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Supply Chain Glossary

Glossary  >  M  >  Make or Buy  


 

Make or Buy


Source: Procurement Glossary
Author: Paul Rogers
Institute: CIPS - UK

Courtesy of


 

The make or buy decision is between making a good or providing a service in-house, or buying the good or contracting for the service from external suppliers.  It precedes the procurement process and is a strategic decision that defines the boundary of the organisation.

 

When organisations understand their ‘core competence’ and know in which activities they have a relative competitive advantage over competitors, it makes strategic sense to undertake those activities internally.  For example, in running an airline, it is possible to ‘wet lease’ the aircraft and crew, buy-in the ground-handling and check-in services and contract out the sales and customer interface.  This is possible because these are mature supply markets, with competition, which might enable the virtual airline to obtain these services at a lower cost than if it sought to engage in these activities with its own resources. In this example, the core competence of the airline would be in planning a network, i.e. deciding where to fly to and from, obtaining the slots from the relevant airports, negotiating with governments, buying aviation fuel, and developing and promoting their brand.

 

In practice not all make or buy decisions or ‘do or contract’ decisions involve systematic cost comparisons, benchmarking external and internal costs, and the shape of some organisations owes as much to the legacy of historical choices as to current strategic opportunities.  See also Outsourcing and Transaction Cost Economics.

 

 

 

 

 

 

 

 

 




Job Opportunities
 
Senior Procurement Category Manager
     
     Pennsylvania, Philadelphia County, Philadelphia  -  PERM  -  Bramwith Consulting

Senior Procurement Engineer
     
     Bothell, Washington  -  PERM  -  Philips

Inventory Control Mover
     
     New York - Oak Hill  -  PERM  -  GlaxoSmithKline

Global Lean (NLS) Manager
     
     Memphis, Tennessee  -  PERM  -  Nike Inc.

Director of Procurement
     
     Chicago  -  PERM  -  Michael Page

Head of Glass Procurement
     
     Illinois, Cook County, Chicago  -  PERM  -  Bramwith Consulting

Finished Goods Buyer / Planner
     
     Warwick RI  -  PERM  -  LifeWork Search

Mechanical Engineer- Procurement
     
     Monroeville, Pennsylvania  -  PERM  -  Philips

Procurement Manager-RTP
     
     North Carolina - Research Triangle Park  -  PERM  -  GlaxoSmithKline

Regional Category Manager, Procurement
     
     North Carolina - Research Triangle Park  -  PERM  -  GlaxoSmithKline

Sourcing Information Analyst
     
     Beaverton, Oregon  -  PERM  -  Nike Inc.

Senior Sourcing Analyst - Facilities
     
     Deerfield  -  PERM  -  Michael Page

VP of Procurement
     
     Chicago  -  PERM  -  Michael Page

Global Procurement, Innovation Manager
     
     New Jersey - Warren  -  PERM  -  GlaxoSmithKline

Senior Sourcing Analyst – Tee’s Center of Excellence
     
     Beaverton, Oregon  -  PERM  -  Nike Inc.



 
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