Today, outsourcing is increasingly used by companies as a way to save money and access specialized expertise.
This is particularly true when it comes to the contingent workforce, where staffing agencies can help businesses engage contingent workers. These non-employee workers offer businesses benefits such as access to hot skills, seamless scalability, reduced costs and a huge number of other advantages.
Yet to realize the true potential of these vendors, successful vendor management is crucial.
Here's everything you need to know to successfully manage your staffing agencies and build a successful contingent workforce management program.
Formal vendor management, however, has largely been a business practice for large enterprises with vast amounts of spend - allowing them to invest in expensive technology and dedicated procurement departments.
That’s not to say that smaller organizations don’t have vendors. They do. They just historically haven’t had access to the technologies that allow them to truly, and strategically, manage them.
Thankfully, this has now changed. With a number of new technological solutions on the market to manage those vendors, smaller businesses are now discovering that they have the capabilities to implement more strategic vendor management practices.
Are you struggling with the complexities of managing your external workforce and the vendors associated with it?
In this guide you’ll discover some proven best practices and solutions designed specifically for getting better results from the vendors within your non-employee workforce program, simply by improving how you manage those vendors.
This page will help you to better understand the importance of managing the vendors used within your contingent workforce program, and how technology and best practices can result in a huge return on investment (ROI).
Learning how to manage vendors starts with understanding exactly what vendor management is, and how it applies in the context of your business’s goals.
Vendor management is a process that organizations strategically build to manage their vendors - also known as suppliers. Vendor management includes everything from sourcing vendors, negotiating contracts, controls and compliance, cost management, mitigating risk and analyzing vendor performance to ensure service delivery.
Through successful vendor management, organizations are able to meet their business objectives, control costs, minimize potential business disruption and ensure they are able to deliver on their own customer expectations.
Here’s how Gartner describes vendor management:
“Vendor management is a discipline that enables organizations to control costs, drive service excellence and mitigate risks to gain increased value from their vendors throughout the deal life cycle.”
Vendor management refers to a strategic process that involves managing suppliers from a range of industries, whether it be your company’s marketing consultants, IT vendors or software suppliers.
This guide, however, will be specifically looking at how vendor management applies to your organization’s non-employee workforce.
With around 40 percent of the US workforce currently made up of contingent workers (independent contractors and temporary workers) and the average organization having 18 percent of their workforce hired on a contingent basis, vendors are becoming an increasingly important success factor for any business that’s leveraging non-employee workers.
Staffing agencies, also known as staffing vendors or staffing firms, are used by organizations to ensure they are able to meet real-time workforce requirements.
A staffing vendor will work on behalf of a business, matching temporary job candidates with relevant positions within the organization. This helps to ensure that companies are able to scale up and down rapidly depending on current business requirements, as well as access hot skills within their industry.
Yet just using a staffing agency doesn’t guarantee a ROI. That’s where vendor management comes in.
When it comes to a company’s non-employee workforce, successful vendor management is important for a number of reasons.
Vendor management plays a key role in selecting the right vendors that lead to program success. Vendor management is a crucial step in achieving your workforce requirements, and, ultimately, your business goals.
Through an effective vendor management approach that puts centralization and insightful data at the forefront of business decisions, your organization will be able to effectively manage vendors to improve workforce quality and reduce costs.
The result? Your business will be perfectly prepared for long-term growth in a cost-effective manner.
Vendor management benefits:
Managing vendors involves a large amount of data and analytics. On top of that, it’s likely that you are using a number of staffing agencies to source non-employee workers - making vendor management even more complex.
To make this even worse, organizations with smaller contingent workforce spend (anywhere from $1m to $10m) are typically using manual management processes such as spreadsheets, in-house databases or sharepoint-like websites.
In fact, according to a study conducted by Forrester Research, 82 percent of businesses claim that they still use spreadsheets to inventory, assess, and manage third-party companies.
Performing these manual processes lead to a number of vendor management challenges, which all result in poor decision making, hidden costs and a complete lack of visibility into your non-employee workforce program.
