Purchasing_-_Dr_Nora_-_Ch_5_ - Make or Buy Insourcing and...

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Chapter Five Make or Buy, Insourcing and Outsourcing
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INTRODUCTION One of the most critical decisions made in any organization concerns make or buy decisions. When any organization starts its life, a whole series of make or buy decisions need to be made, and as the organization grows and as it adds or drops products from its offerings, make or buy decisions continue to be made.
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Reasons to Make Instead of Buy Quantities are too small and/or no supplier is interested. The purchase option is too expensive “to reduce cost”. Quality requirements are too exacting or unusual and require special processing methods the supplier can’t be expected to provide. Greater assurance of supply or closer coordination of supply and demand or forecast of future shortage in the market or rising prices. To preserve technological secrets A significant customer required it. To take advantage of unused or avoid idle equipment or/and labor Keep out capacity utilization high and outsource the rest Avoid supply dependency Competitive, political, social or environmental factors Management takes pride in size.
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  • Spring '16
  • El Qady
  • Insourcing, supply management expertise, outsourcing decisions, significant customer, high capable supplier

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