How to Choose a Vendor Management System (VMS)?

Vendor management has kind of moved from being “nice to have” into something that sits right at the core of procurement, especially if you are a business that deals with hundreds or even thousands of suppliers.

To give you an idea, Deloitte says large enterprises usually work with more than 5,000 vendors. Just onboarding one of them can take anywhere between 30 and 90 days. And Gartner’s 2023 research pointed out that 84 percent of companies ran into some kind of third-party incident that disrupted operations. On top of that, 70 percent admitted they do not even have full visibility into which vendors are touching sensitive data.

And this is precisely where a vendor management system (VMS) steps into the picture. It cuts down so many manual back-and-forths, makes onboarding very much faster, and it will give you a clearer picture of your suppliers. 

What is the tricky part though? Picking the right one. 

That is exactly what this guide is about: how to figure out which VMS actually fits your procurement strategy, whether you are starting fresh or just thinking about upgrading what you already have.

What is a Vendor Management System (VMS)?

So, a Vendor Management System, or VMS if you want to keep it short, is basically a piece of software that helps a company deal with all the vendors it has. And when I say vendors, I do not just mean the regular suppliers. It also covers contract workers, contingent staff, service providers, all that stuff.

Now, here is where it gets interesting. A VMS is not just a tracker or some fancy address book for suppliers. It actually pulls together the whole vendor journey in one place. Sourcing, onboarding, contracts, compliance, performance checks, payments, you name it, it is all in there.

If you think about it, without something like this you are probably juggling spreadsheets, emails, and a few different tools that never really talk to each other. A VMS kind of fixes that by giving you one central hub where the entire vendor lifecycle lives.

Best Vendor Management System (VMS) in 2025

Not every Vendor Management System is built the same way. Some focus heavily on automation, others make ERP integration their big selling point, and a few go all-in on deep data control.

The point is, there is no single “best” tool for everyone, it really depends on what your team needs. That said, here are four solid examples worth looking at. 

Each of them tackles vendor management from a slightly different angle, so you can see which approach lines up with your situation.

1. Zapro: Fast, AI-powered, and built for modern procurement

Zapro is kind of like the all-in-one tool that procurement teams use when they are tired of juggling spreadsheets and chasing emails. It is an AI-augmented platform, but wait; do not let that scare you, because the whole point here is to make things simpler, not more complicated. 

So many teams seem to be liking it because you can get it up and running quickly, instead of waiting months for a huge rollout.

What Zapro really does is pull all those scattered tasks into one dashboard. Onboarding, approvals, spend tracking, even contracts and purchase orders, it all lives in one place. And since it is zero-code, you do not need IT to rebuild everything for you. You just adjust it to match the way your team already works.

Some Zapro features worth calling out:

• Automation driven by AI that handles onboarding, approvals, and vendor communication.
• Dashboards that actually show you compliance, performance, and documents without digging through files.
• One interface where you manage vendors, contracts, RFx, and POs together.
• Integrations that connect easily with ERP, finance, or collaboration tools.
• Zero-code configurability, so you can tweak workflows without a developer.

Pros:

• Cuts down around 80% of the boring manual work.
• You can deploy it in days, not months.
• Brings AP, sourcing, and contracts under one roof.

Cons:

• The Spark tier starts at about $299/month, and that is only for a limited number of users.

Best for:
Teams that are tech-forward, do not want to live in spreadsheets anymore, and need automation to give them some breathing room.

Pricing:
The Spark plan is about $299/month (covers around 200 invoices or POs, and up to 10 users). Bigger teams or complex setups can get a custom tier if they need it.

2. SAP Ariba: Enterprise-Grade Risk and Compliance

SAP Ariba has been around forever in this space, and for good reason. If your company already runs on SAP ERP or S/4HANA, Ariba plugs right in and feels like part of the same system. Big enterprises love it because it handles the heavy stuff: procurement at scale, finance visibility, and a lot of risk management tools that smaller systems just don’t bother with.

Highlights:

• Tight integration with SAP, so your data stays consistent across huge, global operations.
• Advanced risk controls with alerts and due diligence baked right in.
• Multilingual support, which is a lifesaver for global teams.
• Full supplier lifecycle management, including automated onboarding.

Best for: Enterprises dealing with massive supplier networks and strict compliance rules.

