In-house production or external procurement (make or buy)

In-house production or external procurement (make or buy) is the important decision within the procurement program via the interface between procurement and production (make-or-buy in logistics, make-or-buy in production). It determines whether a good is produced in-house or obtained from outside. This also defines the vertical range of manufacture. Since the systems and workers available in a company have only limited flexibility in terms of production technology, this decision has to be made in the long term for many goods.
Maßgebliche Kriterien für die Entscheidung zwischen Eigenfertigung und Fremdbezug sind neben den Kosten und der Liquidität die Qualität, die Fertigungs- bzw. Beschaffungszeit, die Sicherung der Bereitstellung sowie die Product range policy the company.

The relationship to the rest of the production program and the capacity utilization play a role in the cost comparison. In-house production usually results in a higher capital commitment and therefore affects liquidity. With regard to quality, it must be checked to what extent your own company or supplier can meet the quality requirements. Ensuring quality and ensuring timely availability of the required goods are often so important for production and sales that they can make the difference when choosing between in-house production and external procurement. Range considerations play a role if the company has to offer a broad range, but the manufacture of all products exceeds the existing qualitative and quantitative capacities.

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