Shopping around for business software can be overwhelming. Google search results can feel like walking down a market street bazaar. Search results act as market vendors displaying their fresh produce and shouting at you to buy here. Therefore it can get very generic and overwhelming quickly. And when pretty much every software vendor claims to offer an all in one solution, it can feel like every solution offers a _____ (fill in the blank) management solution. So why do you need another software solution to manage your vendors?
The answer is you don’t, until you do. Vendor management tools should offer a unique set of features that help you improve the unique way you communicate with vendors. Similarly, the end goal of making this process more productive than whatever you’re doing now. So what are these unique set of features? Below, you’ll find a comprehensive guide to choosing the vendor management software that is right for you.
1. What is a Vendor Management System Software?
2. How to choose a vendor management software for a small business
3. Top 12 vendor management software
4. Top 3 vendor management software – based on functionality
What is a Vendor Management System Software?
Put simply, vendor management solutions are a type of software (or service) that serves as a communication, project, and payroll management system for companies employing contractors and freelancers.
Vendor management softwares serve three main functions:
- Vendor Engagement – Effective and accessible communications channels that allow for quick and easy interaction between managers and the contractors they work with.
- Project Management – A convenient tool for task assignment, process tracking, work coordination and other functionalities of an agile project management and collaboration platform.
- Payroll Management – Simple and efficient processes to organize vendor and contractor payments, contracts and expenses.
Why do I need a vendor management software? (And why now?)
First, a necessary clarification. There are various types of vendor management software vendors that are focused on serving different customers need. For the purpose of this post, we’ll focus on vendors within the field services industry.
The reason we’re focusing on field services is because many of Connecteam’s users are from the field services industry and we want to provide relevant content. Second, remote and mobile workers are hard to manage. Even when they are committed full-time employees. So managing a workforce that is both contingent and remote, is doubly challenging, or perhaps tripled.
When you choose to use a vendor management software, you gain an important benefit: cutting costs. We might as well stop here! We kid. You can avoid paying that pesky above-market pay rate and even supplier markups. Should we mention you can leverage your reporting to examine current spending? Ah, so we’ve got you! Statistics say that on estimate, 60%-80% of business spend on vendors. When you have an understanding of where all your dough is going, that’s crucial to identify where costs can be lowered. After all, at the end of the day, it is all about the money.
Our economy and work processes are moving rapidly in the general direction of task-based, mobile employment. Some like to call it “the Uber economy” and it is personified by “millennials”. Now, I’m not one for buzzwords but, in this case, they happen to be the best general term. Think about it. Let’s describe your average gig-economy contractor today – young, techie, mobile, independent but motivated.
This growing source of specialized labor, talent, and skill can prove to be a very strong resource. However, it’s also a leadership challenge. Your vendors are different than your full-time employees. They’re different from your material or product suppliers, and they’re not quite like B2B service providers. They are a unique combination of all three, and as such, demand a different approach and toolset.
One of the best examples of an industry that demands effective vendor management to function is construction. The majority of the manpower involved in construction projects are independent contractors, unfamiliar with the employing company and its policies. In addition, their level of competency varies, and it’s usually difficult to predict.
Construction workers don’t sit in an office – they are out there, doing their job. So when managers need to communicate, assign tasks, and measure their effectiveness with almost no face-to-face interaction, certainly it is a challenge. Seems like without a proper vendor management software, this can turn into a very pricey shouting match across the construction site.
How to choose the vendor management software that’s right for smaller businesses
There are dozens of vendor management solutions to choose from. Even if you try and narrow it down to those suitable for small businesses. So before you can choose a vendor management software, think about this. First, you need to define what needs this system will serve. Then, think about what functions it can perform to make your business run smoother and save costs.
Once you strategically manage your vendors, you can quickly identify areas for consolidation, compliance gaps, and performance management. When you know all that, you can guarantee that you’re getting the most value from your vendors. You need to be able to reduce risks and make better, smart decisions. That all starts with the right vendor management software.
Obviously, every business has its own requirements, and no one knows your business like you do. But, there are more than a few demands that are true for every business:
Ease of use
Having a great tool no one uses is almost worst than having no tool at all. When selecting a solution to manage your contractors, make sure it’s one managers and team leaders will actually work with. You don’t want to end up investing too much time and money in getting your managers to use a system that is supposed to help save time and money. If it’s too complicated and no one is using the system, you’ve only wasted everyone’s time across the board. And that’s the last thing you want to happen,
Ease of deployment
Purchasing additional equipment, training your contingent workers how to use of the system and other steps involved in the deployment of any business software tool, can end up putting a strain on your workflows and budget. Make sure the tool you choose is cost effective when you consider ALL the variables. Among them is the speed of deployment, especially if you have a rapidly growing business that needs a vendor management software yesterday.
