforce in a single instance of your VMS?
Does your SOW solution provide customization for expense types and fixed amounts per supplier?
Can I source talent directly from your VMS, using my own preferred talent pool?
What are your global resources and capabilities? How extensive are your technical and service resources in Europe? In Asia? Elsewhere?
What innovation have you introduced (to your products and the industry) over the last three years?
Do you have customers I can speak with about the performance and reliability of your products and your service?
Hopefully, we’ve covered all the basics of vendor management systems and you have a good idea of what to look for in a VMS. If you want to get even more insights from industry experts, you can access the on-demand webinar event here.
Perhaps you prefer reading to watching video? No problem! Download our whitepaper, “What to look for in a Vendor Management System: Asking the Right Questions.”
Discover and learn how Beeline helps you engage with the external workforce.
An Introduction to Funding Models and Pricing Methods for a Vendor Management System (VMS)