How to Choose a Vendor Management System: A Step-by-Step Guide for Procurement Teams

Vendor management is no longer a side task—it’s a core part of procurement. For organizations managing hundreds or even thousands of suppliers, the complexity and risk involved have grown significantly. According to a Deloitte survey, large organizations now engage with an average of over 5,000 third-party vendors, and onboarding a single supplier can take anywhere from 30 to 90 days, depending on the industry.

The stakes are high. A 2023 report from Gartner revealed that 84% of organizations experienced at least one third-party incident that disrupted operations. 

What is even more alarming? 

Over 70% admitted they lack full visibility into who has access to their sensitive data.

That’s where vendor management systems (VMS) come in. These platforms reduce manual overhead, shorten onboarding cycles, and provide better visibility across the supplier lifecycle. But choosing the right VMS isn’t easy—features vary widely, and so do integration capabilities.

This guide will walk you through how to evaluate and choose a vendor management system that aligns with your procurement strategy—whether you’re starting fresh or replacing an outdated tool.

What is a Vendor Management System (VMS)?

A Vendor Management System (VMS) is a digital platform that helps organizations efficiently manage vendor relationships. It centralizes everything in one place, from procurement and onboarding to evaluating performance.

Here’s why it’s better than using spreadsheets or multiple systems:

• Centralized Hub: All vendor data, contracts, and performance metrics in one place.
• Automated Workflows: Onboarding, contracts, and invoices are streamlined.
• Cloud-based or On-Prem: Access from anywhere with flexible deployment options (SaaS or on-site).

Key Features:

• Vendor Database: Stores contact info, contracts, certifications, and performance data.
• Automated Workflows: Simplifies vendor onboarding and invoicing.
• Performance Tracking: Evaluate vendors based on set criteria.
• Compliance Management: Ensures adherence to contracts, regulations, and policies.
• Reporting & Analytics: Instant insights into vendor performance and spend.

Contingent Workforce Management:
VMS is especially useful for managing flexible workers like contractors, freelancers, or consultants. It helps businesses onboard, track, and manage these workers efficiently.

Why It Matters:
VMS platforms also support Third Party Risk Management (TPRM)—helping financial institutions and other regulated industries manage risk and compliance better.

In short, a VMS turns complex vendor relationships into smooth, streamlined processes. It’s more than just tech—it’s a strategic asset that improves decisions and reduces risk.

Why Procurement Teams Need a VMS

The business world is evolving rapidly, and procurement teams face more pressure to manage external workforces effectively. Research shows 50% of executives plan to increase their reliance on external labor, making Vendor Management Systems (VMS) more critical than ever.

Organizations are expanding their use of contingent workers—contractors, freelancers, and temporary staff—to access specialized skills, increase flexibility, and drive growth. But managing this external workforce introduces key challenges:

Key Challenges Without a VMS:

• Limited Visibility: Lack of insight into vendor performance and costs.
• Inconsistent Processes: Disjointed onboarding, compliance, and contract management.
• Global Complexity: Difficulty tracking workers across borders and different labor laws.
• Manual Effort: Time-consuming, inefficient processes.
• Compliance Risks: Increased exposure to regulatory issues.
• Data Fragmentation: Inaccurate or disconnected information impacting decision-making.

Without a VMS, procurement teams struggle with poor communication, inefficiencies, and risks that make managing external labor a daunting task. A VMS helps solve these issues by streamlining processes and providing real-time insights into vendor performance. 

Here’s how it adds value:

Benefits of a VMS:

1. Better Visibility: Track vendor performance and spending in one place.
2. Streamlined Processes: Automate onboarding, contracts, and invoicing.
3. Global Workforce Management: Simplify the management of workers across multiple regions.
4. Compliance Made Easy: Ensure adherence to regulations and internal policies.
5. Cost Control: Identify savings opportunities and avoid unnecessary expenses.

Additional Key Benefits:

• Improved Supplier Collaboration:
  Better transparency and communication strengthen vendor relationships, fostering trust and long-term partnerships.
• Centralized Vendor Data:
  Store all vendor info in one place, ensuring data accuracy and smarter decision-making.
• Reduced Manual Work:
  Automate tasks like supplier sourcing, invoicing, and time tracking, eliminating manual errors and increasing efficiency.
• Financial Efficiency:
  Simplify invoicing and payment processes, improving vendor relationships and financial reconciliation.

