make it or buy it

8/3/2019 make it or buy it

1/11

By

Charandeep Singh

BBA-II

811


2/11

y

Economic considerationyDependent upon many factors

I Make it

1.Location layout2.Capacity

3.Product and production technology

4.Selection of plant and machinery

5.Production control

6.Quality7.Cost


3/11

II Buy it

1. what to buy?

2. How to buy?

3.How much to buy?

4.When to buy?5.Where to buy from?

6.What price to pay?


4/11

y F

or making

1 cost concerns

2 desire to expand the manufacturing focus

3 need of direct control over the product

4 intellectual property concerns

5 quality control concerns

6 supplier unreliability

7 lack of competent suppliers

8 volume too small to get a supplier attracted

9 reduction of logistic costs

10to maintain a backup source


5/11

y For buying

lack of technical experience

suppliers expertise on the technical areas and the

domain

cost considerations

need of small volume

insufficient capacity to produce in house

brand preferencesstrategic partnerships


6/11

y Financial decision

yTechnological aspect

y Marketing aspect

yPurchasing aspect

y Strategically aspect

y Intangible aspect


7/11

y Cost considerations

y Desire to integrate plant operations

y Productive use of excess plant capacity to help absorb fixed overhead

y Need to exert direct control over production and/or quality

y Better quality control

y Design secrecy is require

y Unreliable suppliers

y No competent suppliers

y Desire to maintain a stable workforce

y Quantity too small to interest a supplier

y Control of lead time , transportation and warehousing costy Greater assurance of continual supply

y Provision of a second source


8/11

yPolitical , social or environmental reasons (union pressure)

y Emotion


9/11

y Lack of expertise

y Suppliers research and specialized know-how exceeds that of thebuyer

y Cost considerations (less expensive to buy the item)

y Small-volume requirements

y Limited production facilities or insufficient capacity

y Desire to maintain a multiple-source policy

y Indirect managerial control considerations

y Procurement and inventory considerationsy Brand preference

y Item not essential to the firms strategy


10/11

y Lack of expertise

y Suppliers research and specialized know-how exceeds that of thebuyer

y Cost considerations (less expensive to buy the item)

y Small-volume requirements

y Limited production facilities or insufficient capacity

y Desire to maintain a multiple-source policy

y Indirect managerial control considerations

y Procurement and inventory considerationsy Brand preference

y Item not essential to the firms strategy


11/11

make it or buy it

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