Make Versus Buy

Bismillahirrahmanirrahim ……

Assalamualaikum w.b.t

How are you feel today?  have a great day today. In this era of Globalisation, there are many thing we want to do fast as possible. If  you have a company, you must have this 3M to achieve objective in business. This is Minimize Cost, Minimize Investment, Maximize Customer Service.If your company fulfil this 3M that can increase our profit. Today, we don’t want to talk all about 3M. We just want to talk about the first M. That mean, Minimize Cost. In business, Minimize cost is very important in business because if the product can fulfill customers requirement that mean our company was success in business. Customers not look at price, if customers satisfied they must buy it. That why, If we produce the product that can increase for the cost of production, that can effect for the price give to customer. To produce the product we must have a raw material to an sure the product can fulfil produce.In production, we have a two decision to get a raw material. That is we want to buy it or we want to make it.

Make Versus Buy

   

             Make or buy? This is a question of making decision to think about it. In today’s competitive environment, progressive firms must be able to produce quality products at reasonable prices. Product quality is a direct result of the production workforce and the suppliers. Buying organizations can be longer afford to maintain a large supplier base. In today’s competitive sourcing environment, buying firms select suppliers based on their capabilities, and not purely on the competitive process. The current trend in sourcing is to reduce the supplier base. In order to select suppliers who continually outperform the competition, suppliers must be carefully analysed and evaluated. That the reason why we need to buy or make.

The reason why must buy :

1.                             

                                        1.   Do not have the exact resource

2.                                 2.   Inadequate managerial / technical resource

3.                                 3.  Free management to deal which its core competition

4.                                 4.   Low labor cost

5.                                5.  Indequate capacity

6.                                6. Lack of knowledge

7.                                7. Save time

8.                                8.  Quantity discount

   

The reason why must making  :

1.      

                  1. Lower production cost

2.                               2. Unsuitable supplier

3.                               3. Ensure adequate supply

4.                               4. Maintainance core competence

5.                               5. Utilize surplus labor & facilities

6.                               6. Obtain desired quality

7.                               7 .Remove supply collusion

8.                               8.  Protect personal from lay off

9.                               9. Increase or maintain the size of company

                As can be seen, the make or buy decision is strategic , not merely a routine operational decision. The make or buy decision actually consists of a series of interrelated decisions that evolve over time. The make or buy decision must first determine what product or service is under consideration. The firm must then consider the in-house capability  for producing the product or service.

             If any constructive ideas can be added in the spaces comment below. Thank you for all response. Your cooperation is greatly appreciated.

THANK YOU for reads,