3. Oracle Supplier Hub: Master of Vendor Data

If SAP Ariba is all about compliance and control, Oracle Supplier Hub is more about cleaning up your supplier data mess. Think of it as the system that takes all those duplicates, old records, and random spreadsheets floating around and actually makes sense of them.

Highlights:

• Standardizes supplier data across different platforms.
• Cleans up duplicate entries and keeps a solid master record.
• Lets you analyze supplier relationships with hierarchy management.
• Flexible deployment: standalone, integrated, or hybrid, but it is depending on your setup.

Best for: Organizations that are stuck with legacy data silos and ones that need one single, clean version of vendor records.

4. Procol: Agile, Mobile-First, and Outcome-Focused

Procol is kind of the opposite of the big enterprise systems like SAP and Oracle. It is built particularly for speed and flexibility, especially if your procurement team is always on the move. See everything is mobile-first here, so you can manage all the procurement tasks without being tied to your desk.

Highlights:

• Full remote procurement management through a mobile-first interface.
• Customers report saving over 15,000 hours and $100M in costs (yep, those are their numbers).
• It has custom workflows that can adapt to how your procurement will work.
• It has access to a very big network of more than 50,000 vetted suppliers.

Best for: It is best for fastly-growing companies that need automation, mobility, and quick ROI but without the bulkiness of most legacy systems. 

Why do procurement teams even need a Vendor Management System (VMS)?

Let’s be honest, the business world is moving faster than most teams can keep up with. Procurement folks especially are feeling it. There is more pressure than ever to manage vendors, outside workers, contractors, freelancers… the whole lot. Some surveys even say nearly half of executives are planning to rely more on external labor. If that is true, then Vendor Management Systems (VMS) are no longer some optional extra, they are slowly becoming essential.

Companies today lean on contingent workers for all sorts of reasons. Sometimes it is to fill skill gaps. Sometimes it is just to stay flexible or scale quickly without hiring full-time staff. 

See whatever the reason it may be, trying to manage all of this with spreadsheets and endless email chains? It definitely gets messy, really messy, right?

Here is how the pain usually shows up when there is no proper VMS in place:

• You do not really see what is going on. Vendor performance, actual costs… half the time it is hidden in a dozen different spreadsheets.
• Processes are all over the place. One team onboards a supplier one way, another team does it differently, and contracts just end up lost in email threads.
• If you are dealing with global vendors, forget it. Every country has its own labor rules, taxes, and paperwork. Trying to track all of that manually is a headache.
• Way too much manual work. People literally spend hours in copying data, chasing approvals, or double-checking invoices and what not?
• Your compliance slips through the cracks. Maybe a certificate expired, maybe a regulation changed and nobody caught it. Either way, it is risky.
• Data is scattered everywhere. Some info with finance, some with procurement, some in personal folders… and no one is totally sure what is up to date.
  
  

Benefits of a Vendor Management System (VMS)

1. Better visibility
Most teams right now are juggling like five different spreadsheets and still do not really know what is going on. A VMS pulls all of that into one view. Contracts, invoices, performance numbers, it is all right there. You can see in real time who is actually doing well, where things are stuck, and where the money is leaking. One screen instead of ten tabs, and suddenly decisions get easier.

2. Streamlined processes
Onboarding vendors the old way? Honestly, it is just very painful and you know it better than us. Endless back-and-forth emails, lost documents, and approvals that take so many weeks. With a VMS, a lot of that admin is automated. Documents get uploaded once, approvals move faster, compliance checks happen in the background. The big win here is time; suppliers come onboard quicker, mistakes go down, and no one has to chase ten people for updates.

3. Managing global suppliers
Anyone working with international vendors knows the mess: different tax rules, currencies that keep changing, labor laws you cannot memorize, plus cultural quirks. A decent VMS handles most of that for you. Localized workflows, compliance built-in, proper record-keeping. It basically takes some of the chaos out of going global.

4. Easier compliance
Let us be honest, regulations never get easier. Certificates expire, contracts have hidden clauses, and one slip can cost big money. A VMS keeps track of this automatically, audit trails, reminders, compliance dashboards. Instead of someone frantically digging through old files before an audit, you already have everything updated and in place.

5. Cost control
Money leaks are sneaky. Duplicate invoices, hidden overspending, random charges that get missed. A VMS spots those. Plus, with automated payments, vendors actually get paid on time, which means fewer disputes and better relationships. It is not magic, but it does save both cash and stress.

