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Improving Strategic Outsourcing Relationships
By: Elizabeth N. Treher, PhD
April 2006 - Drug Delivery Technology
How many of us have worked on teams that we knew we could be more productive and effective if we were all on the same page? If we were clear about our own goals before involving others? Research shows that failure rates of strategic alliances and outsourcing agreements have remained at about 50% for the past decade. Isn't it time to recognize that the soft side of outsourcing relationships really is the hardest and therefore devote the time and resources to address and prevent these issues?
Finding the right partner (Table 1) is key to achieving outsourcing success. Taking extra time to select the right partner has both short-term and long-term benefits. Prior experience with a service provider is one of the greatest predictors of success according to a National Science Foundation-sponsored study.
Table 1. Key Steps in Partner Selection
- Build an internal cross-functional core team to manage the selection, contracting, and implementation processes.
- Select project(s) to be outsourced.
- Define the scope of the work to be outsourced.
- Identify potential partner organizations.
- Narrow the list to a few strong candidates based on pre-determined criteria.
- Develop a request for proposal and submit it with a confidentiality agreement to candidates.
- Compare proposals, identify the two top candidates, and network to check references using pre-determined selection criteria to reduce "gut-feel" decisions.
- Invite candidates to present to your core team and explore experiences.
- Conduct QA audit, site visits, interviews and assess details.
- Select partner.
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