In my last post I discussed how a purely cost-accounting-driven make-or-buy decision can be bad for the company. However, there are often good reasons to buy parts or products instead of make them. In this post I will look at a couple of reasons for outsourcing rather than making it yourself. Unfortunately, all of these are hard to pin down in numbers, and at the end of the day it is still a qualitative decision.
Cost
Make or Buy: How Not to Do It
“Make or buy?” is a question most companies have to ask themselves. Which parts or even products should you make yourself, and which ones should you outsource to a third-party supplier? The question itself is already difficult, but here again we run into the problem of cost accounting. If you go purely by the numbers, you can easily run your company into the ground. Let me show you how (NOT) to do it.