The Best Vendor Management Systems

What is a Vendor Management System?

Vendor management systems (VMS), also known as contingent workforce management software, are a staffing tool for sourcing external labor. It is a SaaS online solution for managing your temporary or permanent workforce in expanding companies. With a VMS, your business can bring in outside talent to fulfill specialized roles and configure workflow to fit your needs.

While VMS has some overlaps with procurement, human capital management (HCM), and human resource software, as all are designed for improving your labor management practices, vendor systems are primarily for the management of contingent or contract workers. HR software solutions alone do not cover all the intricacies necessary to correctly source and hire external labor.

Note: The term "vendor management" sometimes used interchangeably to refer to supplier relationship management (SRM) solutions. If you are looking for a software to handle your supplier management and vendor communications along a multi-echelon supply chain, please review our SRM software options.

Key Features of VMS Software

• Non-employee labor management: Streamline onboarding, training, and other labor issues for members of your seasonal, temporary, or contingent workforce
• Candidate tracking: When interviewing multiple applicants, track all of their relevant information and keep records of contracts
• Contract generation: Create standardized templates for your external labor job contracts
• Talent analytics: Measure performance from all of your contingent employees
• Job listing generation: Make accurate job listings for staffing agencies and vendors to reflect the positions you need filled
• Timesheet management: Stay ahead of staff scheduling and attendance requirements for your external workforce and avoid conflicting schedules with your internal employees
• Compliance management: Check you meet all the labor standards of different locales, depending on where your external labor is located
• Third-party payroll integration: Ensure timely payment for all your contracted workforce
• Staffing agency communication: Stay in contact with staffing agencies to source new labor whenever you need it

Best Vendor Management Software Benefits

There are several benefits to introducing a VMS to your business's vendor relationships:

Procure Qualified Labor

One of the biggest hurdles companies face when sourcing external labor is knowing who is a good candidate. With a VMS procurement solution, you can create highly specific job orders to ensure vendors and staffing agencies only send you qualified candidates.

Candidate tracking tools let you review and compare all applicants online. It's easier than ever to figure out which applicant is best suited for your job order. Customizable questionnaires can save time by testing potential employee skills during the application process. This can improve your risk assessment for projects by ensuring you are hiring from a VMS-approved talent pool.

Fill Positions Faster

Your business cannot operate without your external labor force. Yet the time it takes to interview candidates and measure vendor performance can add up, costing your company time. Managing the hiring process yourself can make your workload overwhelming. VMS lets you fill positions faster by automating the process by providing vendor information within a centralized repository so you can find ideal candidates in a flash.

Seasonal positions in particular need to be filled in a timely manner. As a web-based solution, VMW lets applicants and agencies apply online. Review and respond to applicants with ease without having to sort through piles of physical resumes and cover letters.

Meet Local, National, and International Labor Compliance

Another hassle of working with contingent employees? Your external workforce might be located in another state or country. You have to know and follow all local labor laws and regulations. User-friendly VMS software helps you stay compliant by providing a single location to store all necessary hiring and onboarding documentation.

Even if your workers are in the same office, VMS provides risk management by keeping your business processes compliant when you work with contracted labor.

Workforce Performance Metrics

Once you have your external labor, you need to know you're getting the best value from your workforce. Vendor management solution applications measure and analyze the real-time performance of your freelance and contract workers.

This aspect of VMS modules gives you greater security when hiring. You can rest easy when reviewing applicants by checking their past performance. You get due diligence without having to perform your own background checks on each candidate. And when temporary workers do well, you can keep their contact information to build up your talent pool.

Online Approval Processes

Web-based VMS applications let you access your external labor information anywhere. Need to finish up applicant approval when out of the office? No worries! Streamline your business processes by using mobile applications to check applications and provide approval remotely.

VMS contract management tools even let you send boiler-plate contracts to approved candidates. You can also review invoices from your contingent labor vendors to ensure accuracy with billed services.

Lower Labor Costs

The more external employees you have, the more hoops you have to jump through with contracts, scheduling, and payroll. By using a VMS to manage your contingent labor, you can keep payroll costs down. Your HR department can stay focused on your internal employees while the VMS handles the needs of your contingent talent.

Types of Contingent Workers Covered by VMS

There are many different types of contingent workers your business may work with. VMS solutions help your business to manage contingent workers including:

• Temporary contract workers (temps): Workers provided by staffing agencies for limited work contracts at other businesses. Temps are often used to cover for full- or -part-time employees who will be undergoing an extended absence for any reason, such as parental, bereavement, or sick leave.
• Freelancers: An entirely independent, self-employed worker who generally works in creative fields including music composition and performance, writing, translating, acting, computer programming, and graphic or web design.
• Contractors or subcontractors: Trade employees, often in construction and maintenance, who may work independently or as part of an organization.
• Consultants: A professional who is independent or part of an agency, temporarily works with a company in order to provide valuable insights to improve business performance.
• Independent professionals: Any other self-employed worker who may have a specific skill set they hire out.

VMS helps you manage your external workforce for as long as you need them. For example, maybe you need a temp for six months to replace an office employee on maternity leave. You also need a certified consultant for a one-time safety seminar. Despite the different timescales of employment, a single VMS covers both long- and short-term contracts.

Healthcare Vendor Management Systems

Of course, some industries depend on temporary and third-party workers more than others. The healthcare industry heavily relies on contingent workforce to staff clinical and non-clinical positions. Since healthcare workers need to meet strict compliance standards set by government organizations and the facility itself, finding qualified candidates can be difficult. Healthcare-specific VMS software is designed to record all external labor certifications from applicants so you can easily select the best candidates for your medical facility.

Vendor Management Software Pricing

How much you spend on your vendor management system will depend on what exactly you're looking for and your ideal budget. VMS software pricing is first determined by whether you want a continual, subscription-based plan or a one-time perpetual license. Monthly SaaS prices range from $5 per month per user up to $1,990 per month. This subscription cost often includes technical support, training, and initial installation fees.

Most subscriptions are also priced per user, though some plans allow for a set amount of users. This is particularly popular with tiered pricing plans. Custom pricing is often available for larger companies or those with specific hiring standards.