Vendor Management Systems Positive Impact on Contingent Workforce Programs - Staffing Suppliers
This blog post was written by Zenith Talent CEO Sunil Bagai. This is the second in a two-part series. You can read the first post here.
In the first part of our series, we looked briefly at the history of Vendor Management Systems, the undeniably positive impact they’ve had on contingent workforce programs, and why hesitant staffing suppliers should embrace them. In this article, we’ll explore those benefits in greater depth.
Money. Follow the money, business leaders always say. Well, staffing represents a $400 billion industry worldwide. And with VMS programs in place at 74 percent of large businesses, it makes sense for staffing suppliers to join programs where such high volumes of spend are being processed.
Big Data. Of course the business of talent is a business of people, yet managing that business, in the sense of operations and finance, falls within the realm of figures. One of the biggest windfalls for staffing providers that join a VMS program comes from access to advanced analytics and business intelligence.
The VMS tracks, among countless other things:
- Number of calls required to connect with candidates
- How many connections are required to qualify candidates
- Submittal-to-interview ratios
- Percentage of offers accepted or declined
- Percentage of placements that start
- Retention and turnover rates
- Assignment data
- Performance scorecards
- Screening results
- Placement rates
Furthermore, the analytics provide suppliers with mission-critical visibility into areas of their strengths and weaknesses in the program, allowing them to proactively refine their recruiting strategies and deliverables.
Increased opportunities and process efficiencies. Supplier-funded programs, which have become the norm, essentially offer a “pay to play” model in which staffing agencies have the ability to gain access to a broader spectrum of opportunities than they may otherwise have selling directly to clients. Because a VMS program supports enhanced visibility into performance and spend, administrative efficiencies, and automated billing management, the supplier’s costs are largely offset by the reduction in associated overhead. The benefits suppliers enjoy from participation in a VMS program also provide incentive for long-term commitments.
Reduced service costs. Suppliers can realize greater cost savings related to account management and operations when working through a VMS. Because opportunities are distributed through predefined tiering rules in a continuous flow of requisitions, suppliers can focus on the quality of talent and supporting their workers instead of trying to seek out job orders.
Process improvements. A VMS automates the contingent workforce and Statement of Work (SOW) management processes, improving efficiencies in sourcing, assignment management, project management, onboarding and offboarding, and invoicing. The system also simplifies the process of extending assignments or contracts, administering expenditures and responding to new opportunities.
Enhanced payment processes. The electronic invoicing process inherent in most VMS systems leads to faster payments for suppliers, significantly reduces time spent on administrative work and facilitates automated and detailed reconciliation reporting.
Proactive notifications. VMS systems automate a variety of important and time-sensitive alerts to suppliers through notifications on their dashboards and system generated emails. These notifications keep suppliers current on pending actions, new requisitions, interview requests, offers and negotiations, and timekeeping (timesheet entry and approvals). Moreover, suppliers also receive crucial feedback from hiring managers throughout the hiring process lifecycle, automated in real time by the system.
Overcoming objections requires a little communication
And at the end of the day, it’s called a Vendor Management System for a reason: the data provided by staffing partners influences the entire program. A well-run VMS program comes down to communication. Every benefit of a VMS -- whether visibility into spend, transparency into performance, accurate timekeeping and billing, or consolidated reporting -- boils down to a communications-based process that must include, embrace and support supplier partners.
MSPs and hiring managers should invest their time and effort in educating suppliers on the VMS, working with them to adopt the program and creating consensual agreements that set the right expectations.
A great way to do this is by creating a framework that centralizes communications to help bridge the needs of all users (MSPs, hiring managers, suppliers and contingent talent) in an agile and efficient manner. Optimal programs are those that promote collaboration, mutual benefits and the alignment of goals toward success. Learn more about building a VMS system with clear communications.