Adopting a VMS turns procurement from a transactional process to a strategic driver of growth. It helps organizations scale faster, stay compliant, and optimize vendor relationships, all from one centralized platform.

Essential Features to Look for in a Vendor Management System

Not all VMS platforms are created equal. If you’re evaluating solutions, focus on the features that directly solve procurement headaches and scale with your vendor operations. Here are the four feature pillars that matter most:

1. Supplier Onboarding Automation

Manual onboarding eats time and introduces errors. An efficient vendor management system automates the entire process and can cut onboarding time by up to 90%.

Look for:

• Self-service supplier portals for easy registration
• Automated approval and verification workflows
• Centralized storage for contracts, certifications & compliance docs
• Seamless integration with your ERP, procurement, and finance systems

Standardizing onboarding ensures clean data, faster time-to-productivity, and fewer compliance gaps.

2. Performance Tracking & Vendor Scorecards

Once suppliers are onboarded, you need visibility into how well they’re delivering. A strong VMS tracks performance using real-time data and customized scorecards.

What matters:

• Delivery times, defect rates, fill rates, service levels—all in one dashboard
• Scorecards with both quantitative and qualitative insights
• Custom metrics aligned with your internal KPIs
• Alerts for underperformance or SLA breaches

This isn’t just oversight—it’s a tool for strategic improvement and accountability.

3. Compliance & Risk Controls

Third-party risk is a real and growing concern. A good VMS reduces exposure by automating compliance and strengthening risk governance.

Must-haves:

• Real-time regulatory updates and compliance workflows
• Automated worker classification (especially for global workforces)
• Centralized storage for legal, tax, and insurance documents
• Security essentials: encryption, access control, audit trails

If you operate globally, ensure the VMS supports local tax rules, currency differences, and country-specific labor laws.

4. Reporting & Analytics

The best VMS solutions turn data into action. Built-in reporting tools help teams monitor spend, compliance, and vendor performance without waiting for IT.

Look for:

• Customizable dashboards for at-a-glance insights
• Real-time reports on cost, compliance, and supplier KPIs
• Predictive analytics to uncover risks and savings opportunities
• Integrations with BI tools (e.g., Power BI, Tableau) for deeper analysis

Data-backed procurement leads to smarter decisions and stronger supplier partnerships.

How to Evaluate Vendor Management System Software

Choosing the right VMS isn’t about picking the flashiest platform. It’s about aligning the system with your real-world procurement challenges. Here’s a step-by-step evaluation process to guide your team:

1. Start with a Clear Problem Diagnosis

Before diving into features, map out the internal issues you’re trying to solve. This means going beyond surface-level frustrations.

Assess:

• Where delays or bottlenecks occur (e.g., onboarding, approvals, invoicing)
• Which manual tasks waste the most time
• Where compliance or audit risks exist
• Whether data is siloed or inconsistent across departments
• How well teams currently collaborate during vendor lifecycle management

💡 Tip: Get cross-functional input. Procurement, finance, legal, and IT should all weigh in—what seems like a small issue in one area can become a major implementation blocker later.

2. Define Must-Have vs. Nice-to-Have Features

Avoid scope creep. Focus on what actually solves your procurement problems today, and what can’t wait for phase two.

Break features into three buckets:

• Must-haves – Core features tied directly to solving current pain points (e.g., automated onboarding, compliance tracking, vendor scorecards)
• Nice-to-haves – Helpful but non-essential features (e.g., advanced dashboards, mobile access)
• Future needs – Strategic capabilities for long-term scalability (e.g., AI-powered risk scoring, marketplace integrations)

🎯 Prioritizing this way keeps implementation focused—and budgets in check.

3. Evaluate Integration Capabilities Early

Your VMS won’t operate in isolation. It must connect smoothly with your ERP, procurement, finance, and security tools.

Key integration factors to check:

• System compatibility – Does it plug into your existing ERP or CRM stack (e.g., SAP, Oracle, Workday)?
• Data flow – Can it exchange vendor, invoice, and contract data in real time?
• SSO support – Single sign-on is a must for security and usability
• Internal IT support – Even “plug-and-play” solutions need backend coordination and maintenance

🧠 Pro insight: “Sending and receiving data is a two-way street”—integration takes work on both sides. Include your IT team early in the selection process.

4. Think Beyond Today: Scalability, UX, and Support

Don’t just plan for what the system will do today. Make sure it can evolve as your procurement needs change.

