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Link to "1-16.1 Strategic Considerations" Link to contents for "1 USPS Supplying Practices Process Step 1: Identify Needs"      Link to "1-16.3 Cost Considerations"

1-16.2 Operating Considerations

The following considerations can help the purchase/SCM team consider relevant tactical factors affecting the make vs. buy decision:

Considerations that favor a “make decision” include:

  • Cost considerations (less expensive to make).
  • Desire to integrate plant operations.
  • Productive use of excess plant capacity to help absorb fixed overhead.
  • Need to exert direct control over production and ensure supply continuity.
  • Need to exert direct control over quality.
  • Design secrecy required.
  • Unreliable suppliers.
  • Desire to maintain a stable workforce (in periods of declining sales).

Considerations that favor a “buy decision” include:

  • Limited production facilities.
  • Limited internal labor/resources.
  • Cost concerns (less expensive to buy).
  • Small volume requirements.
  • Suppliers’ research and specialized know how.
  • Desire to maintain a stable workforce (in periods of rising sales).
  • Desire to maintain a multiple-source policy.
  • Indirect managerial control considerations.
  • Purchasing and inventory considerations.



Link to "1-16.1 Strategic Considerations" Link to contents for "1 USPS Supplying Practices Process Step 1: Identify Needs"      Link to "1-16.3 Cost Considerations"
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