What are Vendor Management Systems (VMS)?

Vendor Management Systems are sometimes called Vendor Neutral Systems because they are perceived to provide a level playing field among the many staffing agency vendors.  Vendor Management Systems is (typically) web-based staffing software that handles submittals of candidates by recruiters and staffing agencies for jobs that are posted by a hiring company.   The design of VMS lends itself to achieving a lower bottom-line cost for the hiring company that deals with a large number of contingent staffing providers and has a large and ongoing number of contingent staff to hire because it seemingly fixes the costs of doing business with staffing companies by locking in lower and predictable markup expenses.

man on headset

VMS systems have been around since the early 1990s and have roots to Ford Motor Company.  The promise of VMS is that it will deliver to the hiring company a better cheaper way of doing business with multiple staffing providers because it takes the guess work out of costs by requiring recruiters to submit all candidates for any position through the software.  The software compiles the list of candidates submitted by the recruiters and staffing agencies and streamlines the list of potential candidates and costs for the hiring company.

Some opponents of VMS allege that the process leaves a lot of the staffing agencies that participate in the submittal process at a loss because it prevents them from making lasting relationships with the hiring companies in which they can form profitable and exclusive relationships.  In turn, VMS opponents say this leaves the hiring company with no real allies when it comes to having a go-to partner for finding labor because they are stuck in a neutral type of system requiring many hurdles to jump through if your hiring manager has unique needs.

The costs of VMS vary, but are typically in line with other type of on-site hiring partnerships like MSP’s or Managed Service Providers.  In contrast to VMS, MSP’s are typically one or two vendors that sit onsite at the hiring company’s location and conduct most or all of the process of employment for the hiring company.  VMS could be deployed in this environment too, however one might question how neutral the system could be if you employ a specific agency to conduct the hiring program for which they were also submitting candidates for hire through as well.

This entry was posted in Staffing Insights and tagged , , , . Bookmark the permalink.

Leave a Reply