It is an important decision from many aspects.
One, what are the boundaries of our company?
Where do our company operations start and where do they finish?
The other one is, what do customers value?
And third what are we good at?
So this decision needs to be made very carefully and very deliberately.
It's not something you just decide on a whim.
You have to have proper analysis in place.
To help you whether to make or
buy, I'm offering you a couple of questions that you should ask yourself.
In coming up with the right answer.
The first one is what business are we in?
What is our company about?
And what is core to our company?
Everything that is core should stay in house,
everything that we determine is not a core area should be outsourced.
The second question is, are we good at making this one item?
And if we're not good at it, we should not make it because
we can buy it from somebody who is much better than we are.
For example,
a lot of companies decide they are not very good at handling their own logistics.
So, they decide to pay another company to handle their logistics.
Third, do we have a competitive advantage?
If we decide something is core to our business, but we're worse
than our competitors, then it's the wrong thing to have as a core item.
So we don't necessarily want to spend resources doing that.
And lastly, If we decide to put in resources in to making a certain item,
what happens to those resources?
They're gone, but we could have used them better elsewhere.
So we need to be very conscience of what resources we spend in making items,
or choosing to not expend those resources and buying the item.
Harley Davidson continues to thrive,
partly because their label is made in the USA.
Consumers like that, so
the company continues to produce in house, in the United States.
And that is what their consumers are looking to buy
in terms of the motorcycles.