Navigating the Onshoring Wave: Why Smart Vendor Relationships Matter Now More than Ever
In recent months, the biotech and pharmaceutical industries have seen a surge of interest in onshoring, essentially bringing drug manufacturing and related operations back to U.S. soil. According to a recent Pharmaceutical Technology article, companies are scrambling to establish new biotech hubs domestically to buffer against supply‑chain disruption, geopolitical risk, and tariffs.
This structural shift has major implications for how biotech firms manage their external partners, encompassing contract manufacturers and reagent suppliers, to logistics providers, instrumentation vendors, and specialist service providers. In fact, as the industry reconfigures its geographic footprint and regulatory expectations tighten, effective vendor relationship management (VRM) becomes a strategic lever more than ever.
Below we explore why managing vendor relationships well is critical in this new environment, what challenges are emerging, and some best practices for biotech firms as they ride the onshoring wave.
The Stakes: Why VRM Is a Strategic Imperative During Onshoring
1. Increased complexity and transition risk
Shifting operations domestically is anything but trivial. Building or expanding new facilities, qualifying new vendors, meeting U.S. regulatory oversight, and optimizing logistics will bring a host of transition risks.
2. New vendor landscape
As companies move operations stateside, they may need to engage with new local vendors that differ in scale, proximity, and capabilities.
3. Supply chain resilience & redundancy
One of the drivers for onshoring is to insulate against disruption. To truly gain resilience, firms need redundancy and flexibility in their vendor base.
4. Cost pressures and margin sensitivity
Onshoring often comes with increased fixed costs. Vendor contracts and sourcing decisions now have a magnified impact on margins.
5. Compliance, quality, and oversight
Domestic facilities may face stricter enforcement. Vendors must meet high standards for quality systems, traceability, auditability, and responsiveness.
Key Challenges in VRM During Economic Reshuffling
When a biotech or pharma firm attempts to reshuffle its supply chain footprint, it often runs into interconnected vendor challenges such as vendor selection uncertainty, qualification burden, misaligned incentives, rigid contracts, lack of data transparency, and cultural shifts in business relationships.
Best Practices for Managing Vendor Relationships in the Onshoring Era
Segment and tier your vendors
Classify vendors by risk, spending, and criticality. Why? Not all vendors are equally strategic.
Early and continuous engagement
Involve vendors in planning, validation, and technology selection early. Why? This helps with vendor alignment and internal buy-in.
Flexible contracting frameworks
Use modular contracts with KPIs, volume ramps, exit clauses, and shared investments. Why? Helps to ensure adaptability in uncertain and changing environments.
Robust qualification and audit playbook
Maintain rigorous and standardized templates and risk-based audits, digital audit tools. Why? Speed and consistency are paramount during transitions.
Joint capacity planning & forecasting
Share demand forecasts, co-plan capital needs, and align incentives (e.g., tiered pricing or shared cost for expansion). Why? This also helps vendors scale appropriately and reduce bottlenecks. This area of focus must have implications for a win-win situation for both you and the vendor.
Performance dashboards
Implement scorecards and real-time metrics (e.g., automated data feeds like early warning alerts, and integrated quality systems, APIs, etc.). Why? Visibility increases issue detection and mitigation.
Redundancy and backup planning
Maintain dual sourcing strategies for critical materials, contingency agreements, and disaster recovery plans. Why? Even domestic vendors are not immune to disruptions.
Relationship governance forums
Establish regular joint steering committees, technical working groups, and escalation paths. Why? Ongoing collaboration helps resolve issues faster and reinforces the idea of partnerships.
Continuous risk assessment
Regularly review vendor financial, regulatory, ESG Compliance (if relevant), and geopolitical risk. Why? Vendor risks will evolve as the ecosystem continues to experience change.
A Hypothetical Use Case
A biotech company transferring sterile fill/finish operations domestically must onboard new suppliers. Without strong VRM, weak validation and logistics planning could trigger costly delays. With disciplined VRM, early engagement, joint validation, and flexible contracts reduce risk and ensure smoother regulatory reviews.
Final Thoughts and Next Steps
The article on emerging U.S. biotech hubs underscores that many firms are rethinking geography and supply chain resilience amid onshoring pressures. However, this shift is only as strong and effective as the vendor relationships underpinning it. If your biotech organization is planning or executing onshoring, consider mapping your vendor network, auditing your VRM maturity, piloting process improvements, and training teams in vendor collaboration and risk mitigation. Supply chains are currently rebalancing and while vendor relationships have a heavy focus on procurement they are also strategic pillars for companies to achieve resilience and growth.
The Biokive Consultancy Group helps small to mid-sized Biopharma companies navigate through the vendor identification, selection, and management process. If any of the above sounds like areas of concern for you, reach out to schedule a free consultation.