The do/buy decision; how do you decide when to buy and when to make?
There is an age-old conundrum, when should you buy and when should you do it in-house? Sometimes, it is all about the right balance, establishing when it is economically and/or financially beneficial to do one over the other.
Here is a list of generic reasons that might be considered when deciding to outsource or not.
Reasons for making in- house:
- It is cheaper to make in- house than to buy. Detailed analysis needs to be done in order to ensure that costs are realistic. Sometimes, it is worth weighing up the long-term cost of doing things yourself.
- Doing the activity fits with your expertise, equipment and tradition and aligns with your core competences. If is it your bread and butter, why would you outsource?
- There is no reason to outsource, if you have idle capacity in- house that can do the tasks. Make the most of what you have available to you.
- What is being done is too large, difficult or expensive to transport. The logistics of transporting certain products or builds is just not feasible so producing on site is the only option.
- The activity is classed as confidential., If your competitive advantage relies on confidential technology or processes then sometime there is no other option than to keep it in-house.
- The task that needs to be undertaken is unusual or complex and an increased level of control is needed for success.
Reasons for buying:
- It is cheaper to buy than to make. No- brainer and requires no further explanation!
- You don’t have the resources or capability to do it. What you are trying to do isn’t possible due to capacity constraints. There are always companies and suppliers that might be better equipped to deal with the task in hand.
- What you are trying to do is very small-scale and the capital investment would be inappropriate. If something is not financially viable then surely it isn’t the best option?
- There is dedicated process technology involved which makes buying the better route. Why invest the time and money into technology when someone else already has?
- What you want to buy is non-core to your organisation. There are always extras that you need to buy in. As a company it is simply not efficient to produce everything you require yourself.
- You must buy it because there is some form of intellectual property involved. The fact is, in certain circumstances, it cannot be made because someone owns the rights. Usually this would be in the form of a patent for a particular technology or innovation.
- You believe that risk can be outsourced, and you would rather a supplier handle it and take the risk. This is one that is very common. It takes the risk out of your hands and lays it at someone else’s door.
There is no right or wrong decision when deciding what is best; to buy or to make in- house. It is all about what suits your needs. igus® support both sides. You have the choice. As the customer, you can buy components to help with the build or you can relinquish all stress and let igus® build and deliver. The choice if yours.