Nearsourcing’s Effect on Vendor Relationships

Outsourcing a project is often seen as an all or nothing proposition: either an entire project is outsourced or everything is kept in house. The reality is that a mixed approach can be taken for outsourcing by complementing core competencies and sourcing of weaknesses.¹ One benefit of nearsourcing is that your lead scientists can work with CROs much easier. Nearsourcing research allows for a greater level of connection and collaboration that may be missed from global outsourcing. It’s tough to augment your core competencies with outsourced solutions when they are located half a world away; this is the reason why you often see high quality CROs around pharmaceuticals hubs, whether it is New Jersey, Cambridge, or San Francisco. The reputation of these regions are living proof that nearsourcing is always an important option to consider.

Using Inc’s good vendor relationship management tips,² how does a company’s relationship with vendors change when outsourcing overseas versus locally?

• Shift in Communication Channels: Globally outsourced projects rely on regular assessments of projects and measurable requirements to get an idea of progress. Local projects encourage more frequent updates and even in-person collaboration. Rather than getting updates over email, scientists can easily evaluate projects in real-time, make adjustments as needed, and even learn more about a new scientific area.
• Customer Loyalty: Making the effort to work closely with the nearsourced partner benefits both parties. The vendor gains consistent business and you get your research services completed. If you’ve found a quality partner nearby, it’s worth discussing discounts for continued business to solidify a long-term relationship that helps both sides. Conversely, you may also find out firsthand that nearby CROs do not live up to expectations, allowing you to comfortably make the decision to try overseas outsourcing (help future customers by writing reviews).
• Increased Expectations: People expect more and are disappointed easier when they put a face to their work. Being able to actually visit the laboratory also means that an underwhelming laboratory environment could end up hurting the chance of a deal. Additionally, when nearsourcing it is expected that all services will be delivered on time; if a global company can ship deliverables on time, then it should be trivial for one 50 miles away.

Effectively managing vendor relation is critical to project success. Keeping a central location for information, such as Research Exchanges or Sharepoint, helps keep track of vendor communication.