Make-or-buy decisions and their implications

Managing Dynamics in Corporate Networks

“…The stiffer competition has also forced systems integrators to develop new strategies to meet new demands. Management issues, such as lean production, system strategies, and outsourcing, have been introduced and over time become dominant ideas of a changed direction among many corporations [1,2]. If attributes, such as a high level of customization, short lead times in product development and quick responses to late changes of specifications are important, long distances and perpetual changes of suppliers may cause disturbance.…”

The role of context, activities, and organization, in Value-Based Procurement

“…Outsourcing to a single supplier might be done to strike against competitors who enjoy extreme benefits from being the sole customer of that supplier (Arya, Mittendorf et al 2008). Outsourcing also increases the degree of specialization of actors within a supply chain, allowing them to be at the cutting edge and more effective in their cost structures, albeit also at a loss of knowledge, and higher dependency and unpredictability (Ford, Cotton et al 1993). These authors also find that management is often not involved in these decisions, and strategies for the make-or-buy decision are commonly missing.…”

“…Internal representation of the procurement function was an area without literature support, but with strong presence in the empirics. The theoretical framework concerning procurement management was useful for understanding the other activities relating to supplier diversity (Whitfield and Landeros 2006), knowledge management (Tseng 2014), sourcing (Ramsay and Wilson 1990, Ford, Cotton et al 1993, Bals and Turkulainen 2017, and organizing procurement (Lakemond, van Echtelt et al 2001, Lambros andSocrates 2001). These were put into the category Running Strategic Sourcing.…”

“…In that context, it is important to understand in detail the alternatives available (Whitfield and Landeros 2006) to make correct sourcing decisions Wilson 1990, Bals andTurkulainen 2017). Constituting another theoretical alternative to consider, procurement management must also make the continuous decision whether to source from a supplier or to make internally (Ford, Cotton et al 1993). The make-orbuy decision has been central to the strategic change at SAAB.…”

“…The outsourcing of product development shows the anticipated effects, such as effective cost structures, but also the risks of knowledge loss and dependability (Ford, Cotton et al 1993). The strategic importance of procurement from partner suppliers is naturally high (Kraljic 1983, Iyer 1996, but finding and working with multiple suppliers at the same time is difficult or impossible (Ramsay and Wilson 1990).…”