When a company is making a make or buy decision, the qualitative factors it must consider include the lives of the employees who would be let go if the product was outsourced, the time constraints involved in getting outsourced products delivered and whether or not an outsourced product would be up to the company's standards. Almost all manufacturing companies have to deal with make or buy decisions for products.Continue Reading
A make or buy decision refers to the decision a company needs to make on whether it should manufacture a product or part of a product within the company or outsource that product and buy it from another company. The make or buy decision has both qualitative and quantitative factors that must be considered.
As far as qualitative factors go, the company must ultimately value the quality of its product and the quality of its workers and work environment. It is easy to know a product will have the correct dimensions and parts if it is made within the company that needs it, but sometimes it is cheaper to outsource the product. Similarly, potentially the product will have a much higher quality if it is manufactured by a company that specializes in that item.
While the quality of the item is important, so is the quality of the lives of workers. If a product is outsourced, it often means that some workers within a company will not be needed and lose their jobs. In this case, a company needs to ponder whether outsourcing the product is worth losing workers.Learn more about Managing a Business