The Decision to make or Buy materials and parts of the products from vendors are analyzed by the manufacturers for reducing costs. This decision can not be considered as a long-term goal as buying parts from a vendor may not be feasible. It should also be noted that instead of choosing all the options available the most suitable one should be selected. The following are some of the factors that influence making or Buying Decision.
Sometimes taking the decision to make a part of the product in house that purchasing from outside can reduce the cost. While this taking this decision it should be noted that the increase in labor cost and working hours can impact the overall workflow inside the company.
While taking the make or buy decision the morale of the workers and production deadlines also need to be considered. If the production is down due to any circumstances then employees may not be having enough job and producing parts of products in-house will be a good option. Another option to move the production to in-house is when the parts reach at the manufacturing unit after some delay.
If the parts supplied by the vendor is of low quality then it is good to produce the raw parts inside the manufacturing unit itself. If the manufacturing of parts is not possible within the available set up investing in the production line will turn costly affair. Whether it is the make or buy decision maintaining quality is having high importance.
Increasing the volume of the products might make the availability of raw materials or parts of the products supplied become limited. In this case for meeting the demand in the production line Making decision might be suitable.