Guide To Contingent Workforce Management With A VMS
  • 5 min read

Guide To Contingent Workforce Management With A VMS

In today’s dynamic business landscape, managing a contingent workforce efficiently has become crucial for enterprises. Whether your organization already utilizes a Vendor Management System (VMS) or is contemplating adopting one, this guide will provide valuable insights into contingent workforce management and highlight the benefits of integrating a VMS into your operations. From the consequences of mismanaging your contingent workforce to optimizing your sourcing processes, we’ll explore the key considerations and steps you can take to drive success.

How Do Companies Without a VMS Measure Contingent Workforce?

Managing a contingent workforce without a VMS often involves relying on manual processes, spreadsheets, and fragmented systems. This approach can be time-consuming, organized, and error-prone. Typically, companies with smaller and more manageable contingent workforces tend to follow these methods. However, as the size and complexity of the contingent workforce grow, organizations often encounter difficulties that prompt them to consider implementing a VMS.

Gen-0: No System in Place

During this initial stage, organizations may lack a centralized system for managing their contingent workforce. Processes are typically ad hoc, and there is limited visibility and control over contingent workforce management.

Gen-1: Implementing a VMS and Establishing Basic Rules

As organizations mature, they recognize the need for a more systematic and structured approach. Adopting a VMS allows them to establish basic rules, streamline operations, and gain visibility and better control over their contingent workforce.

What Are the Consequences of Getting It Wrong?

Mismanaging the contingent workforce can lead to several negative outcomes, including missed cost savings, wasted time, inaccurate data, and a lack of visibility. Compliance also becomes a concern, as organizations need to ensure they are operating within the boundaries of labor laws and regulations to avoid legal liabilities and labor law violations and penalties. Failing to address these issues can have significant repercussions for the organization’s finances, reputation, and overall operational efficiency.

When Should I Start Considering Adopting a VMS for My Contingent Workforce?

The decision to adopt a VMS depends on several factors and pain points that organizations may experience. Signs that indicate the need for a VMS include:

1. Difficulty Managing Numerous Staffing Suppliers

As the number of staffing suppliers increases, maintaining control and oversight becomes more challenging. A VMS helps centralize supplier management and ensures consistent processes and performance tracking.

2. Lack of Visibility into Staffing Suppliers and Contingent Workforce

Without end-to-end transparency of performance data, organizations struggle to assess supplier effectiveness and overall contingent workforce performance. A VMS provides supplier score cards as well as real-time data and analytics for informed decision-making.

3. Limited Demand Management and Control

Contingent workforce requisitions lack proper governance and control can lead to inefficiencies and increased costs. A VMS enables organizations to implement demand management strategies, improving requisition processes and cost control.

The optimal timing of VMS adoption varies across industries. However, organizations typically start seeing significant value from a VMS when they reach approximately 150 contingent workers or $5 million in contingent workforce spend. Additionally, if legal concerns related to non-compliance arise, it becomes crucial to consider implementing a VMS to mitigate risks.

What Steps Can Companies Take to Get Ready Before It Becomes a Problem?

Recognizing the need for a solution and adopting a VMS is the first step in preparing for effective contingent workforce management.

Additionally, organizations can consider working with a Managed Service Provider (MSP) that offers its own VMS. Collaborating with an experienced MSP can provide guidance and expertise in implementing and optimizing the VMS while aligning it with your specific business needs.

Are There Regulatory Agencies at Play for Things Like ESG, Neurodiversity, etc.?

While specific regulatory agencies may not govern Environmental, Social, and Governance (ESG) or Neurodiversity initiatives, organizations still need to consider various regulatory factors.

In the United States, the U.S. Department of Labor and federal, state, and local laws and regulations influence contingent workforce management.

It’s important to note that regulatory landscapes can vary from country to country.

Simplify has extensive knowledge of these regulations and can assist organizations in adapting to them.

Utilizing a VMS can provide a framework for ensuring legal compliance, as long as it is used correctly and in alignment with applicable regulations.

How Do Enterprises Stand to Win by Getting It Right?

By effectively managing their contingent workforce with a VMS, enterprises can unlock several benefits:

1. Time and Cost Savings

Streamlining processes, automating workflows, and gaining better visibility into the contingent workforce save valuable time and reduce costs associated with manual management.

2. Improved Sourcing Processes

A VMS enables organizations to establish efficient sourcing channels, ensuring the right suppliers are engaged to fulfill their contingent workforce needs. This leads to better-quality talent acquisition.

3. Enhanced Compliance and Risk Management

Adopting a VMS ensures systematic and compliant processes, reducing the risk of legal liabilities and labor law violations.

4. Increased Organization and Visibility

Centralizing data and reporting through a VMS provides clear visibility into the contingent workforce, enabling data-driven decision-making and enhancing overall organizational efficiency.

Why Contingent Workforce Management Matters for Enterprise

Contingent workforce management is a critical aspect of modern enterprises, and adopting a Vendor Management System can significantly improve efficiency, control, and compliance. By recognizing the signs indicating the need for a VMS, preparing proactively, and leveraging the benefits of VMS implementation, organizations can streamline their contingent workforce management processes, optimize sourcing, and enhance overall operational success.

If your team is not using a VMS today to track contingent workforce spend, chances are your team is leaving money on the table. If you want to see exactly how much, you can learn more by chatting with our team about our industry leading VMS here: