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Make and buy strategy as a result of an insourcing project

Grela Grzegorz

Zeszyty Naukowe. Organizacja i Zarządzanie / Politechnika Śląska

2020

z. 144

137--146

Purpose: The aim of the article is to develop a formalized model which explains the decision to use the ‘make and buy’ strategy. Design/methodology/approach: The article presents a review of the latest literature on the ‘make and buy’ strategy for a selected component or service, together with a case study of the use of the ‘make and buy’ strategy resulting from the implementation of an insourcing project in a manufacturing company. The model was built using mathematical analysis. Findings: The formalized model of the ‘make and buy’ strategy presented in the article is focused on factors related to cost savings. It uses analytical verification to determine whether the savings associated with insourcing the process of manufacturing the analysed product outweigh the costs associated with its launch in-house (with the size of demand determined on the basis of historical data). Practical implications: In the context of this article, ‘make and buy’ consists of simultaneously producing and purchasing the same product or service by the organization, which in the literature is sometimes referred to as dual-sourcing, concurrent sourcing, bisourcing, plural sourcing or partial integration. The use of the proposed model may be useful for entrepreneurs from the point of view of optimising the costs of their business. Originality/value: Proposal of a formalized model which explains the decision to use the ‘make and buy’ strategy.