What Are Vendor Management Services and How Are They Beneficial?



Vendor Management Services (VMS) are a mechanism for business used to procure and manage employment services (temporary or permanent), as well as outside contract or contingent labor. VMS evaluates third-party providers of goods and services, supervises day-to-day interactions and manages long-term business relationships.

Often, companies with multiple locations (offices, plants, warehouses, etc.) have difficulties obtaining and managing contingent workforces. Working with a company that provides VMS will enables understanding and proactive management/control of the costs of delivery of payroll, benefits programs, and Human Resources. VMS providers essentially act as an intermediary between a company and vendors (ranging from employment agencies to service providers). They supply negotiation while monitoring substance of contracts, maintain contact with current vendors, and reach out to vendors with which the company has not yet worked.

Comprehensive VMS programs facilitate and ensure quality business practices with existing vendors, provide employee contact services, vendor governance, and understand and reduce risk in the work environment. Typical features include consolidated billing, order distribution, and enhanced reporting system capabilities. Most VMS providers have internet accessibility for their clients, which is where a company can place and monitor requisition orders, review scheduling, and easily communicate with the VMS provider.



The benefits of utilizing VMS are exponential when considering business management.


Vendor Management Services provide:

  • Effective management of multiple vendors and service providers with decreased risk
  • Proactive management of issues before becoming problems (reacting to a problem takes more time and resources than addressing an issue)
  • Coordination of vendor performance expectations with business strategies, while enhancing communication and accountability
  • Ensure vendor processes/policies are compliant with the company’s requirements for federal or state regulations
  • Regarding VMS for management of contingent labor, the benefits naturally vary from business management, but are still quite valuable.
  • Streamlined requisition workflow
  • Reduced time-to-fill requisition periods
  • Bill rate standardization and management
  • Optimization of supplier base
  • Consolidated invoicing
  • Performance metrics for vendors
  • Reduction in contingent labor workforce spending