Best vendor management system in 2023
In this article, we explore the features and benefits expected of a good VMS in 2023, highlighting the major differences between vendor options, and capabilities.
2023 will slide the workforce design dial ever further toward external workers
- Talent shortages are growing
- Available talent is shrinking
- Businesses are reluctant to factor in long-term commitments into business plans
- Salary levels are declining against inflation, meaning that take-home pay doesn’t go as far as it did previously–encouraging people to take side gigs and second (and third) jobs
Vendor Management Software has grown up
When the gig economy kicked in, organizations realized they could take on long-term and short-term contractors in a myriad of ways, bringing agility to their resourcing.
According to the latest stats from industry watchers SIA, 1 in 3 workers you meet in any corporation are employed by someone else–they just work ‘from’ there.
Contract management is at the heart of a VMS
Want to gain more insight? Read our guide to VMS
Managing vendor relations
It streamlines indirect procurement, in addition to driving out cashable efficiency savings through rationalization of resourcing options, normalization of payment terms, and exposes inefficient ‘hidden’ contingent hiring expenditure within departmental budgets.
Comprehensive dashboard
A good VMS has a centralized dashboard that’s able to automate most aspects of the vendor life-cycle. It meets the challenges of bringing uniformity, control, and method to maximize talent reach while minimizing the operating overheads of a large supply chain. It also helps to formalize (and largely automate) vendor communication through event-driven email automations.
Vendor compliance has risen up the agenda
Today, no contract management solution would be complete without a compliance management feature embedded within it. You will need to make sure your hires have been properly vetted for IC compliance, that they have the necessary insurance, and they’re signed off on policy training.
Make paying vendors a breeze
The best vendor management systems incorporate effective timesheet and expense sheet payment workflows that can be tailored to your sign-off approach. Additionally, smaller payments can be processed automatically if you prefer.
The rise of the Total Talent Management system
To overcome this shortfall, businesses are rapidly adopting alternative supply-chain and sourcing mechanisms—such as Direct Sourcing. In 2020/21, contemporary Vendor Management Systems adapted to support these demands. In 2023, we expect businesses to increasingly rely on talent technology to act as their talent interface.
READ THE NEWTON DAY 2022 RESEARCH REPORT ON EXTERNAL WORKFORCE MANAGEMENT SYSTEMS
Vendor relationship management–one leg of a six-legged VMS pony
Selecting the right VMS for your business begins by recognizing that vendor relationship management is just one aspect of vendor management software systems.
They offer various approaches (besides vendor supply chains) to find and hire external talent. The good news is, the more advanced VMS should include these capabilities in their extended module options.
- Micro-task portals
- Gig workers
- Direct Sourcing portals
- Statement of Work contracting systems and service procurement
- Candidate Engagement portals
Selecting the best Vendor Management System for 2023

1. Cloud-native

2. Natively mobile

3. AI-enabled
Broadly half of the organizations surveyed by McKinsey say they have adopted AI in at least one function and over half of those adopters claimed their use of AI reduced costs.

4. Powered by analytics and personalized data decisioning

5. Brimming with bots
The best VMS solutions in 2023 are filled with intuitive software bots that guide users in completing tasks. It’s especially helpful for new users of the software, meaning less time goes into training. The steps of each task are fragmented into smaller blocks that make the exercise of entering key-fill data less taxing.
Wherever possible, underpinning every activity thread will be a series of software bots doing the heavy lifting—capturing data, making decisions, automating email workflows, checking answers to questions, and validating claims.
They can be used to automate approval processes, create and send emails to vendors and candidates based on timed events. They’re also great for resource tracking and onboarding processes.

Move beyond the VMS with our cloud native talent portal solutions
6. Serves the end-to-end external workforce management lifecycle
Today, various external workforce solutions provide much flexibility. Micro-task portals, such as Fiverr and Toptal, let hiring managers ‘shop around’ for the perfect gig worker for any given task.
Simplify VMS enables you to harness the perks of the gig economy by implementing a direct sourcing portal tailored for your business. Hire temps and talent to get specific tasks fulfilled against a secure Statement of Work contracting solution.

Final thoughts
Outlook
Indirect Procurement professionals might be looking for a system to support vendor management processes, ensure vendor compliance, harvest and manage vendor data, pay vendors, and govern their vendor network.
Meanwhile, HR and External workforce project professionals perceive VMS as the gateway to the external workforce. In this case, vendor management features will need to go further and wider.
Jump-off point
That said, finding the best-fit solution is more complicated than installing brand-new software or rethinking your existing solutions. To get the most from your VMS, you must make sure it integrates with your incumbent systems and software preferences. Otherwise, you might find its performance compromised.
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