The Role of the Vendor Management System in a Changing Labor Market

Imagine you are the VP of Marketing at a large retail company. You just launched a new product and want to create some space on your website to showcase it. However, you don’t have experience in building a website, and your company doesn’t have any resources available to assist you for another few months. What do you do? This scenario occurs daily across businesses globally. Though it sounds stressful, the solution is quite simple: engage the external workforce!

The concept of external labor is not uncommon; individuals have been hired by companies to do work on a contingent basis for 70+ years. In fact, a 2018 study conducted by SAP and Oxford Economics, which examined the responses of 800 executives across 16 industries concluded that:

  • 65% of executives state that external workers were critical to daily operations
  • 83% of executives intend to hire more external workers in the next three years
  • 44% of total labor spend is on the external workforce

While it is clear employers are actively hiring from the external workforce, they do not always have the best tools for full visibility and end-to-end management of those workers. Data is hidden, rate cards are inefficient, the process is de-centralized and compliance is at risk. This is where the Vendor Management System (VMS) comes in.

Related: Register for our webinar “Total Workforce Management 2020: Is your Organization Ready?

A VMS is an application that facilitates the end to end processes of procuring and managing contingent labor (internal and external) from hire to retire.

Let’s try an exercise. How many of these questions could you answer about your organization?

  • How many external workers are currently on assignment for your organization?
  • What is your annual contingent labor and services spend?
  • Who are your highest-performing suppliers?
  • What is your process for determining fair market value for contingent workers in different roles?
  • Are your finance, risk, and HR departments satisfied with current controls in place for engaging and paying contingent workers and service providers?

These questions represent challenges businesses face today: lack of visibility, operational inconsistencies, and strategic misalignment. These pain points have consequences, like higher labor costs, regulatory and compliance risk, and misalignment between operations and business goals. The role of the VMS is to chip away at these challenges and facilitate procurement, external workforce management, and spend management.

SAP Fieldglass Is a Leading VMS

SAP Fieldglass is a cloud-based, open VMS that helps organizations find, engage and manage their external workforce talent, suppliers, and more. With a 99% customer retention rate, it is not shocking that Fieldglass is the industry leading solution according to the most recent Gartner Report..

Across three core modules, SAP Fieldglass offers features including (but not limited to):

  • Job requisitions
  • Candidate selection
  • On/offboarding
  • Time/expense sheets and invoicing
  • Supplier selection
  • Statement of Work Services Spend Management

Fieldglass provides potential benefits across different business units. Legal teams can gain a 25% higher rate of total compliance from reduced risks and improved service-level agreement compliance. Automation, streamlined accounts payable, and a centralized payroll can generate 60% higher cost savings rate. Some companies take the value one step further, by achieving total spend and total workforce management when integrating with SAP Ariba and/or SAP SuccessFactors.

Integration with SAP SuccessFactors gives HR a view of the total workforce, even placing external positions where they fit within the internal organizational chart. Overall, Fieldglass enables its customers to manage the entire external workforce management process, from procurement to invoicing and off-boarding. If the external workforce is a key contributor to your company’s success, this solution will be a good fit.

Join us live on Thursday, February 28 at 11 AM EST to find out more about Total Workforce Management and if your organization is ready. Register here!

By | 2019-02-26T16:09:04-04:00 February 26th, 2019|Categories: Blog|Tags: , |0 Comments

About the Author:

Valeria is an associate consultant for Rizing HCM.

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