This framework is developed by a team of former McKinsey and Big 4 consultants. The presentation follows the headline-body-bumper slide format used by global consulting firms.
Make-or-Buy Decision PPT: Learn how to analyze outsourcing vs in-house options with clear frameworks, weighted analysis, and decision templates. Download now. Make-or-Buy Decision Analysis is a 23-slide PPT PowerPoint presentation slide deck (PPT) available for immediate download upon purchase.
As organizations are being put under increasing pressure to cut expenses and improve return on assets, the dilemma of whether to keep key functions in-house or outsource them has taken center stage.
Manufacturing units are being identified with Make-or-Buy Decisions as third-party suppliers in Eastern Europe, China, Southeast Asia, and other low-cost regions hold out a promise of significant advantage that companies in developed countries can't offer.
The Make-or-Buy Decision extends beyond manufacturing. It encompasses human resources, information technology, maintenance, and other fundamental business functions. Chief Procurement Officers (CPO) are now expected to play a key role in helping business units make decisions given the skills and objective perspective the teams bring to the effort. While the choice to keep an activity in-house or outsourced may be cross-functional and strategic, it is the role of the CPO to make outsourcing decisions work.
This presentation thoroughly discusses the dynamics of Make-or-Buy Decisions and the framework to guide companies make the right decisions. The framework is built on 3 key pillars.
1. Strategy
2. Risks
3. Economics
The Make-or-Buy Decision should not be made without careful analysis. The analysis should be conducted in the most diligent and objective manner.
This deck also includes slide templates for you to use in your own business presentations.
This PPT provides a comprehensive toolkit for executives to navigate the complexities of Make-or-Buy Decisions with precision. It includes detailed criteria for evaluating strategic, risk, and economic factors, ensuring a holistic approach to decision-making. The presentation also offers practical templates to streamline your analysis and presentations. By leveraging this framework, you can make informed, strategic decisions that align with your company's long-term goals and operational capabilities. This resource is indispensable for CPOs and business leaders aiming to optimize their procurement strategies and enhance organizational efficiency.
This PPT slide outlines key decision criteria for make-or-buy evaluations in corporate strategy, focusing on in-house production versus outsourcing. The first criterion, "Attractiveness of the process/business," emphasizes differentiation; in-house processes that enhance products may be retained, while unattractive outsourcing options due to labor shortages or regulatory issues may favor internal capabilities. The second criterion, "Critically for overall business success," highlights synergies; in-house production is preferred if it aligns with existing processes and enhances performance. The third criterion, "Industry dynamics and competitive positioning," assesses market conditions; a hostile supply market may necessitate in-house operations for control, while a favorable environment may support outsourcing. Lastly, "Dynamics of the technology or capability" considers technological change; in-house capabilities are essential for innovation, while effective suppliers may justify outsourcing.
This PPT slide outlines the risks associated with outsourcing, highlighting the importance of effective risk management. Key risks include lower quality, reliability, and predictability compared to in-house operations, as well as challenges in supplier selection and relationship sustainability. The "Decision Rule" emphasizes a thorough supplier selection process informed by an understanding of the supplier's strategy, operations, and cost structure to mitigate risks. In the "Role of CPO" section, the Chief Procurement Officer (CPO) is responsible for managing these risks, fostering partnerships with suppliers, and overseeing risk assessments during make-or-buy evaluations. The CPO must also ensure contracts protect the organization against potential outsourcing shortcomings. This strategic approach to risk management is essential for leveraging external partnerships effectively.
This PPT slide outlines a strategic framework for evaluating outsourcing decisions. It emphasizes the strategic importance of products or services and the necessary processes, technologies, or skills for delivery. The "Decision Rule" section prioritizes in-house capabilities for essential functions, indicating a careful consideration of core operations. The "Role of CPO" highlights the Chief Procurement Officer's responsibilities in assessing which aspects should remain in-house versus outsourced. This includes evaluating potential outsourcing partners' technological capabilities and product development processes. The CPO must also determine if the organization has the necessary skills and resources for effective management of outsourcing relationships. Maintaining quality and cost efficiency throughout the contract is crucial, necessitating ongoing evaluation to prevent subpar outsourcing results.
