Sourcing: Issues to be considered for the make-or-buy decisions

The make-or-buy decisions affect the overall performance of a manufacturing company and have a determining effect on its future survival. The make-or-buy decision is one of the most difficult problems in the business strategy and all the departments of a company must be involved in order to devise a sound sourcing strategy. In most of the companies, the sourcing decisions are based on the accounting aspect of the problem, but the development of a sourcing strategy requires the consideration of a host of financial and non-financial factors. Based on the concepts of core competences and strategic sourcing, this paper provides a structured and easy-to-follow procedure to develop sourcing decisions helping companies to focus on core activities and restore competitive advantages. Moreover, the application of the developed procedure in a real industrial case confirms the soundness of the whole procedure. This paper also examines the alternatives to widening the internal span of process.