What Is a VMS (Vendor Management System) & Why Use It?

As the contingent workforce continues to grow, accounting for a larger share of total employment year after year, businesses have sought ways to better manage these workers. For many companies, contingent labor programs operate in myriad silos, and organizations lack visibility across all of them.

This fragmentation can create some challenges. With managers lacking alignment across an organization, businesses can miss out on getting the best external talent since there’s no feedback loop between personnel or efficient processes for securing highly skilled knowledge workers.

Furthermore, opportunities to secure the best rates for professional workers – whether via direct sourcing or with suppliers – can be lost amidst the chaos. And with no standard onboarding process in place, the chances of worker misclassification increase.

So, how can a business tear down these silos, provide enterprise-wide transparency, and manage contingent workers across the entire worker lifecycle? Enter a leading-edge Vendor Management System (VMS).

What Is a VMS (Vendor Management System)?

A vendor management system, or VMS as it’s commonly called, is a SaaS platform that businesses use to manage all aspects of the contingent labor ecosystem. By centralizing and automating the management of temporary workers, independent contractors, self-sourced talent, and statement of work (SOW) engagements through one cloud-based VMS platform, organizations can drive a host of benefits when using the most capable VMS software today – especially when combined with an integrated, purely vendor-neutral Managed Services Provider (MSP).

Depending on the platform’s sophistication, typical VMS us cases include:

• Initiating a talent or project request
• Evaluating project bids and hiring workers
• Onboarding and offboarding workers
• Reviewing timecards and expenses
• Labor analytics, benchmarking, and optimizing

Top-tier vendor management systems can also integrate with other software applications, such as ERP, HRIS, and other HR and procurement systems. The scope and ease of integration will vary based on the provider. (Read more: “VMS Integration: A Guide to the Basics.”)

Hiring managers, MSPs, suppliers and workers all interact with the VMS in a typical contingent talent management workflow.

Why Use a VMS?

Leveraging the power of an industry-leading VMS software, such as Magnit's VMS, to manage contingent & gig workers offers a host of benefits, including:

• Cost savings: Avoid paying above-market pay rates and supplier markups, and leverage reporting to evaluate current spend
• Visibility and transparency: Minimize “rogue” spending by departments and enable measurement of supplier performance
• Improved talent quality: Optimize the talent pool by enabling more supplier management options, particularly with a vendor-neutral approach
• Reduced compliance risk: Follow consistent processes to ensure full compliance with federal, state, and local laws and standards
• Increased efficiency: Acquire higher-quality workers over a shorter timeline

Again, the rate of improvement in each of these areas will vary based on the business, the solution chosen, the depth of implementation, and alignment with the MSP. 

The Power of a Joint VMS MSP Offering

To realize the full power of a leading-edge VMS, it’s wise to opt for an integrated MSP and VMS model. With an integrated MSP/VMS, the technology and human aspects are intertwined, making it easier for companies to achieve optimal results from their contingent labor programs.

The Magnit Difference

Magnit combines the world’s most tenured, purely vendor-neutral MSP with Wand, its best-in-class VMS. Together, this unique integrated offering provides clients with a comprehensive workforce management solution.

What makes Magnit’s Wand VMS unique? The list includes, but is not limited to, industry-leading iOS and Android mobile apps, a cutting-edge user friendly interface, and proprietary machine-learning technologies that provide a superior user experience and help clients drive unprecedented contingent workforce management success.

To learn more about Magnit's VMS and how it can help you reach your business goals, check out the “Magnit VMS, Effectively Manage All Aspects of the Contingent Workforce Supply Chain” solution brief.

If you’re interested in learning more about how Magnit is helping organizations implement winning contingent workforce programs globally, please contact a Magnit representative at info@magnitglobal.com.

Disclaimer: The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of Magnit and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.