Vendor Management System - Introduction2

Property of the Corris Consulting Group 1

Agenda

Overview

Key Definitions

How Does It Work

Value Add Enhancements

Market Conditions & Trends

Challenges

Savings Opportunities

Best Practices & Benchmarks

Team Members

Team Member Roles & Responsibilities

Questions


Overview of Vendor Management Systems

A vendor management system (VMS) is a web-based application that facilitates the requisitioning and procurement process of filling temporary staffing requirements.

Typical features of a VMS application include human capital requisitioning, order distribution, and consolidated billing, in addition to very significant enhancements in reporting capability which outperforms manual systems and processes.

A classic system tracks costs and can integrate pertinent data into the existing owner’s ERP system.


Key Definitions

Vendor Management Organization (VMO)

• The body of policies and procedures that surround the VMS software. The VMO can be either managed internally by the client or outsourced to a third-party, such as a Managed Services Provider (MSP).

MSP – Managed Services Provider (MSP)

• A company that typically partners with a VMS provider and maintains an on-site program management presence.

Vendor on Premise (VOP)

• Typically an on-site management solution, provided to a client by the primary staffing provider, whereby the suppliers' representative(s) acquire and manage contingent workers.

Primary Vendor(s)

• Refers to the direct contractual relationship between a consulting vendor and the end client. A typical vendor management program will have a number of primary vendors, but there can be one primary vendor who can then use sub-vendors.

Sub-Vendor(s)

• Those staffing firms that work through a primary vendor.


How Does It Work?

Essentially a requisition system for people.

Routes requisitions to either HR, Procurement, or Finance to ensure funding is available before sending

requisition to the vendors.

Routes the approved requisition with specific requirements to pre-approved vendors.

Once interviewed and approved the Hiring Manager creates an Engagement document within the VMS, which

constitutes an offer letter.

After the candidate accepts the offering, the VMS becomes the Time & Attendance application for time

reporting and Hiring Manager approval.

After the time submission is approved by the client, an Invoice is automatically system generated.

The Invoice is paid by the Client to the MSP, who in turn pays the respective sub-vendors.

Slides follow to show a pictorial view of the process


Link2consult, Inc. 1 Bridge Plaza Suite

Administrator

Hiring

Manager

Purchasing

Administrator

Recruiter

Vendor-sideClient-side

Sales

Recruiter

Generic User Roles

Link2consult, Inc. 1 Bridge Plaza Suite 275 Fort

Lee, NJ 07024 201-849-4418

Procurement Module1) The hiring manager creates a Requisition (REQ) for a staffing need

and obtains approval; or creates REQ in B2B e-Procurement app.

2) After necessary approvals are obtained, data is exported…

…and a more detailed REQ is created within Link2consult.

Customized Selection Criteria

REQ Publish

Vendor 2

Vendor 3

Vendor 4

Vendor 1

3) The REQ is then “wrapped” with customized selection criteria supplied by Link2consult’s value-added service partners. 3a) Background checks are associated with the REQ to ensure all hired contractors are screened according to (client) company policy. 3b) Skills tests are then specified, allowing the hiring manager to objectively assess the technical skills of all submitted candidates. Once completed by the Hiring Manager, the REQ is published and the MSP or VMO is notified for review and distribution to Vendors.

Reference checks

Education Verification

Credential Verification

Criminal Records check

SS# Validation

Driving RecordsBackgro

und C

hecks

REQREQ

REQtemplate

REQexisting

REQblank

HiringManager

Approved Staffing VendorsClient


Lee, NJ 07024 201-849-4418

Engagement Module


Reference checks




SS# Validation

Driving Records

Backgro

und C

hecks

REQ

C++JavaJavascriptVisual BasicVisual C++SQL ServerOracle DBANotes/DominoCORBASAP BasisSAP ABAP/4PeoplesoftHTMLWindows NTWindows 2000Linux

REQ

Java

HTML

Vendor 4

Vendor 3

Vendor 2

Vendor 1

The hiring manager creates an Engagement document by clicking “Make Engagement Proposal” at the top of the candidate’s profile.

HiringManager

Engagement

Bill rate

Start date

End date

Timesheets

xxxx

xxxx

Client


Lee, NJ 07024 201-849-4418

Engagement Module


Reference checks




SS# Validation

Driving Records

Backgro

und C

hecks

REQ


REQ

Java

HTML

Vendor 4

Vendor 3

Vendor 2

Vendor 1

When all Pre-employment checks are completed successfully, the contractor arrives at the worksite and is “On-boarded.”

HiringManager

Engagement

Bill rate

Start date

End date

TimesheetsPurchasing

Manager

xxxx

xxxx

xxxx

Rate Reviewand Approval

Contractor

Vendor 2

On-boarded

Client


Lee, NJ 07024 201-849-4418

Engagement Module


Reference checks




SS# Validation

Driving Records

Backgro

und C

hecks

REQ


REQ

Java

HTML

Vendor 4

Vendor 3

Vendor 2

Vendor 1

Payment of the Invoice is then made by the client to the Managed Service Provider (MSP), the MSP pays vendor less a service fee.

