Make and Buy
Veröffentlicht von Oliver Ruoff · 8 Juni 2020
“Make or Buy” sounds rather categorical. But actually it shouldn´t be. Every company has to find a good balance between keeping the core competences in house to secure IP and to ensure a certain flexibility as well as speed. And on the other side in a more and more volatile world there is a need for cost flexibility. Thinking along this line we should rather talk about “Make and Buy”.
Actually the Make-(or)-Buy topic is strategical and therefore mid-to-long term in its orientation. But especially in times like the present with volatile business environment this topic pops up with short term ideas in mind. Even more it is essential to differentiate the main aspects and goals of a reduction or even an increase of the vertical integration.
Else the effect of a potential outsourcing could even be counter-productive. It could result in:
- Exiting the optimum working point by reduced volumes for the production technologies
- Reduced productivity and thereby increased product cost
- Know-how will be open source resulting in a weaker competitive position
This doesn´t mean that outsourcing is a bad idea.
It just means that we should be careful and diligent when deciding about make-and(or)-buy topics. Market and strategic considerations should be a first step to ensure that from a mid- to long term view the future success of your company is secured. Else we may optimise the short-term profitability but endanger the mid- to long term survival. In some cases this may make sense. But hopefully not in many.
Depending on the position in the lifecycle of products and/or technologies the Portfolio position may shift. As well the appropriate Make-and-Buy strategy may change.
Based on this first strategical view and clustering of products and services the next step will be an economical evaluation of each element.
To be able to keep the productivity high for the remaining volumes this economical evaluation has to consider investment scenarios and utilisation per technology.
These are only some impulses for your thoughts. If you are interested please feel free to contact me to discuss.
With kind regards
Oliver Ruoff
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