Question

List and describe the types of coordination costs incurred by outsourcing.

List and describe the types of coordination costs incurred by outsourcing.

Homework Answers

Answer #1

The various types of coordination costs incurred by outsourcing are as follows:

  • Cost of coordination with the third party vendor: While considering outsourcing, many companies fail to accommodate the cost of conducting follow-ups with the third party vendor.
  • Cost of auditing and inspection: Usually the company conducts audits to keep a check on the compliance adherence level of the third party vendor. The audit and inspection costs are a type of coordination cost, incurred to keep a check on the business processes followed by the third party.
  • Cost of unplanned logistics: Any kind of unplanned logistics, requires coordination between the company and the vendor.
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