6. Stronger collaboration with suppliers
This part is overlooked. It is not just about controlling vendors, it is about working with them. A VMS gives you shared spaces for communication, issue tracking, even feedback. When vendors feel like partners instead of outsiders, service quality goes up. It is trust, not just transactions.

7. Centralized vendor data
Right now, every department probably keeps its own version of vendor info. Finance has one, procurement another, operations a third. And of course, half of it is outdated. A VMS gives you one single record for everything, contact details, certifications, performance history. No more chasing five people for the right phone number.

8. Less manual work and fewer errors
At the end of the day, this is the biggest reason people adopt a VMS. All the boring tasks, sourcing, onboarding, invoicing, time tracking, they can be automated. Less copy-paste work means fewer mistakes. And your team finally gets to spend time on strategy instead of admin.

Essential Features to Look for in a Vendor Management System (VMS)

Let’s be honest for a second. Not every VMS is worth your time. Some look shiny in demos, but once you actually try to use them, they just slow you down. So when you are comparing options, do not get carried away with fancy extras. 

Stick to the stuff that actually solves your everyday headaches and can still work for you a year or two down the line.

1. Supplier onboarding automation
If you have ever onboarded a vendor manually, you know the pain. Endless emails, lost forms, missing signatures. Things slip through the cracks, and then you are chasing people for weeks. A proper VMS should take most of that mess off your plate. It handles the repetitive stuff so suppliers can get in the system quickly and without drama.

What you really want here:

• A portal where suppliers can basically set themselves up (saves you a hundred back-and-forths).
• Automatic approval flows, so you are not emailing five people for one sign-off.
• One safe spot where all contracts, compliance docs, and certificates live.
• And yes, it should connect easily with your ERP or finance tools; otherwise you are still stuck doing double work.

The result? Cleaner records, fewer mistakes, and a setup that does not collapse as soon as you add more vendors.

2. Performance tracking and scorecards
Once a vendor is in the system, you need to know if they are actually performing. A solid VMS does not leave this to guesswork, it gives you dashboards and scorecards that show what is really happening.

What matters most:

• Delivery times, defect rates, fill rates — all the unglamorous but super important numbers.
  
• Scorecards that mix both hard numbers and softer insights (like responsiveness).
  
• Custom metrics that match your KPIs, not just generic ones.
  
• Alerts when performance slips so you can step in early.
  

This is not just for policing vendors either. Done right, it turns into a tool for accountability and long-term improvement.

3. Compliance and risk controls
This one is huge. Third-party risk is not a “what if,” it is already here and growing. One bad supplier mistake can land your business in trouble, and nobody wants that.

Must-haves:

• Real-time compliance updates so you are never blindsided.
  
• Automated worker classification if you deal with contractors across countries.
  
• One central place for all tax docs, insurance files, and certifications.
  
• Security basics like encryption and access control.
  

And if you are global? Make sure the system can actually handle different tax rules, labor laws, and currencies. Otherwise, you are back to spreadsheets.

4. Reporting and analytics
All that data is useless if you cannot act on it. The better VMS platforms make reporting simple and, honestly, kind of addictive. You see problems before they get big and spot savings opportunities you might miss otherwise.

Look for feature like:

• Dashboards you can tweak so they show the stuff that really matters to your team.
• Real-time reports on spend, supplier KPIs, compliance.
• Predictive analytics (yeah, it is the system that can actually warn you about risks).
• Easy integrations with business intelligence tools like Power BI or Tableau in case, if you want to go deeper.

At the end of the day, it is not about pretty charts, it is about making smarter calls and building stronger supplier partnerships.

How to Evaluate Vendor Management System Software?

Picking a vendor management system software is not about chasing the platform with the biggest brochure or the flashiest AI buzzwords. It is about figuring out what problems you actually need solved and whether the system fits the way your teams work in real life. 

Here is a more practical way to think about it:

1. Start with the actual problems, not the features
Before you even look at vendors, get clear on what is broken today. Where are the delays happening? Is onboarding taking forever? Are invoices getting lost? Or is compliance giving you headaches? Write these down because if you do not, you will get dazzled by “nice” features you may never use.

