What is a vendor management system (VMS)?
A vendor management system (VMS) is a software solution that helps you manage the entire lifecycle of your contingent workers—from sourcing, engaging, managing, and invoicing through reporting and offboarding. This empowers program managers to handle cost, efficiency, quality, and risk in a single platform.
KEY VENDOR MANAGEMENT SYSTEM TERMS
What is a vendor?
Broadly speaking, a vendor is a supplier of goods and services. Whether an individual or an organization, the vendor provides something of value that a buyer needs in order to accomplish its objectives.
In the context of workforce management, a vendor refers to those who are supported by VMS technology—which includes contract employment agencies, service providers, and the contingent workers themselves. In short, the term vendor is used to communicate those who provide the people or talent who make up an organization’s external workforce.
What is a contingent worker?
A contingent worker is anyone who works on behalf of your organization, but is not a direct employee. Common examples include temporary workers, consultants, gig workers, and freelancers.
It's important to recognize that people and organizations sometimes use different terms when speaking about the contingent workforce. Consequently, when discussing your external talent, it may be helpful to clarify which group you are referring to.
Why do you need a vendor management system?
A VMS gives you the ability to easily and quickly access non-employee information so you can make faster, better decisions—with more confidence. This includes high-value decisions related to the way you source, engage, manage, and pay both your contingent and total workforces.
Vendor management software can also be a powerful tool for ensuring the security and compliance of your organization. Without a way to easily track and record worker status and other information related to your external workforce, temporary workers can create critical gaps and pose risks to both your organization’s finances and reputation.
As the extended workforce grows, a management solution is key to building and operating a successful extended workforce strategy. While these solutions are most often used by the Program Management Office (PMO) team to help with daily management tasks, the collected data can be leveraged across an organization. For instance, HR, finance, and IT teams can easily access and analyze the information, enabling actionable workforce planning and strategy.