How can a VMS help a company’s purchasing department?

Year after year, intellectual services purchases are becoming increasingly important in corporate budgets. Therefore, organizations must implement appropriate management tools to monitor their expenses, evaluate the performance of their suppliers, and optimize their processes.

Among the existing management tools, the Vendor Management System (VMS) is the ideal solution for managing intellectual service purchases for large companies.

So, what problems can a VMS solve? What are the main features? Should your company equip itself with a VMS? All the answers are in this article.

Purchasing intellectual services, a category of purchases that is difficult to manage without an appropriate tool

The purchase of intellectual services is a particular category of purchases: we do not buy the assistance of an IT expert or a strategy consultant as we would buy raw materials or office supplies, for example.

First, there is a particular legal framework with significant legal risks, such as the offense of bargaining or the requalification of an employment contract. But also because a substantial shortage of skills characterizes the market. This makes sourcing more complex and involves loyalty and employer branding issues, which need to be included in other purchasing categories.

Finally, purchasing intellectual services involves a vital human aspect since it concerns the purchase of know-how and expertise. This creates particular problems in terms of supplier relations and performance evaluation.

As a result, generalist purchasing solutions only meet some of the typical challenges of intellectual services purchasing. Functionalities designed to manage more “traditional” purchases do not meet the needs of these intangible purchases. Companies that spend money on intellectual services need to use a dedicated tool.

What is a VMS?

The VMS, a management tool for the purchase of intellectual services

A VMS is a digital purchasing solution specialized in intellectual services, which allows a company to manage all its outsourced labor needs, such as freelancers, consulting firms, or ESN (digital services companies).

A VMS generally takes the form of SaaS software with a subscription system. It can be integrated into the company’s information system and synchronized with internal applications.

What are the functionalities of a VMS?

Each VMS has different functionalities, but generally, such a tool allows to digitize of the whole source-to-pay process:

  • Sourcing, with the ability to publish tenders, manage applications and select the best suppliers
  • Contract management, with a centralization of all suppliers’ legal documents
  • Mission tracking, with the integration of a system of Activity Reports (ARC) or Timesheets.
  • Payment of service providers, with centralization of invoices
  • Reporting and performance tracking, thanks to targeted KPI tracking and access to customized dashboards.

For which types of companies is a VMS a suitable solution?

A VMS is a solution adapted to companies of a specific size that record a significant volume of purchases of intellectual services. It allows them to gain agility and efficiency by digitizing a large part of their processes.

For small companies or those with limited purchasing needs, the need for a dedicated tool is less. Management can generally be done with straightforward tools and processes such as Excel or email exchanges.

The benefits of a VMS for a company

Centralization of all information

A VMS simplifies access to all information related to purchasing intellectual services: supplier data, legal documents, CRAs, invoices, key indicators, etc. It takes the form of a cockpit and allows purchasing to gain visibility to play the role of an orchestra conductor.

Save time and efficiency in the purchasing process.

A VMS can automate many small, laborious tasks, such as managing validation requests, sending contracts, or paying supplier invoices. This saves time and makes exchanges between suppliers, purchasing, business, and finance more fluid. All of which improves the productivity of all these stakeholders.

More efficient supplier panels

A VMS is a beneficial solution to rationalize and dynamize your supplier panels. Indeed, thanks to such a tool, it is easier to follow the performance of its suppliers to challenge them. It is also easier to compare different responses to a call for tenders. Exchanges can also be made more fluid thanks to integrated messaging systems.

Better budget control and cost reduction

A VMS allows us to gain visibility on expenses and optimize them. It can, for example, offer the possibility to define price lists and negotiate with suppliers via a dedicated module. This allows the company to make savings.

More reliable reporting

A VMS centralizes all the information and facilitates access to data by making it possible to monitor specific KPIs, such as the evolution of rates. The possibility of consulting these KPIs in a dashboard or via data visualization modules allows you to move from simple monitoring to steering and making informed decisions.

Time savings, financial gains, reduced risk of errors, more fluid exchanges… a VMS is a tool that offers many advantages for companies with large purchases of intellectual services. It is a tool that allows buyers to focus on the strategic aspect, bring more added value to the business, and play a fundamental role as business partners.

Looking for a VMS solution for your business? Discover LittleBig Rise, an all-in-one platform for large groups who want to manage and control all their external services in one place