07 Apr How to Access Better Contingent Worker Data Through an Effective Vendor Management System
A vendor management system (VMS) will help employers gain access to the critical real-time data needed to manage their contingent workforce far more efficiently. Employers who implement a VMS can reduce contingent workforce costs by 10% to 15%.
If there’s any certainty in today’s uncertain world of work, then it’s that the coronavirus (COVID-19) pandemic will have a lasting impact on how traditional full-time workers and contract workers work and how business gets done. One of the large-scale shifts that have business owners re-considering their workforce strategies, for example, is the accelerated rise of the contingent workforce. Research by Gartner reveals that 32% of companies are replacing full-time employees with contingent workers as a measure to save on costs.
However, contingent workforce management is a complex responsibility for employers. Understanding contingent worker data and intelligence is critical to gaining insight into the impact that independent contractors have on the company and the work being done.
As the contingent workforce continues to rise, employers must harness the power of a VMS in order to expand their program, mitigate risk, and manage the growth of their contingent workforce.
The information below will help employers gain a deeper understanding of how a VMS aids in contingent workforce management. The information will also give insights into how a VMS will help provide better access to the data employers need to drive business and their contingent workforce forward.
What does a VMS do?
A VMS is a software application, typically cloud-based, that helps to facilitate the process of contingent worker procurement and contingent workforce management. A VMS will automate and streamline multiple processes related to contingent workers who were sourced through an organization directly or by their managed services provider (MSP).
A VMS allows companies to engage and manage high-quality contingent talent, while also improving collaboration with suppliers. At its most basic level, a VMS will manage every stage of external workforce engagements—from candidate selection, onboarding, time and material tracking, payroll, and the offboarding of workers.
What does a VMS include?
Whether a company is operating a mature contingent workforce or is engaging contingent workers for the first time, a robust grasp of contingent workforce management and a VMS isn’t required to understand that data should drive significant decisions within the program. An effective VMS should provide reporting and analytics that serve several roles in managing and measuring contingent labour. Listed below are some examples of these roles.
- Tracking all contingent worker spend within the VMS, including services engaged through statements of work (SOWs).
- Managing all suppliers of contingent work within the VMS.
- Providing visibility into all projects that utilize contingent workers within the VMS.
- Providing visibility that can be leveraged to ensure that regulatory controls are in place to aid in compliance and to mitigate contingent worker risk.
Effective workforce management solutions will provide organizations with real-time access to data to review the active headcount of workers, tenure, spend, consumption by business unit and other VMS reporting related to contingent labour.
How do you automate vendor management to receive better data?
A vendor management solution will guide users step-by-step through each process associated with procuring external resources. From creating a requisition to offboarding, vendor management software will seamlessly complete each task within the VMS. With automation eliminating tedious administrative responsibilities, organizations can save time and money.
For example, the artificial intelligence (AI) technology driving an effective VMS will use predictive analytics to compile, analyze, and identify opportunities. The technology will also provide recommendations on the tasks listed below.
Save on hiring costs
Recommendation: Hiring through the Austin, TX branch will save an organization 12% on hiring costs.
Recommendation: Source internally before engaging vendors to decrease time to fill.
Maintain hiring manager satisfaction
Recommendation: Increase the net promoter score (NPS) for the Raleigh, NC location.
A VMS can also integrate a vendor management solution. Through this management solution, organizations can track and manage pre-defined performance metrics. This allows companies to gain greater visibility into their vendor relationships and have more control over their vendor selections. A vendor management solution that integrates with a VMS can give employers confidence in the quality of services that are being delivered.
Why access to data is critical right now
A VMS solution will ensure data, processes and procedures are consistent across all areas of business departments and locations—even if their contingent worker programs are managed independently. This capability not only sets the standard approach to management but also ensures that companies are compliant with local legislation. For business leaders, effective vendor management is critical for a variety of reasons:
A VMS will help save on costs in an uncertain economy
Saving on costs is a top priority in an uncertain economy. One of the most significant benefits of vendor management is saving on pricing. Managing vendors from a central data hub allow companies to save on costs in many ways. The information gained through VMS technology allows employers to:
- Tap into talent pools already within the system—saving on additional recruitment costs and time to hire.
- Manage payroll and flag errors in overtime pay and rates that are higher than usual.
- Provide insights into rate cards in order for employers to make better hiring decisions.
- Help manage diversity, equity, and inclusion (DE&I) at the staffing vendor and worker levels.
A VMS will ensure better rate card management
Sometimes, vendors will charge inconsistent rates for the same skill set without providing any transparency into markups or pricing. A VMS will ensure that employers pay fair market pricing for resource skillsets while achieving visibility into savings and vendor markup. This allows for fair and controlled pricing.
A VMS will help mitigate risk
A VMS will ensure data, processes, and procedures are consistent across all areas of an organization’s departments and locations—even if their contingent worker programs are managed independently. This capability not only sets a standard approach to management but also ensures that organizations are compliant with local legislation.
A VMS will aid in better vendor selection and classification
In the United States, agencies such as the Consumer Financial Protection Bureau (CFBP), the Federal Financial Institution Examination Council (FFIEC), and the Federal Reserve Board (FRB) are becoming more involved in assessing regulatory compliance. The increased focus is forcing employers to re-evaluate how they select their vendors.
A VMS will help put emphasis on measuring cybersecurity risks
With greater data generated and stored in cloud-based applications, data breaches are a continuous threat to organizations and their vendor management software. Hackers can gain access to data by exploiting a vendor’s security loopholes. An effective VMS will safeguard their property in the cloud and provide the best performance in the market. A VMS can ensure a company receives the highest level of performance and security.
Getting it right
Effective contingent staffing and contingent workforce management will require executive communication within a company. When sourcing and implementing a VMS, it’s important to get support and buy-in from the key stakeholders in the company. When management is in agreement with a vendor management strategy, then the key to supporting an organization’s management objectives involves planning, choosing, and configuring the right vendor management software to suit business needs.
If your company is considering VMS solutions or is re-evaluating your current solution, then significant operational changes can require a new contingent workforce management solution. An effective MSP will support these changes across the entire contingent workforce.
Are you interested in gaining deeper insights into an effective VMS?
Download our free case study to learn how Flextrack’s VMS technology helped one client partner save on contingent workforce costs and more.