Also consider:

• Scalability – Will it grow with your vendor base and geographic footprint?
• User experience – Is it intuitive enough for high adoption across non-technical users?
• Vendor reputation – What do current users say about support, uptime, and service responsiveness?

🛠️ Ask vendors for real-life case studies in companies similar to yours—and don’t skip the reference check.

A thoughtful evaluation process grounded in your organization’s pain points—not just a feature checklist—will help you choose a VMS that delivers long-term value, not just short-term convenience.

Best Vendor Management Systems for Enterprises in 2025

Vendor Management Systems (VMS) vary widely in features, scale, and specialization. Some emphasize automation, others prioritize ERP integration or deep data control. 

Below are four strong examples—each solving vendor management from a different angle.

1. Zapro: AI-Powered, Fast, and Purpose-Built for Modern Procurement
   Zapro Vendor Management focuses on automating vendor workflows with AI and seamless collaboration. Built for speed and simplicity, Zapro is ideal for teams that want clarity, control, and automation—all in one place.

Highlights:

• AI-driven automation for onboarding, approvals, and vendor communications
• Smart dashboards to track compliance, performance, and documentation in real time
• Unified interface to manage vendors, contracts, RFx, and purchase orders
• Pre-built integrations with major ERP, finance, and collaboration tools
• Zero-code configurability to match your exact procurement workflows

Best for: Modern procurement teams that want agility, automation, and fewer spreadsheets.

2. SAP Ariba: Enterprise-Grade Risk and Compliance

A pioneer in the VMS space, SAP Ariba integrates deeply with SAP ERP and S/4HANA, giving global enterprises powerful tools for procurement, finance, and risk management.

Highlights:

• Tight SAP integration for data consistency and scale
• Advanced risk controls, alerts, and due diligence features
• Multilingual support across global teams
• Supplier lifecycle management with automated onboarding

Best for: Enterprises managing complex supplier ecosystems with high compliance requirements.

3. Oracle Supplier Hub: Master of Vendor Data

Oracle Supplier Hub is built to clean, consolidate, and maintain supplier data across systems. It’s perfect for companies that need data accuracy and hierarchy visualization.

Highlights:

• Supplier data standardization across fragmented platforms
• Clean duplicate records and maintain master data quality
• Analyze supplier relationships via hierarchy management
• Flexible deployment modes (standalone, integrated, or hybrid)

Best for: Organizations with legacy data silos needing unified vendor records.

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

Procol brings a modern, mobile-first VMS for fast-moving procurement teams. It supports end-to-end vendor management and delivers measurable outcomes in time and cost savings.

Highlights:

• Remote procurement management from a mobile-first UI
• 15,000+ hours saved and $100M+ in customer-reported cost savings
• Custom workflows to support different procurement processes
• Access to 50,000+ vetted global suppliers

Best for: Fast-growing companies looking for automation, mobility, and fast ROI.

🚦Quick Comparison:

Platform	Best For	Key Strengths
Zapro	Modern teams	AI automation, UX, fast setup
SAP Ariba	Enterprises	Compliance, ERP integration
Oracle Hub	Data-heavy orgs	Master data, hierarchy insights
Procol	Mid-large orgs	Flexibility, mobile access, ROI

Factors You Should Not Ignore Before Making a Choice

Choosing a vendor management system isn’t just about solving today’s problems—it’s about investing in a tool that adapts as your business grows and evolves. Here are the most important factors to weigh before making your final decision.

1. Scalability to Support Future Growth Without Rebuilds
Your VMS should be able to handle increasing volumes of job requisitions, vendors, and contractors without performance issues. As your procurement operations expand, the system must grow with you—not hold you back.

Look for:

• Systems designed for large datasets and user volumes
• Cloud scalability options (multi-region, multi-instance, etc.)
• Performance benchmarks under heavy loads
• Flexible pricing models based on usage or scale

2. Customization to Match Your Procurement Workflows
Off-the-shelf tools often don’t fit the unique steps in your procurement lifecycle. Your VMS should allow you to tailor workflows, permissions, data fields, and dashboards—without extensive development.

Check for:

• Drag-and-drop or low-code configuration tools
• Ability to add custom approval paths, fields, or templates
• Workflow flexibility to support different departments or geographies
• UI personalization by user role

A customizable system ensures your procurement team can use the platform without constantly working around rigid templates.

3. Simple, Intuitive User Experience (UX) That Drives Adoption
A feature-rich system means nothing if your team avoids using it. A well-designed interface leads to better adoption, faster onboarding, and fewer support calls.

