MakeorBuyAnalysen

Make-or-buy analysis (MakeorBuyAnalysen) is a decision framework used in operations management and procurement to decide whether to produce an item internally or purchase it from an external supplier. The analysis weighs economic, strategic, and operational factors to determine the option with the lowest total cost and acceptable risk over a relevant time horizon.

Key factors include direct costs (labor, materials, tooling), overhead, capital investments, capacity utilization, and transition costs. Indirect costs such as quality, supplier reliability, lead times, intellectual property, and potential bottlenecks matter. Strategic considerations include core competencies, long-term supplier relations, flexibility, and risk exposure from supply disruption or price volatility.

Process steps typically involve defining requirements and options; gathering data on in-house production costs and outsourcing prices; estimating total cost of ownership including purchase price, maintenance, downtime, quality failures, obsolescence, and disposal; analyzing qualitative factors and risks; comparing options using break-even or net present value (NPV) analyses with sensitivity checks; and making a decision followed by implementation and monitoring.

Common methods include cost comparison, total cost of ownership, break-even analysis, and decision trees. Tools such as activity-based costing or life-cycle costing can improve accuracy. Sensitivity analysis helps assess how changes in key variables affect the preferred option.

Applications span manufacturing, information technology, and service industries. Limitations include data quality, volatile input prices, supply risk, and the challenge of quantifying strategic value. The analysis is most effective when integrated with corporate strategy and updated as conditions change.