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4 Ways to Improve Your Services Procurement Strategy With VMS

May 26, 2016 9:51:32 AM

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Most companies today already enjoy well established procurement strategies yielding varying levels of results. However, there are a few successful themes that strong procurement organizations share which are tried and true. Building your procurement strategy around these four core themes is almost guaranteed to drive the results sought by those tasked with sourcing and engaging contingent workforce resources. Here are these time-honored four themes as they relate specifically to the utilization of Vendor Management System technologies.

1) Leveraging VMS Tech to Drive Process Efficiencies and Automate Manual Processes

Standardization and automation of the acquisition of materials, supplies, equipment, services and procedures ties directly into the deployment of a VMS system. During the implementation period for a new VMS solution, be sure to work closely with the solution provider to capture the as-is state of manual processes associated with services procurement. Identify opportunities to eliminate labor intensive processes in favor of automation. There are great process efficiency gains and potential savings (in the form of saved work hours within HR functions) associated with automating the onboarding process as a whole. From calling vendors to managing responses, compliance, onboarding and more, the VMS can be configured to manage these tasks easily.

Typically, VMS solution providers offer significant subject matter expertise to help their customers achieve efficiency through automation. They’ve seen nearly every possible services procurement automation challenge scores of times and bring that experience to your project. But you have to be fully engaged in the deployment process to capture the maximum value of their efforts.

2) Increasing the Quality of Services Procurement via VMS

VMS systems are renowned for driving quality in two main ways. First, VMS tools help improve staffing supplier performance which leads to better candidates and shorter times to fill. VMS tools are great for monitoring and measuring the performance of suppliers, ensuring they are meeting with established key performance indicators (KPIs) and/or service level agreements (SLAs). The automation can even be configured to provide early warnings as soon as performance levels begin to dip below acceptable levels so that corrective action can be applied quickly – before performance suffers.

VMS systems are also great at ensuring the high quality and caliber of the talent being sourced. Configure a VMS to establish a competitive bidding environment. The software makes it easy to provide managers with resumes from all approved suppliers for a given location and/or category instead of the 1 or 2 suppliers they previously directly engaged. The competition spurs suppliers to put their best foot (ergo, their best candidates) forward.

3) Cost Savings

As mentioned earlier, there are significant process efficiency gains to be captured through the use of the VMS. Staffing Industry Analysts recently published data and figures supporting the position that the use of VMS software saves organizations on average $129 per worker due to the aforementioned efficiencies. Moreover, tighter control over rate management enabled by VMS results in cost savings. The VMS permits organizations to set maximum rates per role/location. Even better, it also automates the ability seeking approvals for “business exceptions” when it is deemed necessary according to pre-established business rules. Unlike exceptions that are made without an underlying strategy (or any means for tracking exceptions) the VMS enables measurement of the average cost per role and benchmarks the differences at which the resources were ultimately engaged.

Another example of how VMS drives cost savings is in the application of overtime rates. These rates are often managed with a lower multiplier than 1.5. Sometimes at 1.3 or 1.4 to net a savings to customers.

Consolidated Invoicing and payments – enabled by automation via VMS drive savings by processing a single invoice to the VMS provider versus processing multiple invoices by vendor.

4) Increase Spend Under Management

Another major benefit of deploying a VMS is the visibility it provides, allowing organizations to make more accurate, data-driven business decisions. While temporary workers are the primary focus of this, increasing numbers of organizations are focusing efforts on gaining the same visibility into Independent contractors and SOW’s to demonstrate savings and management to their organizations. Demonstrating the ability to successfully manage more complex challenges inherent in ICs, SOWs and other specialized services can lead to greater spend being authorized through the VMS for procurement.


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Topics: Blog, Procurement Services

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