Compatibility & integration
Your Vendor Management Solution doesn’t work in a vacuum. In needs to integrate with other systems in your business. Consider what systems your vendor management software needs to interact with, and plan this process well before choosing the right solution for your organization.
It’s important to choose a system you’ll be comfortable using, and your work managers like. But if your contractors and freelancers are not equipped to use it – you’ll have a problem. Think about your vendors’ habits, behaviors, and their uniqueness, both as individuals and as a group.
Payroll & work hours logging
If you already have an existing payroll system, you might want your vendor management software to integrate with it, to keep everything in one place. You might also want to use a built-in time clock to track your contractor’s billable hours, so you’re never surprised at the end of the week or month. If these are features you need, look for them when choosing a VMS.
Compliance & regulations
Some industries require specific processes to comply with local legislation and regulations. Banks, construction projects and medical fields are just a few of the many that demand a vendor management software with support for specific functions, workflows and training procedures. Make sure your vendor management software service of choice answers these demands.
Qualification, training & onboarding
How will your vendor management software solution work with your established hiring, training and onboarding processes for vendors? How will it make them more effective (and cost-effective) to execute? If you want to use your vendor management software to recruit vendors, train and onboard them properly before giving them tasks, consider these features to include in your list of requirements.
If your business happens to be an apple orchard, where the task of your contractors is pretty similar (pick apple, put in box), you might not need a project management feature in your vendor management software. However, if your vendors can be assigned to different tasks according to their skills and abilities, you should employ a vendor management software that lets you manage workflows, preferably with pre-made templates to allow for quick customization and deployment.
Communication, collaboration & engagement
You want your vendors to spend time doing what you pay them for, and not trying to understand tasks or wasting their work-hours doing something that is not quite what their manager meant when they assigned a task to a contractor. To keep things clear, allow for effective collaboration and interaction between vendors and their team leaders. You might also want to keep your vendors engaged with company culture and activities, offer professional development resources and more. If so, it’s important you focus on the communication features of your vendor management software, rather than just administrative capabilities. When you have streamlined communication, everyone wins.
Security & reliability
Peace of mind is one of the most neglected criteria when selecting a software solution of any kind. Which is a shame. Many more managers would have thicker natural hair if this was a consideration. Imagine just how much hair you would lose if your vendor records vanished, got hacked or altered by unauthorized users of the system? Don’t overlook these nightmare scenarios, and choose the vendor management software to keep your hairline where it is (as much as possible) with a solution that offers stability and security.
Or you could just take our word for it, skip all the intro, and start reading here. If you’re just joining now: Hello! We checked dozens of vendor management softwares (so you don’t have to), and here are the best ones for small businesses like yours.
Top 12 VMS
This award-winning global payment automation solution is your end-to-end payroll and supplier management system, and more. It can help you organize the administrative side of employee, vendor and supplier payments, from onboarding to tax compliance, all in an online cloud-based solution.
Who it’s for: Businesses looking to manage their payroll and streamline other payment processes.
Pricing: $850 per month plus a flat per transaction fee that varies according to the payment method the payee chooses.
A mobile-first solution for managing and engaging your vendors and contingent workers. The Connecteam solution includes a comprehensive manager dashboard, pre-made templates and workflows, built-in time clock with geo-tagging capabilities and extensive integration with payroll management systems.
Who it’s for: Small to medium businesses looking to effectively onboard, manage and communicate with vendors.
Pricing: Have your entire team on Connecteam for a fixed monthly price: starting at $29-$72 every month for up to 200 users. If you need more than 200 users, there is an Enterprise plan and it’s also available for a fixed monthly price. Start a free 21 day trial now.
This online tool is built for managing projects with teams of freelancers, issuing payments, managing invoices and tracking vendor performance and qualification. It’s accessible online, and allows vendors to manage and update their profiles.
Who it’s for: Companies employing over 50 freelancers or vendors for project-based work and need an internal directory, project management tool and invoicing capability.
Pricing: By quote
ProcureWare is a supplier management, sourcing, bidding, and contract management software-as-a-service. Supplier management features support the creation of a customized supplier self-registration process, allowing centralized access to a searchable, up-to-date supplier database.
Who it’s for: Organizations looking to automate vendor diversity and allow for vendor project bidding.
Pricing: By quote
Beakon for small business is a modular system to manage safety, risk, compliance and other aspects of contractor employment. Also, it includes modules for auditing, vendor training and even visitor management.
