12 Vendor Management Best Practices That Actually Drive Results

By Brian Knapp, VP Digital Operations, Kelly

Running a Vendor Management System (VMS) sounds simple in theory: implement the technology, manage your suppliers, control your contingent workforce spend. But after 15 years managing MSP programs and supporting VMS implementations across dozens of clients, I can tell you the gap between theory and execution is where most companies struggle.

Technology is not the problem. The major VMS platforms—Fieldglass, Beeline, FlexTrack, VectorVMS—all have robust functionality. What separates successful programs from failed ones comes down to how organizations approach implementation, adoption, and ongoing management.

An estimated 79% of enterprises with more than 1,000 employees globally were using a VMS by 2023, up from just 50% in 2009. VMS adoption is expanding beyond Fortune 500 companies too—in 2024, an estimated 78% of new VMS contracts were signed by companies that had never used a VMS before, with 60% of this new adoption coming from organizations spending under $10 million annually on contingent labor.

Here are the practices that separate programs that deliver real ROI from those that become expensive shelfware.

1. Secure C-suite buy-in before you begin

This is the biggest failure point I see: HR or procurement champions a VMS initiative, but it never gets real executive support.

Without C-level backing, people find workarounds. A hiring manager has a favorite supplier they've worked with for years, and they'll figure out how to keep using them outside the system. Another department doesn't want to deal with approval processes, so they classify contractors differently to bypass the VMS. Before long, you're back to rogue spend and zero visibility.

Critical Point: The implementation must be holistic across all departments and geographies. No exceptions. That only happens when executives make it clear this is how the company will operate going forward, not a suggestion for people who feel like participating.

2. Don't fight the tool's capabilities

Companies often want the VMS to conform to "the way we've always done it" without considering that their existing processes are probably inefficient.

VMS platforms offer automation and workflows specifically designed to improve outdated manual processes. If you spend all your time trying to make the new system replicate your old spreadsheet tracking, you've missed the point entirely.

Be open-minded. Step back and ask: "What are our actual goals? What problems are we trying to solve?"

Your objectives might include:

• Gaining visibility into rogue spend across departments
• Reducing contingent labor costs by 10% or more
• Cutting time-to-fill from weeks to days
• Achieving compliance with independent contractor classifications
• Consolidating invoices from dozens of suppliers into a single monthly bill

Whatever your priorities, they should drive how you configure the system, not the other way around.

All the major VMS platforms are configurable and can be tailored to specific needs, but you have to be willing to let go of legacy processes that don't serve you anymore.

3. Define your goals before selecting the technology

A VMS program designed for cost savings will be configured completely differently than one optimized for speed-to-hire. These objectives often conflict; you can't maximize both at the same time.

If cost savings is your priority, you'll emphasize competitive bidding, rate cards, and extended vendor response times to ensure you're getting the best price. If speed-to-hire matters most, you'll need a different supplier strategy, possibly with some vendors on retainer or priority access to certain talent pools.

Figure out what you're trying to accomplish before evaluating platforms. Use analyst research from Everest Group and Staffing Industry Analysts to understand which systems excel at different objectives. That helps narrow dozens of options down to the five or six that actually fit your needs.

Market Context: In a recent survey, 80% of organizations said they plan to increase their use of contingent workers in the next 12-18 months. Make sure your VMS selection aligns with your growth trajectory.

4. Match your VMS to your existing tech stack

Integration capabilities matter more than most companies realize initially.

• SAP shops: Fieldglass integrates tightly with SAP's ERP and HR systems
• Workday customers: Often benefit from Beeline (formerly VNDLY) for the same reason
• Salesforce ecosystem: FlexTrack is built on Salesforce platform

Beyond your core systems, factor in geographic footprint and localization requirements. If you operate globally, you need multilingual support and multi-currency handling—billing in US dollars domestically, pounds in the UK, euros in Ireland. Not all platforms handle this equally well.

Bottom Line: The technical architecture you choose will either enable smooth operations or create friction for years. Get this decision right at the start.

5. Demand live demos, not roadmap promises

When evaluating VMS providers, avoid getting caught up in "this feature is on our roadmap" conversations.

Ask vendors to show you their tool from beginning to end—actual functionality that exists today. Walk through a complete workflow:

1. Creating a requisition
2. Releasing it to suppliers
3. Reviewing candidates
4. Onboarding
5. Timesheet approval
6. Invoicing

See what the experience actually looks like for hiring managers, program administrators, and suppliers.

This requires you to share your goals and current processes with vendors so they can demonstrate how their platform would work for your specific situation. But that transparency is necessary to make an informed decision.

6. Be an active partner, not a passive client

Too many organizations implement a VMS, hand it off to their MSP, and only get involved when they're dissatisfied with results.

The best programs have active client participation. Companies that stay engaged, understand what's happening in their program, and contribute to ongoing optimization see dramatically better outcomes.

At Kelly Services, we approach our relationships with VMS providers as true partnerships. We sit on their advisory boards and product committees. We share feedback from our client programs, help test new features, and contribute to product roadmaps. Our clients should take the same approach with us—participating in governance, reviewing performance data regularly, and helping refine the program over time.

Industry Insight: A VMS program isn't something you can set and forget. It requires ongoing attention. According to industry data, about 68% of VMS implementations in North America involve an MSP partner, while 32% of companies self-manage their VMS in-house. Whichever model you choose, active engagement is essential.

