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.