Evaluate:

• Interface clarity and ease of navigation
• Role-based dashboards and task lists
• Accessibility across desktop and mobile devices
• Vendor-side usability (registration, uploads, updates)

Request a product demo and watch how easily a new user can complete key tasks. A short learning curve means faster ROI.

4. Role-Based Training and Support Resources for Smooth Onboarding
Training shouldn’t be one-size-fits-all. Your VMS partner should provide targeted training options to help different user groups—procurement, finance, legal, IT—get the most from the platform.

Ask vendors about:

• Role-specific training sessions
• Access to online learning hubs, documentation, and video guides
• Options for live or on-demand sessions (remote and in-person)
• Certification paths or refresher program

Real-world usage proves that teams with tailored training outperform those with generic tutorials. Time invested in onboarding pays off through better system utilization.

5. Trusted Vendor Reputation With Strong Post-Sale Support
Your VMS provider must be more than a software vendor—they should be a reliable partner. Check their track record with similar-sized companies and industries, and review their long-term product roadmap.

Dig into:

• Customer references and case studies
• Reviews on platforms like G2, Gartner Peer Insights, or TrustRadius
• Frequency of product updates and feature releases
• Availability of support channels (chat, phone, email, ticketing)

Also, verify how quickly their support team resolves issues. A responsive vendor with proactive service keeps your operations running smoothly.

Final Tip:
Balance your short-term needs with long-term procurement goals. Don’t just choose a system that fits today—choose one that will support smarter, faster, and more secure vendor operations in the years ahead.

Steps to Successfully Implement a VMS

A vendor management system isn’t plug-and-play. 

Successful implementation demands more than installing software—it’s about planning, people, and adoption. These practical steps will help your deployment align with procurement goals and deliver lasting results.

1. Assign Internal Champions to Lead Change

The biggest difference between a smooth rollout and a failed one often comes down to internal champions—people who believe in the system and rally others around its success.

Choose champions who:

• Are naturally driven to improve processes
• Earn trust across teams and departments
• Show persistence, clarity, and enthusiasm
• Understand procurement pain points firsthand

For larger organizations, build an implementation taskforce of representatives from procurement, finance, IT, and operations. These champions act as change agents—testing the system, creating internal documentation, troubleshooting issues, and guiding their peers through transition.

2. Train Procurement and Vendor Teams with Role-Specific Focus

Training isn’t a one-time event. It’s a strategic investment that ensures every user—from buyers to suppliers—knows how to use the system confidently and in compliance with your policies.

Start by:

• Reviewing internal procurement and compliance guidelines
• Identifying different user groups (procurement team, finance, vendors, etc.)
• Aligning training goals with how each group will use the system

Effective training plans combine:

• Instructor-led walkthroughs for hands-on understanding
• Self-paced tutorials for flexibility and reinforcement
• Scenario-based practice tied to real workflows
• Knowledge checks or certification for critical roles

Your goal is to make the system second nature—not just another tool on the shelf.

3. Monitor Adoption and Adjust Based on Real-World Use

Once your VMS goes live, the work isn’t done. Post-launch monitoring is essential to identify what’s working, where users get stuck, and how the system is impacting procurement performance.

Best practices for tracking adoption:

• Launch with a kickoff meeting between internal teams and the VMS provider to clarify ownership, deliverables, and deadlines
• Monitor usage analytics like login frequency, module usage, and approval timelines
• Collect feedback from end users and stakeholders
• Identify training gaps or underused features
• Evaluate early outcomes (e.g., faster onboarding, fewer compliance errors)

This data is a gold mine and you can use this data for continuous improvement. Adjust your workflows, add training sessions, or request vendor support based on the realities of your operations.

Why Zapro is At Least Twice As Better than Your Existing VMS

Zapro isn’t just another VMS—it’s a game-changer. 🚀 

Unlike traditional systems that focus solely on transactions, Zapro brings collaboration, data-driven insights, and full vendor lifecycle management under one roof. 📦

It replaces the need for 15+ tools, slashes onboarding times by 50%, and delivers 30%+ cost savings 🏷️. Plus, with built-in risk management and the ability to track every interaction, Zapro ensures you never miss a beat in your vendor relationships. 🔍

If you want a system that doesn’t just manage vendors but optimizes the entire process, Zapro is at least twice as good as your current VMS. 

FAQs

Q1. 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.

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.