Things to check:

• Which approvals are always stuck in limbo
  
• Where manual tasks are chewing up hours
  
• If data is siloed across finance, procurement, and ops
  
• Whether teams even talk to each other during vendor setup
  

💡 Pro tip: Do not do this alone. Pull in people from finance, legal, IT. Keep in mind that what seems like a small hiccup for you may actually be a massive bottleneck for them.

2.  Clearly define must-have vs. nice-to-have
This one is huge. Every system will try to wow you with bells and whistles. But you need to separate essentials from “cool but not today.”

Break it like this:

• Must-haves: It can be something like a stuff that fixes today’s pain (for example: automated onboarding, compliance tracking, vendor scorecards).
• Nice-to-haves: Good extras but you can live without for now (for example: mobile app, advanced dashboards).
• Future needs: These are things that might be handy once you scale (for example: AI risk scoring, marketplace integrations).

Do know that if you do this, it will keep your budgets sane and prevent the project from ballooning out of control.

3. Check integrations early, not later
This is where many teams trip up. Even if the vendor says “easy integration,” reality often involves a lot of IT coordination.

Ask questions like:

• Does it actually connect cleanly with your ERP or CRM (SAP, Oracle, Workday, whatever you use)?
• Can the data actually flow both the ways: POs, invoices, contracts?
• Does it support SSO feature (single sign-on)?
• How much backend babysitting will IT need to do?

💡 Remember: See integration is never simply a plug-and-play thing. Make sure that you get IT in the room early or you will definitely regret it later.

4. Think about tomorrow, not just today
The system you pick might feel fine today, but what happens when you double your supplier base or add another region? Or worse, if your team hates the interface and refuses to use it?

Ask yourself:

• Can the system actually grow with you but without slowing you down?
• Is the interface very simple enough that even somewhat non-technical folks will actually use it?
• What are real customers talking about support: are tickets solved fast or do they keep sitting there for weeks?

And please, do not skip reference calls. Talking to someone who already uses the system for 10 minutes will tell you more than any polished demo.

Factors you should know before picking a Vendor Management System (VMS)

Alright, so here’s the thing. 

Choosing a VMS is not only about fixing today’s issues. It is more like making an investment that will (hopefully) last years as your business grows. Too many teams rush in and then realize six months later that the tool cannot keep up. You do not want that mess.

1. Scalability (can it grow with you?)
Look, if your vendor base doubles, or if you suddenly expand into new regions, the VMS should not start crawling or breaking. It has to scale.

Things worth checking:

• Can it actually handle big datasets without choking?
• Do they have cloud scalability (multi-region, etc.)?
• Do they publish any performance benchmarks?
• Is the pricing flexible if you suddenly onboard hundreds more suppliers?

Basically, you will have to ask yourself: does this system actually grow with me, or am I going to rebuild the same in just two years?

2. Customization (make sure that it does fit your workflow, not the other way around)
Off-the-shelf sounds nice, but procurement workflows are never “one size fits all.” If the VMS is rigid, your team will start working around it, and that defeats the point.

Check for:

• Simple config tools (drag-and-drop is best).
• Ability to tweak approvals, fields, templates.
• Support for different departments or even regions.
• Dashboards that can be tailored by role.

If you can’t make it fit your reality, then it is just more admin pain.

3. User experience (are people actually going to use it?)
A feature-rich tool does not matter if everyone avoids logging in. UX is a big deal.

So test it yourself:

• Is the interface clear? Or do you need a manual to find one thing?
• Actually, are the dashboards useful per role (because it’s like that: finance sees what finance needs, procurement sees what procurement needs)?
• Will people be able to use it on mobile, or is it desktop-only?
• What about vendors: can they register and upload stuff without ten emails?

Pro tip: sit someone down who has never seen the system and ask them to complete a task. If they struggle, adoption will be an uphill battle.

4. Training and support (don’t skip this part)
Training has to be role-specific. A generic 2-hour webinar is useless if legal, procurement, and finance are all in the same session. Everyone uses the tool differently.

Ask vendors if they provide:

• Separate sessions for each group.
• Online docs, videos, cheat sheets (things people actually use).
• On-demand refreshers.
• Certifications or practice modules.

Time spent on training now = fewer headaches later.

5. Vendor reputation and support (are they actually reliable?)
Last one, but honestly, it might be the most important. You are not just buying software, you are choosing a partner.

What to check:

• Do they have solid references in your industry?
• Are there case studies of companies like yours?
• How fast is their support response? Hours or days?
• Do they update the product often, or is it stuck in 2020?

