Factors That Help You to Understand Whether You Should Manufacture or Buy the Product from an External Source
The action that helps you to decide whether you want to manufacture a particular product or buy it from an external source is known as make or buy decision. You need to take this decision when a particular firm has already modified a product or a part of the product and then have started facing issues with their suppliers.
There are some companies who do all the work starting from manufacturing every part of the product to final distribution of the product. On the other hand there are some other companies who simply buy parts of products from other companies and then finally manufacture the finished good.
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Factors influencing the make or buy decision
When you are trying to take a make or buy decision it is immensely important that you properly analyze expenses that are related to the development of a particular product.
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Factors that favor the in house manufacturing of a product
- If you want to access direct control on the manufacturing department then having a manufacturing unit within your organization is very important. This will also help you to control the quality of your product
- If you do not want to rely on suppliers
- The cost is definitely less when you manufacture parts of a particular product within your organization
Factors that influence purchasing parts of products from an external supplier
- If you do not have people with the necessary expertise
- If you prefer buying parts of a particular brand
- If the volume that you need is quite less
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