HiringManager

Engagement

Bill rate

Start date

End date

TimesheetsPurchasing

Manager

xxxx

xxxx

xxxx

Vendor 2

Rate Reviewand Approval

Timesheet

TimesheetReports timeper project

Contractor

MSP

ClientPayment of Total Invoiced Amount less fee

Invoice

Service Fee

Control of hiring process and utilization of contract labor

Ease of contractor identification and assignment details

Ability to manage engagement end dates and notify Security

Ability to review pay/bill rate information

Enhanced time entry/approval system

Tracks history of assignments and rate changes

Better control of assignments including 30 day break policy

Ability to edit work locations on active engagements

Formal documentation and historical tracking

Ability to report on contractor population by business unit, location, and manager

Consistent on-boarding process (includes backgrounds, drug screens, insurance verification, etc)

Online testing and assessment functionality

Accessible from any mobile device

Valued Added Enhancements


In October 2013, Forrester wrote about four trends:

globalization of talent and needs as many companies have staff needs in several countries

a more sophisticated understanding of “contingent” in that the end user defines project vs.

contingent labor putting their companies in legal jeopardy without a corporate policy with concise

definitions

inclusion of SOW work into contingent programs

separation of VMS software and MSP services as the majority of companies surveyed split their

VMS selections from their MSP decisions

Most firms use vendor management systems (VMS) to address the contingent worker process and

automate as much as possible

Companies spend roughly 20% of their IT budgets on all nonpermanent labor

All the VMS suppliers have increased their capabilities in the area supporting projects that include those

that are fixed scope and fixed price

Other Trends

Fieldglass was purchased by SAP in 2014

International Business Machines Corp. purchased Emptoris Inc. in 2011.

Market Conditions & Trends

Source: Forrester Research, Inc. 2013


Challenges

Potential resistance for vendor participation

Lack of management support and enforcement

Willingness to make exceptions to processes, metrics, and

participation

Complexities for training all necessary personal for an

enterprise rollout


Savings Opportunities

A reduction in Supplier mark up by 15% can reduce billing rates

by 11.5%. On $5M in annual staff augmentation spend, the saving

would be $575,000

Savings can also be generated by benchmarking prevailing pay

rates. Past experience has shown about a 5% reduction or an

additional $500,000 per year on a $5M annual spend.

Soft cost reductions in reduced financial administration because of

vendor consolidation, invoice processing, and check production


Best Practices & Benchmarks

Area of

OpportunityIndustry Average Best Practice

Policy Contract labor procedures are formalized.

Agency and line manager tasked with

oversight of compliance.

Formal policy supported by informed

and empowered hiring managers,

recruitment/sourcing specialists, and

contractors.

Governance Divisional-based or geographical-based

decisions for contract labor spend.

Governance encourages compliance.

Centralized contract labor program

utilizing an intranet and distributed

access tools. Governance enforces

compliance.

Spend Visibility Limited visibility into contract labor

expenditure. Some visibility into

compliance before awarding contract

labor position.

Visibility into more than 60% of

spend, access to ad hoc and real-

time reports and proactive

compliance alerts & actions.

Automation Multiple fragmented sources of

information. Heavy reliance on agency

and manual reconciliation.

Use of online requisitions, time and

milestone tracking and invoice

reconciliation solutions. Leverage of

automated sourcing where

applicable.

Sources: Best Practices of the Most Effective Workforce Management Solutions, Allegis Group Services, 2010. Property of the Corris Consulting Group 15

Team Members

Project Champion - EVP of HR

Co-Project Champion - Director of Procurement

Director HR – Communicated Contingent Worker Policy and

Training that introduced the VMS

Team Leader – Procurement Category Manager

Handled all external vendor communications and negotiations

HR Team Members

HR Managers in various domestic locations to assist in regional

training sessions change management at their given localProperty of the Corris Consulting Group 16

Role Responsibility

Project Champion Assist in identifying and securing team member participation Identify Ensure stakeholder participation Obtains Executive Leadership Team approval Clear roadblocks Mediate issues/gain consensus on key decisions Participate in relevant meetings

Procurement

Project Leader

Leads team through continuous improvement process and facilitates team meetings Facilitates all supplier communications Reports issues to the appropriate resource Creates decision criteria required to evaluate vendors Responsible for vendor selections and final recommendation Prepares resulting contracts or service agreements prior to Legal review and acceptance

Human Resources

Policy & Communications

Develops Contract Labor Policy Establishes approval hierarchy and VMS workflow process Enterprise communication of the new process Ensures departmental headcount and related budget

Team Roles & Responsibilities


Vendor Management System - Introduction2

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