Nothing is worse than signing a contract and then realizing support takes a week to respond.

3 crucial steps to successfully implement a VMS

Let’s be clear here: a vendor management system is not plug-and-play. You cannot just install it and expect magic. The success of it depends on people, planning, and whether the teams actually adopt it. 

Here are a few steps that can make the rollout smoother and actually worth the investment.

1. Pick your internal champions
The single biggest difference between success and failure is often people. You need folks inside the company who believe in the system and are willing to push it forward.

What you should look for:

• People who actually care about fixing processes.
• People who have trust across different teams (procurement, finance, IT, ops).
• People who won’t give up when there are hiccups in the rollout.
• Ideally, someone who has lived the procurement pain points firsthand.

For bigger companies, don’t rely on just one person. Create a small taskforce. Let them actually test the system themselves, and write some simple internal docs, troubleshoot. Let them also be the go-to people when others are actually confused.

2. Train with role-specific focus (definitely no one-size-fits-all)
This is where many fail. Training cannot be just one generic session for everyone. Procurement, finance, IT, and even suppliers all use the tool differently.

So break it down like this:

• Go back to your procurement and compliance policies.
• Identify groups (buyers, suppliers, finance, etc.).
• Train them based on their role, not a generic workflow.

Good training mixes things up:

• A live walkthrough so people get hands-on.
• Self-paced tutorials for when they forget.
• Practice tied to actual workflows (not made-up examples).
• Some sort of quiz or certification for key roles.

The goal is to make using the system second nature. If people see it as “extra work,” they won’t adopt it.

3. Monitor adoption and tweak as you go
Here’s the truth: when you go live, the work is not over. It is actually just starting. You need to track how people are using it and where they’re getting stuck.

Some best practices I’ve seen:

• Start with a kickoff meeting where everyone knows what’s expected.
• Track usage data (logins, approvals, module usage).
• Collect real feedback from users, not just managers.
• See what features are not being used at all (maybe people don’t know they exist).
• Measure quick wins like faster onboarding or fewer compliance misses.

This info is gold. Please use it. 

Adjust workflows, add extra training sessions, or call the vendor’s support team if needed. The system should evolve with how your teams actually work in the real world.

Why Zapro is at least twice better than your current VMS

See Zapro is not just “another tool.” It’s designed to replace the patchwork of 15+ systems you probably juggle right now. Instead of handling transactions in isolation, Zapro ties the full vendor lifecycle together.

• Cuts onboarding time in half.
• Delivers more than 30% cost savings.
• It has built-in risk management, so you always get to see what’s exactly happening across the board.
• Tracks every interaction so absolutely nothing slips through the existing cracks.

If your current VMS feels clunky or reactive, Zapro is simply the smarter upgrade. It is not just about managing vendors, it is about optimizing the whole process.

Vendor Management System FAQs

Q1. What is the vendor management system?
A Vendor Management System (VMS) is a software platform that helps businesses manage their relationships with suppliers and service providers. It centralizes vendor data, streamlines processes like onboarding, contract management, and performance tracking, and ensures compliance with company and regulatory requirements.

Q2. How do I choose the right Vendor Management System for my organization?
Start by assessing your procurement needs and defining essential features. Prioritize scalability, customization, user-friendliness, vendor reputation, and integration with existing systems to ensure alignment with your long-term goals.

Q3. What essential features should I look for in a Vendor Management System?
Look for supplier onboarding automation, performance tracking, compliance controls, and detailed reporting tools. Ensure the system offers customizable workflows, security measures, and integration capabilities with your enterprise systems.

Q4. How can I ensure successful implementation of a Vendor Management System?
Successful implementation requires internal champions, thorough training for both procurement and vendor teams, and clear milestones. Continuous monitoring and strategic support will ensure smooth deployment and maximize system value.

Q5. How does a Vendor Management System improve supplier relationships?
A VMS improves supplier relationships by enabling clearer communication, standardized processes, and real-time updates. It helps identify top performers and fosters collaborative, data-driven partnerships for long-term success.

Q6. What are the key benefits of implementing a Vendor Management System?
A VMS improves supplier collaboration, centralizes vendor data, and reduces manual tasks. It streamlines processes like onboarding, enhances vendor performance visibility, and automates time-consuming activities, allowing teams to focus on strategic goals.