7. Invest in training and change management

Technology only delivers value if people know how to use it properly.

Training Requirements:

• Hiring managers: How to create requisitions, evaluate candidates, approve timesheets
• Procurement teams: Rate card management and supplier performance metrics
• Stakeholders: Why new workflows exist and what problems they solve

Address resistance early. People resist change when they don't understand the reasoning behind it. Explain the "why"—how the VMS prevents compliance issues, reduces costs, improves hiring speed—and resistance drops significantly.

8. Use analytics to drive strategic decisions

Most VMS tools provide historical reporting to include what happened, how much you spent, how many contractors you had. That's table stakes.

Recent industry research identified five areas where AI is already improving VMS operations:

1. Supplier matching
2. Statement of Work authoring
3. Rate benchmarking
4. Project risk analysis
5. Buyer behavior profiling to guide better decisions

The real value comes from predictive analytics that help you plan ahead. When you analyze three years of data and notice you hire 30 people in a specific role every October, you can prepare in August instead of scrambling when requisitions come in.

We're building AI-powered functionality in tools like Helix and Sevayo Insights that goes even further. These systems can recommend whether to engage a contingent worker or hire full-time based on the role, location, duration, and market conditions. They can suggest alternative locations where you'll have better success finding talent. They can summarize dashboard data in 30-45 seconds that would take a human 30-45 minutes to analyze.

Track the metrics that matter:

• Time-to-fill
• Invoice accuracy
• Vendor performance
• Rate compliance
• Budget adherence
• Support resolution time

Look for patterns in that data and use them to improve your program continuously.

9. Structure your supplier relationships strategically

A typical MSP program works with 10-12 suppliers depending on size. Larger programs can have 30-40.

Organize suppliers by tier (Tier 1, Tier 2) and skill discipline. Not every supplier needs to see every requisition. Match opportunities to vendors who have demonstrated capability in those areas.

Kelly Advantage: One advantage of working with an MSP provider like Kelly: we leverage relationships across multiple client programs. That gives us negotiating power for better pricing and service levels than a single company could achieve on their own. We also bring domain expertise—if you're in oil and gas, we can connect you with suppliers who specialize in that industry and understand its unique requirements.

10. Use consolidation to create leverage

Competitive bidding is valuable, but it's just the starting point for cost management.

> Volume Discounts

Volume discounts kick in at certain spend thresholds. If a supplier does $1 million in business with you annually, you might get 1-2% rebated. That adds up quickly on large programs.

> Tenure Discounts

After a contractor has been on assignment for a year, you can negotiate a rate reduction—maybe 5% after 12 months. This recognizes that the supplier's cost to support that placement has decreased now that the worker is established.

The key is having enough volume concentrated with select suppliers to make these discounts meaningful. A company working with 50 different staffing agencies, each doing $50,000 annually, has no leverage. The same company consolidating with 12 suppliers each doing $500,000+ can negotiate aggressively.

11. Build compliance and risk mitigation into every workflow

VMS platforms create "arms length" protection for independent contractor compliance. When contractors are engaged through the system with proper classification checks and documentation, you reduce exposure to misclassification lawsuits.

The VMS should enforce required workflows based on your compliance needs. One of our clients—a Class 5 railway—requires a specific background check before any contractor can be onboarded due to safety and security requirements. The VMS won't allow someone to start work without that check being completed and approved.

Industry-Specific Compliance Examples:

• Healthcare systems: Verify credentials and licenses
• Financial services: Extensive background checks and security clearance requirements
• Manufacturing: Safety certifications

Build those requirements into your VMS workflows so compliance happens automatically rather than depending on individual hiring managers to remember.

Risk Perspective: The cost of one major compliance failure—misclassification penalties, co-employment lawsuits, security breaches—can vastly exceed your entire VMS program cost.

12. Expand your VMS beyond contingent workers

VMS platforms originally focused on hourly contractors and temp workers. That's evolved significantly.

Statement of Work (SOW) Management

Statement of Work contracts—where you're engaging a team to deliver a specific project or outcome rather than buying individual hours—now account for 40-60% of contingent workforce spend at many organizations. Your VMS should track this spend, manage the RFP process, monitor project milestones, and handle invoicing just like it does for traditional contractors.

Everest Group reports double-digit growth of SOW spend coming under VMS management post-pandemic, with projections of over 20% compound annual growth rate in SOW management between 2023 and 2028.

Gig Economy Integration

The gig economy is another growing area. Freelancers who aren't represented by traditional staffing suppliers still need a way to engage with your company, submit work, get paid, and disengage when projects complete. Modern VMS platforms are adding functionality to support this.

If your VMS program only tracks temp workers while project consultants and freelancers operate outside the system, you're missing a large portion of your external workforce spend.

You only get out what you put in

VMS technology has matured significantly, but technology alone doesn't deliver results. Success requires executive commitment, clear goals, proper training, active management, and willingness to adapt processes.

Well-managed VMS programs deliver measurable returns:

• 5-15% direct cost savings on contingent labor spend
• Up to 30% savings on indirect costs
• Improved compliance
• Better supplier performance
• Faster time-to-fill

These programs all have one thing in common: they treat the VMS as strategic infrastructure that requires ongoing investment and attention, not a procurement tool you implement once and ignore.

If you approach your VMS program with that mindset—and follow the practices I've outlined here—you'll be well-positioned to gain real control over your external workforce spend and strategy.