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Should we enter into an alliance, and if so, what type, or work privately?Policy and Procedure ManualT/F - Poor internal compliance with supply processes may indicate that internal customers do not trust the supply process or the suppliers to live up to promises.Online auctions have been most effective when: c.the market conditions favor buyers.Chapter 5 – Make or Buy, Insourcing and OutsourcingMake or BuyNew management trends favoring ﬂexibility and focus on corporatestrengths, closeness to the customer, and increased emphasis on productivity and competitiveness reinforce the idea of buying outside.Reasons to Make Instead of BuyQuantities are too small and/or no supplier is interestedQuality requirements are too exacting or special processing methods neededGreater assurance of supplyCloser coordination of supply and demandPreserve technological secretsLower costTo take advantage of unused capacityKeep our capacity utilization high and outsource the rest
Avoid supply dependencyReduce riskCompetitive, political, social or environmental factorsDistance from the closest available supplier is too greatMarket potential for the product or service is expanding rapidlyForecasts of future shortages in the market or rising pricesReasons to Buy Instead of MakeLack of managerial or technical experienceLack of production capacityReduce riskCustomer preference for a particular brandChallenges of maintaining technological leadership for noncore activityOutsourcing is difficult to reverseCost accuracyFlexibilityInsufficient volume to justify in-house productionForecasts show great demand and/or technological uncertainty Availability of a highly capable supplier Desire to stay leanBuying outside may open up markets The ability to bring a product or service to market fasterSuperior supply management expertiseGrey zoneThis middle ground may be particularly useful for testing and learning without having to make the full commitmentto make or buy. The gray zone in make or buy may offer valuable opportunities or superior optionsfor both purchaser and supplier.SubcontractingInsourcingMost obvious reasonis when an existing source of supply goes out of business or drops a product or service line and no other supplier is available.A sudden massive increase in price, the purchase of a sole source by a competitor, political events and regulatory changes, or a lack of supply of a key raw material or component required for the manufacture of the purchased product. /Developed a unique process quality, cost, delivery, ﬂexibility, supply’s capability to provide the required inputs.