Vendor Management System (VMS)
A Vendor Management System (VMS) is software that coordinates contingent-workforce requirements, vendor submissions, candidate reviews, and vendor performance across multiple staffing agencies. VMS programs are often run by a Managed Service Provider (MSP) at a 3-5% markup on contingent spend, but they can also be self-managed by the hiring company using VMS software directly.
What a VMS does
- RFQ marketplace, a requirement is posted once; multiple approved vendors compete to submit qualified candidates.
- Candidate submissions, vendors submit candidates through a supplier portal with scores and fit justifications.
- Scorecards, vendors are rated over time on fill rate, submission quality, time-to-fill, and interview-to-hire ratios.
- Spend aggregation, the hiring company sees contingent spend across every vendor in one report.
Self-managed vs. MSP-managed
An MSP (managed service provider) runs the VMS on your behalf, manages vendors, posts requirements, screens candidates, at a 3-5% markup on your contingent spend. Self-managed VMS is the hiring company running it themselves using VMS software directly. For programs spending $1M+ annually on contingent workers, the MSP markup can be material enough to justify self-management if you have internal capacity.