Sometimes, manufacturers have difficulty in deciding whether to manufacture materials for a finished product in-house or to buy them in from outside.
Although the principal consideration is financial, there are also other factors that need to be weighed.
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The following checklist will help you focus on the most important factors:
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YES |
NO |
Does demand for the finished product seem relatively buoyant for the foreseeable future? |
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Does demand for the finished product tend to fluctuate? |
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Do you have unused plant and labour that could be utilised to manufacture the materials? |
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Could you achieve greater economies of scale by manufacturing in-house than you could by buying in? |
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Would manufacturing in-house give you greater control over such things as the quality of the materials and delivery time? |
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Could you manufacture in-house without having to recruit extra labour? |
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Every 'Yes' answer is a case for manufacturing in-house.