Who it’s for: Businesses working in highly regulated and high-risk industries including construction, aviation, transport, services and healthcare provision.
Pricing: Free for one user, from $59 Australian dollars for 2-10 employees.
Developed specifically to cater to the needs of organizations employing a large contingent workforce, Beeline vendor management software offers automation of service procurement, contingent staffing, resource tracking and self-sourcing.
Who it’s for: Large organizations and enterprises employing a massive global contingent workforce.
Pricing: By quote
If you’re having trouble managing all your vendor’s documents, contracts, profiles and records, Profile Gorilla is looking to make your life easier. This SaaS solution includes comprehensive vendor profile management and online collaboration toolsת suitable for businesses of most sizes.
Who it’s for: Organizations looking for a central profile management solutions for their vendors, and a place to centrally store related “paperwork”.
Pricing: Starts at $19.99/month
This cloud-based solution attempts to automate as many steps as possible of the hiring process: from recruitment and contract management to tracking and invoicing. Among a variety of modules to select from to suit your business, Connecting-Expertise vendor management software offers the CE Marketplace, to give you access to a broad network of niche suppliers, linked to a benchmarking system of your current vendors.
Who it’s for: Companies looking to automate their vendor hiring process, and expand their vendor pool using the CE Marketplace.
Pricing: Starts at $7,500.00/year
Conrep is a comprehensive solution that goes beyond vendor management with workflow, tracking and controlling using a single software system. It offers role-based dashboards, customized workflow creation, Web forms integration into CRM and extensive reporting capabilities.
Who it’s for: Large companies and enterprises looking for an all-in-one solutions for employee, vendor and compliance management.
Pricing: By quote
This robust SaaS solution offer 22 modules for different business processes: procure-to-pay; e-sourcing, spend analysis and supplier management. Its supplier management platform includes features for vendor data management, document validation workflows, risk evaluation and more.
Who it’s for: Businesses looking for a central profile management solution for their vendors. For organizations in highly regulated industries (like manufacturing and healthcare) Ivalua offers industry-specific solution packages.
BravoSolution positions itself as a strategic procurement solution, integrating supplier lifetime value throughout the entire procurement process. It offers contract lifetime management, procurement, invoicing, spend analysis and other features. BravoSolution offers industry-specific combinations of the modules offered, or you can choose your own according to your business needs.
Who it’s for: Companies that procure and employ a large number of vendors, as well as industry-specific organizations looking for an all-in-one procurement and spend analysis tool customized for regulatory compliance.
Pricing: By quote
Vendor Insight offers a very comprehensive and customizable platform that includes productivity tools, policy and compliance management tools, as well as control and monitoring solutions. Additionally, this solution is designed specifically for financial institutions, banks and credit unions. As such, it includes features and workflows that are unique for that industry, including compliance and due diligence processes in vendor qualification.
Who it’s for: Financial institutions
Pricing: By quote
Top 3 Vendor Management System – Based on functionality
You might remember the main goals of vendor management software – Vendor Engagement, Project Management and Payroll Management. We picked the three solutions that excel at filling each of these goals.
Best for Vendor Engagement: Connecteam
Well, obviously they rank themselves as best in vendor management software for engagement. But, this is based on GetApp customer reviews. The solution Connecteam offers isn’t only easy to use and affordable but it also includes effective tools for engaging your vendors and communicating with them.
Mobile first, Connecteam lets you create your own branded communications app that enables managers to communicate important information to vendors in real time, provide on-demand training, and acts as a channel to provide and receive feedback.
Best for Project Management: Lystable
With Lystable, users can set weekly, monthly, and project budgets, and track spending in real time. Project timelines can be created, and deadlines set for tasks assigned to freelancers. Once work is completed, invoices can be submitted for approval through custom workflows, and when approved, invoices can be paid out directly from within the system.
Best for Payroll Management: Tipalti
Among its features, Tipalti offers an intelligent, dynamic payee portal designed to guide suppliers around the process of submitting their payment details. Complete with tax forms, payment history and supplier data entry streamlining, Tipalti is one of the best vendor payroll solutions out there.
Vendor Management and Beyond
Many of the vendor management software systems out there offer a lot more than what you might have set out as your priorities in selecting the vendor management solution for your business. Odds are that many of these systems include features that can replace existing software and solutions in your business. Thus, increasing efficiency and cutting costs.
Overall, the solutions we’ve listed cater to all the needs today’s businesses have in managing vendors. True, these needs change rapidly. So our last tip to you is to think of the needs and goals your businesses and your vendors will have tomorrow, rather than today.
Other great list articles from Connecteam: