What is a Vendor Management System? An In-Depth Guide

Staffing Industry Analyst (SIA) reports, 80- 85% of the companies with more than 1000 employees use a Vendor Management System. They further describe VMS as a crucial tool for business growth and clarity. 

Why do more than 80% of successful large companies have to rely on VMS software? Because of the competitive advantage it offers. Okay, not just that. 

From centralizing vendor information to managing risks and compliance, vendor selection, cost control, time management, and more. Powerful vendor management does it all. In this blog post, we are going to convince you to need a powerful proactive Vendor Management System to scale and grow. Let us dig in. 

What is a Vendor Management System (VMS)?

A VMS, also known as a vendor management system, is a suite of tools that is designed to streamline the process involved in the management and relationship of the company with its vendors or suppliers. 

To put it more clearly, a VMS simplifies and centralizes almost everything- From Workforce management to accounting, finance management, resource management, and procurement for the company. 

From onboarding vendors to making communications easy and effective, VMS helps the vendor and the enterprise maintain and improve relationships. It further helps you: 

1. Plan Project 
2. Record the workflow
3. Control cost 
4. Manage finance 
5. Manage risk 
6. Offer transparency. 

What is VMS in Recruitment?

Onboarding the right talent is increasingly becoming hard for the company. One right talent is equal to 10 lousy talents. VMS software helps make the recruitment process easy and straightforward for both the company and the potential employee. 

It takes care of highlighting job requirements, expected skills, etc., If the Vendor is going with a hiring agency, VMS can help them filter the right talent. 

Hiring managers can review, compare, and select qualified candidates to transfer them to the next step. Both parties can also track their status with VMS software. 

It also takes care of the post-hiring work. From raising invoices to attendance tracking, the right VMS software helps the company manage staffing, training, meeting, and payment well. 

Features of a Vendor Management System

With too many great features, the Vendor management system is designed to make the mundane, high-impact, and low-impact regular process of the company more straightforward and automated. Having said that, let us quickly look at some of the features you have to look at while choosing a Vendor management system. 

1. Vendor Onboarding: If you dont know already, onboarding a Vendor to the VMS is a one-time process. With the necessary details provided, it is easy to communicate, raise invoices, and share payments. 
2. Contract Management: Gone are the days when you had to deal with raising and signing contracts manually. With a good Vendor management system, creating, storing, and managing vendor contracts are very simple. 
3. Manage Performance: A good VMS helps you and the vendor maintain transparency and clarity by tracking the budget, work progress, quality of the work, etc., 
4. Manage Risks: With real-time data and analytics, you can foresee the risks and troubleshoot them instantly. If you face with non-compliance or finance issues, VMS could help you sort it out. 
5. Invoicing and Payment: VMS helps you with all the accounting processes. You dont need to invest in any other accounting software. With VMS you can raise invoices, and approve and process payments.
6. Reporting and Analytics: Data-driven decision-making is very important for a business’s scalability. VMS provides all the transparent details into the amount and resources spent, performance tracking, etc., 

Benefits of Using a Vendor Management System

Now that we understand what is a Vendor Management System, let’s explore the benefits it brings to organizations:

1. Efficient Workflow: Almost all the nitty-gritty things of your business get automated so that you can save time, money, and effort. This also helps in minimizing errors as manual work creates too many issues. Instead of spending your energy on these little admin tasks, you can work on strategic tasks to improve your business.
2. Save Money: VMS extracts all the details about how much you spend, how you can save, and how to negotiate with your clients. You can save a lot of money when you invest in high-quality VMS software. 
3. Avoid Risk: Risks are unavoidable. But with VMS, you can foresee risks in your business and also vendor. You can identify potential risks and work on avoiding too much damage. 
4. Centralized Data: With VMS, you dont have to have a paper record or multiple software to record, track, and maintain data. VMS does everything. You can centralize almost all of the admin tasks to avoid any confusion in the future. This promotes accurate data and informed decision-making. 
5. Scalability: VMS extracts real-time data and lets you see future challenges and opportunities. Using these, you can spend your energy on opportunities that will help you scale your business. 

Checklist to Implementing a VMS

Here’s the checklist you need to follow to implement a successful VMS. You can use this anytime to set your VMS right and extract every last ounce of benefits from it. Here, take it: 

1. Find your goals-Project planning, Communication, Time and Cost saving, etc.,  
2. Set objectives – Save more time, Reduced risk, etc.,
3. Hire a tech person to make things easier (a project manager is also preferred) 
4. See how the platform works- look for its features and unique benefits that will help your company
5. Involve representatives from your investors
6. Select the right VMS- Check if it will work by going free trial 
7. Set up a timeline, budget, and resources, for the project 
8. Migrate data
9. Train your employees to use the VMS
10. Work on issues and bugs if any. 

Conclusion

See, how simple it is to use a VMS. You dont have to complicate things. With the right VMS software, you can reach your business goals faster than ever. What if we can make things more straightforward for you? If we give you the software that has all the above features, and every benefit and more? 

Well, ProLegion helps you reach your business goals in no time. ProLegion is a cloud Vendor Management System that is designed to streamline your admin tasks.