Vendor Management System (VMS)

Vendor management system definition

A vendor management system (VMS) is a cloud-based software platform that allows businesses to manage their external workforce. VMSs can help with tasks, such as:

• Sourcing: Finding and engaging external workers
• Managing: Tracking contractors’ journey from sourcing to offboarding
• Invoicing: Processing invoices and expenses for temporary workers
• Reporting: Generating reports
• Compliance: Documenting compliance with laws and company policies
• Risk mitigation: Helping businesses identify and mitigate risk
• Collaboration: Improving collaboration between teams

VMS’ can also help businesses streamline processes, save money, and prevent noncompliance issues. They can also help businesses make strategic decisions by providing a complete view of vendor risk, performance, and overall data.

What are the features of a vendor management system?

The exact capabilities can vary from one provider to the next, but typical features of vendor management software generally include consolidated payment information (e.g. billing), risk mitigation, and reporting capabilities for systems and processes.

For instance, a VMS could help a business optimize global worker payments, much like a payments BPO could. Unlike a BPO or an MSP, however, a VMS, is a platform outsourcing agents use to fulfil all aspects of vendor relationships, instead of specific processes.

How to manage global compliance with a vendor management system.

A VMS is a valuable tool department heads can use to manage teams across borders. Because local regulations can vary from country to country, companies may need assistance handling invoicing requirements, employment laws, data regulations, and other complex tasks required for global work.

A vendor management solution should offer powerful capabilities to help companies successfully navigate global invoicing, in-country tax structures, local currency billing, complex wage calculations, and local employment laws.

Global MSPs can use a VMS to help businesses:

• Avoid penalties
• Report on worker data, regardless of category, employment type, or location
• Pull information from multiple countries and centralize it onto one platform to enable data-driven decisions and reduce risk

Must-have vendor management system features

• Digital contract storage: Centralised digital storage for all contracts allows procurement teams to quickly review key contract details, renewal dates, and compliance requirements.
• Vendor and contractor portal: A customisable portal vendors and contractors can use to submit information, documents, and communicate with clients, for an easy onboarding process.
• Due diligence forms: These forms ensure contractors meet the company’s standards in areas like financial stability and compliance.
• Custom data fields: This feature lets procurement teams tailor data fields and categories to match business’s needs.
• Automated workflows: Automated workflows systematize processes like onboarding, risk mitigation and other contractor-related workflows.
• Employee portal: This portal allows internal users to request new vendors and contractors. The portal embeds required vendor data into the request process, to reduce time on managing new vendor contract requests.
• Risk assessment: This helps identify, assess, and mitigate risks vendor/contractor risks for proactive risk management.

Vendor Management System examples

There are many VMS’ on the market to manage payroll compliance, employee sourcing, invoicing, and more. Here are some examples:

1. Papaya Global: specializes in global workforce payments and compliance
2. SAP Fieldglass: provides Workforce visibility tools and vendor performance insights
3. Ivalua: Offers supplier collaboration tools and configurable dashboards
4. Coupa: Delivers processes that drive collaboration for the supply chain, procurement, finance, treasury, compliance, and IT
5. SimpleVMS: A no-cost time-keeping solution that simplifies job postings, invoicing, vendor communication, reporting, and more.