Instead of buying products from suppliers, some manufactures prefer to make the products themselves. Here are few things that can be used as considerations whether to choose to make the products themselves or to buy the products.
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Make when
- The cost of supply is high part of the cost
- The company has specialised needs of the products
- It needs to have a really source of supply
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Buy when
- The company wants to maintain flexibility in its sources of supply
- The company has only limited skills and resources of supply
Analysis is needed to examine not justthe cost of each alternative make-or-buy decission, but also the skills, resources needed and broader direction of the company. It will also look at what competitors do and explore the reasons for any differences.