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When it comes to supply chain staffing, risk management is always a hot topic, especially when contingent workers are part of the equation. Thanks to technological advancements, more and more companies today are using digital solutions to streamline their workforce management and mitigate risks.
Workforce solutions such as managed service providers (MSPs) and vendor management systems (VMS) are on the rise to help companies with their talent engagement and management approaches. These two solutions, when combined, can reduce organisations’ vulnerability to risk and maintain continuity of their contract workforce.
What is a VMS?
A vendor management system (VMS) is a web or cloud-based application that enables organisations to centralise and automate the procurement and management of their contingent workforce. A VMS covers contractors, service firms working under a statement of work (SOW) and temporary workers.
Key features of VMS are:
- Candidate requisition
- Timekeeping
- Approvals
- Expense management
- Billing
- Reporting
A managed service provider (MSP), on the other hand, is a third-party organisation that is responsible for managing the contingent workforce program of a company.
Key features of MSP are:
- Vendor engagement
- Supply chain management
- End-to-end requisition management
- Benchmarking fees and scope
- Rate card management
- Supplier compliance
- Contract management
- Timesheeting
- Consolidated billing
- Expense management
- Contractor care
- Offboarding
Addressing the compliance risks
The method adopted to keep track of your contingent workforce when sourced either through staffing agencies or business process outsource providers can leave your organisations susceptible to compliance risks.
A VMS solution addresses these issues through:
- Housing all information in one system, enabling you to audit when necessary.
- Providing reminder notifications to ensure crucial deadlines and expiration dates are adhered to.
- Having superior control over approval processes
- Having a single-entry point prevents inaccurate or disjointed results
Technology-based solutions such as VMS and the data they deliver significantly improve the impact and effectiveness of any supply chain risk management program.
Benefits of VMS
A vendor management system offers a wide range of benefits that can enhance the management of your contingent workforce program. These key advantages include:
Rate management
With a VMS in place, you can avoid rate miscalculations or incorrect payments. The vendor management system provides accurate and automated calculations, ensuring that you pay your vendors accurately and on time. This eliminates potential errors and disputes, allowing for smoother financial transactions.
Workflow integration
A vendor management system encapsulates suppliers as part of the workflow, creating a centralised platform where all communication, documentation, and tasks related to vendor management can be handled. This way, potential oversights and miscommunications can be eliminated, making collaboration easier between your organisation and your suppliers.
Tracked onboarding and offboarding
A vendor management system enables you to efficiently track and manage the entire lifecycle of your vendor relationship, ensuring compliance with regulatory requirements and your organisation’s internal policies. You now have greater visibility into your vendor ecosystem.
Application integration
With vendor management system, you no longer need to use multiple applications to handle suppliers and your contingent workforce. A VMS can integrate with your existing applications, such as HR software and financial management tools. This adds value and overall efficiency by allowing data to flow seamlessly between systems and eliminating manual data entry, which can be time-consuming.
So where does an MSP fit in?
While a VMS provides organisations with a holistic view of their entire contingent workforce, it’s the expertise of an MSP that provides consultative insight into the data to enable the organisation to remain compliant, mitigate risks, make strategic hiring decisions, improve the quality of their workforce, and improve their bottom line.
Benefits of an MSP
There are numerous benefits that a managed service provider can offer, including:
Cost savings and visibility
- Rationalisation of suppliers. By consolidating your supplier base, a managed service provider can help you reduce costs, streamline processes, and negotiate better pricing terms.
- Tenure management. A managed service provider allows you to optimise your resources effectively.
- Contractor rate management. You gain control over contractor rates, enabling you to achieve competitive pricing and cost savings.
- Talent pool management. A managed service provider helps you build and maintain a pool of highly skilled talent, allowing you to have the right talent for your open roles.
- Analysis of reports. Through comprehensive data analysis and reporting, an MSP provides valuable insights into your workforce, which can lead to improved budgeting and workforce planning.
Risk Mitigation:
- Direct engagement with suppliers. A managed service provider has direct engagement with suppliers, promoting clear communication, faster issue resolution, and better alignment of objectives.
- Compliance of suppliers and talent. An MSP helps mitigate risks by ensuring suppliers and talent meet regulatory requirements.
- Contract management. It handles all aspects of contract management, from drafting and negotiating contracts to ensuring compliance and timely renewals. This reduces the risk of contract disputes and helps maintain mutually beneficial relationships with suppliers.
- Commercial arrangements. Utilising their expertise, an MSP optimises commercial arrangements with suppliers to maximise value for your organisation.
Vendor neutrality
- No conflict of interest. When an MSP adopts a vendor-neutral approach, it eliminates conflicts of interest and provides unbiased guidance.
- Engaged supply chain. An MSP actively collaborates with suppliers, fostering strong relationships and driving supplier performance, resulting in improved service delivery and customer satisfaction.
- Flexibility to work with suppliers. With a vendor-neutral MSP, you have the flexibility to work with a wide range of suppliers, ensuring access to the best talent and services in the market.
Effective supply chain
- Full supply chain management. An MSP handles end-to-end supply chain management, from initial vetting and assessment of suppliers to ongoing performance management. This ensures the highest standards of quality and reliability throughout your supply chain.
- Vetting and assessment of supplier fit. An MSP thoroughly assesses suppliers to ensure they align with your requirements, culture, and values, mitigating the risk of poor supplier fit or underperformance.
- Supplier performance management. By monitoring and evaluating supplier performance, an MSP enables you to address any issues promptly and optimise supplier relationships to drive operational excellence.
With all these benefits that an MSP and VMS can provide to your organisation, utilising these tools can be a strategic approach for your contingent workforce program. The extensive expertise of a managed service provider and the functional capability of a vendor management system provides organisations with the fundamental business insights required to successfully engage and manage contingent workforce.
A tailored solution for your unique needs
Combining an MSP and VMS can be a game-changer for your organisation’s overall talent strategy. Whether you want to streamline your supply chain or improve your engagement with your contingent workers, CXC offers a customisable MSP solution to meet your specific needs. With this approach, you have the power to select the level of support you need across sourcing, engagement, payment, supply chain management, and compliance.
Speak to our team today and let us guide you towards a tailored solution that meets your unique needs. With our expertise and support, you can navigate the complexities of managing your contingent workforce with confidence and clarity.
