The Vendor Management System and Contingent Workforce Management

What is a Vendor Management System

What is a vendor management system, I hear you ask?

It’s only the single most important piece of software for a business with contingent workers in their labour population. Why? Because a VMS enables the company to:

… efficiently manage their contingent workforce

… better understand the contingent population of their workforce

… reap highly valuable data from almost every touchpoint of contingent workforce recruitment and management

… simplify the administrative management of their contingent workers


… and much more.


A Technical Definition

A vendor management system is a cloud-based software technology that enables your company to manage the pipeline of contingent workers in and out of your business.

Most companies will engage a number of staffing agencies to supply contingent workers via their procurement function. The VMS enables the organisation to standardise and streamline every step involved in the contingent worker lifecycle, whether from multiple suppliers or just one or two. From procurement to payment, from onboarding to offboarding, the VMS is a critical efficiency and performance tool, for optimising the contingent workers of an organisation.

The VMS offers your business the ability to streamline your contingent workforce management. It’s the single source of truth for contingent workforce data, enabling you to make informed decisions about sourcing, managing, resource allocation and paying these workers.

In terms of ‘running’ the VMS, there are a couple of options. Your organisation may manage the VMS internally, where your in-house HR or procurement team manage the contingent talent population. Alternatively, the VMS can be handled by the Managed Service Provider (MSP) – like CXC, for example – on your behalf.

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Benefits of a Vendor Management System

  1. Cost Management: insights enable you to standardise the costs of your contingent workers, by job category. The reporting form a vendor management system will give you visibility if you’re paying too much for any contingent talent, and whether supplier margins are inconsistent.
  2. Automation: labour-intensive tasks such as the hiring, managing, and reporting about all facets of your contingent workforce. And the data points available are diverse. These include onboarding documentation, timesheet review and approvals, expenses, agency margin analysis – and much more.
  3. Risk Mitigation: the VMS data gives full visibility of your supplier’s performance. You can foresee and mitigate risks associated with suppliers, their adoption of regulatory compliance, any unexpected costs and even their financial position – all as a means of protecting your business and your talent investment.
  4. Boost Efficiency: the VMS is the central repository for all vendor information. By housing all records of vendor data, costs and activity associated with your contingent workforce, the VMS cuts your admin labour time significantly. No more duplication of data, loss of records or administrative errors. One record, one location.
  5. Boost Vendor Loyalty: building loyalty with quality suppliers is key to relationship retention and growth. By managing your suppliers efficiently and effectively, they’ll relish their association with you, and will seek to remain in your supply chain for the long haul.

The vendor management system is a critical tool for the successful deployment of your contingent workforce program. Reduced time spent on labour-intensive work, cost savings and powerful data insights offer your business a definite competitive edge – as long as the system is used consistently and correctly. Think ‘quality in/quality out’ in terms of the VMS value, and your contingent workforce program – and your vendor relationships – will be truly revolutionised.

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Let’s talk about a VMS for your business

If you’d like to discuss the right vendor management system for your business, please don’t hesitate to contact me here.