How to choose a vendor management system: for contingent labor and suppliers
What a vendor management system is, the two common meanings (contingent workforce and supplier management), the features that matter, compliance points and questions to ask before you buy.
In shortA vendor management system (VMS) is software that helps you source, onboard, track and pay outside providers. In workforce management, a VMS usually means a platform for managing temporary and contract labor supplied by staffing agencies. In procurement, it can mean software for managing suppliers and contracts. Choose a system by deciding which problem you are solving, mapping how requests, approvals, timesheets and invoices flow today, checking compliance features such as insurance and classification controls, and testing it with the agencies or suppliers who will use it.
Co-employment, misclassification, overspending on rates
Supplier failure, compliance, contract leakage
Many businesses use the term loosely. Be clear internally about which problem you are solving before talking to vendors. For a broader view of temporary labor, see our contingent workforce management guide.
Joint employment: depending on how much control you exercise, you may share responsibility with a staffing agency for wage and hour compliance.
Hours and overtime: agency workers who are non-exempt must be paid for all hours worked, and overtime may depend on total hours across assignments.
Safety: OSHA guidance treats host employers and staffing agencies as sharing responsibility for temporary workers’ safety.
Tenure limits: many companies set limits on how long a temp can stay on assignment, as a policy choice.
Check official DOL and OSHA guidance and get legal advice for your situation.
Onboarding temps safely and quickly
A temp’s first day is often their riskiest. Whatever system you use, make sure each agency worker receives site-specific safety training, the right protective equipment and a named contact before starting work, and that this is recorded. Agree with each agency in writing which training the agency provides and which you provide on site. A VMS can track these items, but the routine needs to exist first: a short checklist the supervisor completes for every new temp, and a rule that nobody starts work until it is done.
Measuring program health
Fill rate: the share of requests filled on time.
Time to fill for each role and agency.
Early terminations and no-shows by agency.
Invoice disputes and corrections per month.
Average tenure on assignment and conversions to permanent hires.
Safety incidents involving temporary workers, compared with employees doing similar work.
Questions to ask vendors
Which of our workflows do you support out of the box: requisitions, onboarding, time, invoicing?
How do staffing agencies join, and what does it cost them?
How is worker time captured and approved, and can it come from our existing time clocks?
How are rate cards and markups enforced?
What compliance documents can be tracked with expiry alerts?
What does pricing look like: per worker, percentage of spend or flat fee?
Can we export all data, including invoices and timesheets?
Do you need a VMS at all?
A full VMS is usually justified when you spend significant amounts with several staffing agencies across many sites. Smaller businesses using one or two agencies often get further with clear agreements, a simple approval process and accurate time records for every temp, matched against agency invoices each week. If agency invoices regularly differ from the hours your managers saw people work, fix time capture before buying a larger platform.
How to run an evaluation
Map one complete cycle: a manager requests a temp, the agency fills it, the worker clocks in, time is approved and the invoice is paid.
Count the handoffs, emails and spreadsheets in that cycle today.
Ask each vendor to demonstrate the same cycle with your data.
Involve one or two of your agencies in the demo.
Compare total cost, including fees charged to agencies, which often come back to you in rates.
Common mistakes
Buying a large VMS for a small temp program.
Letting agencies submit time that no site manager has checked.
Ignoring onboarding and safety training for temps.
Assuming the agency carries all legal responsibility.
Rolling out a VMS without training site managers to approve time daily.
Negotiating rates once and never reviewing them against market conditions or agency performance.
A short example (fictional)
A food distributor uses three staffing agencies to fill warehouse shifts across two sites. Invoices regularly include hours that supervisors dispute. Rather than buying a VMS, the company has every agency worker clock in on the same kiosk as employees, supervisors approve time daily, and the weekly approved report is sent to each agency before it invoices. Disputes fall sharply, and the company revisits a VMS a year later when it adds four more sites.
Where EZTime fits
EZTime is not a VMS or procurement system. It helps with the time side of contingent labor: clock-in for agency workers by mobile, kiosk or NFC, supervisor approval, job and client tagging, documented corrections and reports in PDF and Excel that you can match against agency invoices. Staffing agencies can also see our staffing agency software guide.
Frequently asked questions
What is a vendor management system?
Software that helps manage outside providers, most often temporary and contract labor from staffing agencies, or suppliers in procurement.
What is the difference between a VMS and an MSP?
A VMS is software. A managed service provider (MSP) is a company that runs your contingent labor program, often using a VMS.
Does a small business need a VMS?
Usually not. Clear agency agreements and accurate time records often solve the main problems.
Who is responsible for agency workers’ safety?
OSHA guidance treats the host employer and the staffing agency as sharing responsibility.
Can agency workers use our time clock?
Often yes, and it helps reconcile invoices. Agree on the process with the agency first.
Who pays VMS fees?
It varies. Some are paid by the buyer, some by agencies, which may pass costs back through rates.
Disclaimer: This guide is general information only and is not legal advice. Classification, joint employment and safety rules depend on the facts. Check official DOL and OSHA guidance or consult a qualified professional.