Here are just a few of the top vendor management challenges that organizations face:
Lack of visibility: When managing vendors, it’s crucial your entire company is singing from the same hymn sheet. With manual processes, it’s almost impossible to prevent department leaders from engaging staffing agencies on their own terms, hiring non-employees at a rate they think is acceptable and not the company-set rates.
Vendor compliance risk: Setting standards for your vendors is a crucial component of making sure they are helping your company to achieve its objectives. If you aren’t managing your vendors correctly and recording data properly, there’s no way of knowing whether your staffing agencies are meeting your company’s standards or adhering to their agreements and local statutory laws.
Vendor data storage: To place temps and independent contractors across your organization, it’s likely you are dealing with multiple vendors, hiring for multiple projects and multiple team leaders are hiring these workers. To avoid fragmented processes, it’s crucial that vendor data is consolidated into one centralized location and updated in real-time for your entire organization to see.
To address the above challenges, businesses have to move away from manual spreadsheets. Instead, they should use vendor management software.
Your business is relying on vendors to source, engage and place the non-employee workers into your organization that will drive business growth and meet your current workforce requirements.
To ensure they achieve what is expected, it’s important that you build a vendor management process that puts data and visibility at the forefront of your strategy. That’s where a vendor management system comes in.
A vendor management system is a web or cloud-based platform that allows businesses to manage their entire vendor process in one centralized, and automated, location. By consolidating vendors into one place that can be accessed across the entire organization, businesses are able to effectively track, measure and manage vendor performance.
Here’s a comment from Deloitte, on why monitoring vendor performance is crucial:
“Monitoring of vendor services is important to be able to see, communicate and escalate vendor-related issues at an early stage. This requires measurement instruments to reliably and continuously measure and compare performance against benchmarks and between vendors. The challenge is to define and select the right indicators to measure service quality across multiple providers and to have a uniform and consistent view. Vendor monitoring is important because it is the key to continuous service improvement.”
Here are the top five ways a VMS will benefit your vendor management process:
Better workforce visibility - By managing your vendors in one centralized location, you’ll significantly improve visibility into vendor performance and the current state of your non-employee workforce program. You’ll have insight into how much you are spending, and where improvements can be made.
Now you have a VMS and the processes in place to successfully manage your vendors, it’s time to use the data you collect to create some KPIs. These metrics will help ensure that the vendors you work with are delivering continued ROI within your contingent workforce program.
With that in mind, are the top four KPIs your non-employee workforce program should measure:
This measurement looks at the number of calendar days it takes a vendor to fill an open position, from the moment that role is opened to the day it is filled. The faster your vendor can fill a role the better they are performing - although fast fill times shouldn’t compromise workforce quality.
High turnover within your non-employee workforce is either a sign that your staffing agency is placing the wrong temp workers inside your organization, or that you haven’t clearly defined your requirements to your vendor.
This is the ratio of temporary position orders received by your vendor, compared with the number of job orders they fill. The higher the fill rate, the better your staffing agency is performing.
Contact Conexis VMS today. Our team of experts would love to discuss how our vendor management system is the perfect solution for your vendor management needs.
Conexis VMS is the very first vendor management system designed to automate and consolidate the entire non-employee workforce and staffing agency management process, with no minimum spend requirements.
To ensure maximum ROI for companies no matter what their contingent workforce spend is, Conexis VMS has been designed to be a simple, easy-to-use and a cost-effective solution, without the complicated bells and whistles of more expensive VMS software.
No matter the size of your temporary workforce, Conexis VMS will help you manage it.
"Conexis VMS has helped put our contractors in one consolidated place - giving us visibility and control over our temporary workers from agencies, and enabling us to have more predictability and oversight of our costs."
Melie Matifat, Vice President, People & Culture, Intelcom Express
"Conexis VMS has been specifically developed to help small and medium-sized enterprises to automate and improve their entire contingent management process, no matter how small or large their non-employee program is."
John Clark, Conexis VMS