Vendor Management Systems (VMS) are powerful tools for managing contingent labour and procurement processes. However, to maximise their return on investment (ROI), organisations must adopt a Total Workforce Strategy. This approach integrates the management of both contingent and permanent talent to drive efficiency, optimise costs, and unlock strategic value. Here’s how aligning your VMS with a Total Workforce Strategy can enhance ROI.
What is a Total Workforce Strategy?
A Total Workforce Strategy unifies the management of all talent—permanent employees, contingent workers, and freelancers—under a single framework. It focuses on optimising workforce utilisation, improving agility, and aligning talent with organisational goals.
Key Components of a Total Workforce Strategy
- Integrated Talent Management: Combining insights from human resources (HR) and procurement.
- Strategic Workforce Planning: Balancing permanent and contingent talent to meet business needs.
- Data-Driven Decisions: Leveraging analytics to forecast demand and assess workforce performance.
The Role of VMS in Total Workforce Strategy
Vendor Management Systems play a critical role in achieving a Total Workforce Strategy by providing visibility, automation, and analytics for contingent workforce management. When optimised, a VMS can:
- Enhance cost control.
- Improve compliance.
- Streamline vendor and worker management.
- Provide actionable insights for workforce planning.
Strategies to Optimise VMS ROI
1. Consolidate Data for Total Workforce Visibility
A VMS centralises workforce data, providing a holistic view of all talent categories.
- How: Integrate VMS with HR systems, such as Human Capital Management (HCM) platforms, to capture both contingent and permanent workforce data.
- Outcome: Gain a unified view of talent, enabling better decision-making and strategic planning.
Example:
A multinational company integrated its VMS with its HCM, improving visibility into contractor performance and aligning contingent hiring with project timelines.
2. Use Analytics for Strategic Insights
VMS platforms provide robust analytics that can guide workforce decisions and uncover cost-saving opportunities.
- How: Leverage VMS data to analyse spend by vendor, role, and region. Use predictive analytics to forecast future talent needs.
- Outcome: Reduce costs by identifying inefficiencies, such as overreliance on high-cost vendors or duplicate roles.
Example:
A healthcare organisation used VMS analytics to optimise vendor utilisation, reducing costs by 12% in six months.
3. Automate Processes for Efficiency
Automation through a VMS reduces manual efforts, minimises errors, and speeds up procurement processes.
- How: Automate requisition approvals, timesheet management, and invoicing within your VMS.
- Outcome: Free up HR and procurement teams for strategic tasks, enhancing overall productivity.
Example:
A technology firm automated contractor onboarding through its VMS, cutting onboarding times by 40%.
4. Align Workforce Strategy with Organisational Goals
Ensure that your VMS supports long-term objectives, such as agility, cost reduction, and compliance.
- How: Set KPIs within your VMS to track metrics such as time-to-hire, contractor performance, and vendor compliance.
- Outcome: Improve workforce alignment with project goals and organisational priorities.
Example:
A financial services company implemented goal-based KPIs in its VMS, improving project delivery timelines by 15%.
5. Strengthen Compliance and Risk Management
A VMS ensures that contingent workforce management adheres to labour laws, tax regulations, and company policies.
- How: Use VMS tools to standardise contracts, track worker classifications, and manage regulatory compliance across regions.
- Outcome: Mitigate risks and avoid costly penalties associated with non-compliance.
Example:
A global manufacturing company used its VMS to automate compliance tracking, avoiding significant fines during an audit.
Bullet Points: Benefits of Optimising VMS with a Total Workforce Strategy
- Enhanced Visibility: Gain a unified view of all workforce categories.
- Improved Cost Management: Identify and eliminate inefficiencies in contingent labour spend.
- Increased Agility: Quickly adapt to shifting workforce demands with data-driven planning.
- Risk Mitigation: Ensure compliance with labour laws and regulations across regions.
- Better Performance Tracking: Measure contractor and vendor performance to optimise hiring decisions.
Conclusion
Optimising your VMS through a Total Workforce Strategy transforms it from a transactional tool into a strategic enabler of workforce success. By consolidating data, leveraging analytics, automating processes, aligning with organisational goals, and strengthening compliance, organisations can unlock the full potential of their VMS and achieve a higher ROI.