Many companies are reviewing which supply chain tasks they need to perform in house (insource) or outsource to a partner i.e. Logistics Service Provider (LSP) or Contract Manufacturer (CMO). Supply chain activities that can be insourced or outsourced can include for instance Transportation, Transportation Management, Logistics, Value Added Services, Order to Cash, Planning, Running a Control Tower, but also parts of the manufacturing/assembly process.
Seven factors determine the make or buy decision:
In the past, outsourcing has been regarded as a black or white decision. Over the last years, many brand owners have shifted from an insourced to an outsourced model and are reviewing a hybrid model in which the brand owner remains in control of an operation but leverages a 3rd party for specific value or expertise.
Alternative insourcing and outsourcing models include:
BCI supports clients in the evaluation of the make or buy decision, which needs to be analysed from a strategic, qualitative and financial perspective. The critical importance of the supply chain activity to business performance (profit) and supply risks are key to taking the right make or buy decision and choosing the optimal operating model. In the strategic outsourcing evaluation, BCI includes elements such as core competences, the willingness to invest in supply chain execution, the clients position towards having own assets, volume and mix flexibility, scalability, intellectual property, management and control, quality and risk, etc.
Next to these strategic considerations, BCI assesses the pros and cons of the various make or buy models from a financial perspective.
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