SI Review: June 2012

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Expert’s Corner

How a vendor management system delivers value to a staffing firm

By Tom Tisdale

Over the past 15 years, vendor management systems (VMS) have been increasingly adopted by organizations and managed service providers (MSPs) in order to help them manage contingent workforces more efficiently. Along with these implementations have come a variety of methodologies for managing VMS programs that differ from organization to organization. Despite the obvious benefits of a formal VMS-driven program, some staffing firms view these programs as restrictive, while others continue to resist acceptance of the VMS technologies used within these programs.

On the one hand, staffing firms recognize that VMS technologies are useful because they provide measurable outcomes that prove customer requirements are being met. On the other, VMS technologies are perceived as obstacles to communication and relationship-building between a staffing firm and its clients. This perception is changing as staffing firms realize that communication restraints are not necessarily caused by the VMS but instead by the policies of the respective MSP that implements the VMS technology. As this reality gains traction, staffing firms are recognizing a better appreciation of the benefits offered by VMS technologies. Some are even capitalizing on their VMS investment by offering additional services to their portfolio clients.

In particular, here are five ways that a VMS can deliver benefits to a staffing firm:

Provides visibility into performance strengths. A VMS gives clients and staffing firms alike a consistent view of workforce quality, productivity and efficiency. In addition, it enables a staffing firm to align to its strength by job category, location, skill, speed or quality of delivery. As such, the VMS makes it possible for a staffing firm to demonstrate to its customer its successes, as well as its unique value add and differentiation via historical data.

Reveals where there is room for improvement. The flip side of proving positive program results is uncovering areas that need to be improved by investing in the business. Sometimes not chasing inefficient business (time to staff, margins, quality) is better than attempting to staff at all. A VMS can deliver insights to help the front office better align with the consistent delivery of high margin returns rather than waste time in inefficient attempts or in delivering poor quality.

Strategic alignment and more jobs. Staffing firms always want to know how they can become better strategic partners with their customer. A VMS makes it easier to demonstrate strategic value as well as reduce the cost of sale. Prior to the VMS, the staffing firm’s reach into the customer was achieved through its sales team. Now, if the firm is truly delivering strategic and optimized sourcing, it should have access to significantly more jobs to fulfill.

Accelerates payments. A VMS provides automated and real-time financial information in addition to automated timesheets and approvals. Further, a VMS should provide integrated financial capabilities to the back office from time entry through invoice reconciliation with the financial system. The result is quick payment which helps with the operational cash flows of the business and a single automated financial system of record.

Enables new service offerings. A VMS can be the backbone of a strategy to build and launch MSP and RPO services that address a strategic transformation. Most independent VMS firms today will partner with a staffing firm to assist in powering or even in launching their MSP/RPO programs.

Benefits aside, there’s a big reason why staffing firms need to reconsider their resistance to VMS. Simply put, a VMS makes good business sense. Budget pressures caused by a still-murky economy will cause organizations to do whatever it takes to ensure that they receive quality, productive people, at competitive market rates, and on a timely and efficient basis. The VMS is a key mechanism for ensuring this success, and staffing firms that don’t embrace the technology will lose out to competitors that have.

Tom Tisdale is senior vice president, North American VMS sales, at Peoplefluent. He can be reached at tom.tisdale@peoplefluent.com.

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