This PPT slide outlines the economic considerations in Make-or-Buy Decision Analysis, focusing on the impact of outsourcing on capital expenditures, return on invested capital, and return on assets. It emphasizes a shift from evaluating product price to understanding the overall cost of providing a service, encouraging a comprehensive analysis of long-term implications. The role of the Chief Procurement Officer (CPO) includes identifying supplier cost drivers and designing pricing mechanisms that reflect current and anticipated costs, facilitating effective negotiations and strategic supplier partnerships. Ongoing cost improvements should be incorporated into contracts, fostering collaboration between the outsourcing entity and the CPO’s organization. A gain-sharing mechanism is also crucial, rewarding suppliers for contributions and ensuring cost improvement benefits are shared with the buyer, enhancing the outsourcing relationship.
This PPT slide outlines a systematic approach for assessing the strategic value of services and manufacturing processes, categorizing them into strategic, core, and outsourcing options. The decision-making process evaluates whether a service or process provides a competitive advantage or involves emerging technology, leading to a core criticality ranking. High core criticality necessitates checking for preexisting commitments, with recommendations to renegotiate if they exist, or to ensure world-class capability for core activities. Low core criticality suggests considering outsourcing while managing investments effectively. For strategic processes, adequate investment is essential to maintain value. This structured method aids organizations in aligning operational capabilities with strategic objectives and optimizing resource allocation.
Holdup risks arise when suppliers exploit customer dependency. Evaluating outsourcing options before contracts is essential. The first strategy involves controlling production through direct ownership or joint ventures, offering high operational control, but requiring significant capital and management. The second strategy is using multiple suppliers for each product, fostering competition, but potentially increasing costs due to redundancy. The third option suggests selecting a single supplier while splitting volume among multiple suppliers to stimulate competition, which avoids capital investment, but may challenge economies of scale. The final strategy focuses on creating incentives for all parties, fostering strategic partnerships that keep costs low, but may limit future alternatives. Each outsourcing strategy presents trade-offs that impact supplier relationships.
Source: Best Practices in Manufacturing, Outsourcing PowerPoint Slides: Make-or-Buy Decision Analysis PowerPoint (PPT) Presentation Slide Deck, LearnPPT Consulting
This framework is developed by a team of former McKinsey and Big 4 consultants. The presentation follows the headline-body-bumper slide format used by global consulting firms.
For $10.00 more, you can download this document plus 2 more FlevyPro documents. That's just $13 each.
ABOUT FLEVYPRO
This document is part of the FlevyPro Library, a curated knowledge base of documents for our FlevyPro subscribers.
FlevyPro is a subscription service for on-demand business frameworks and analysis tools. FlevyPro subscribers receive access to an exclusive library of curated business documents—business framework primers, presentation templates, Lean Six Sigma tools, and more—among other exclusive benefits.
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.
Trusted by over 10,000+ Client Organizations
Since 2012, we have provided business templates to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
"I am extremely grateful for the proactiveness and eagerness to help and I would gladly recommend the Flevy team if you are looking for data and toolkits to help you work through business solutions."
– Trevor Booth, Partner, Fast Forward Consulting
"I have used FlevyPro for several business applications. It is a great complement to working with expensive consultants. The quality and effectiveness of the tools are of the highest standards."
– Moritz Bernhoerster, Global Sourcing Director at Fortune 500
"As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor
the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant's toolbox.
"
– Michael Duff, Managing Director at Change Strategy (UK)
"As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."
– Michael Evans, Managing Director at Newport LLC
"My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me
in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.
"
– Bill Branson, Founder at Strategic Business Architects
"FlevyPro provides business frameworks from many of the global giants in management consulting that allow you to provide best in class solutions for your clients."
– David Harris, Managing Director at Futures Strategy
"Flevy.com has proven to be an invaluable resource library to our Independent Management Consultancy, supporting and enabling us to better serve our enterprise clients.
The value derived from our [FlevyPro] subscription in terms of the business it has helped to gain far exceeds the investment made, making a subscription a no-brainer for any growing consultancy – or in-house strategy team."
– Dean Carlton, Chief Transformation Officer, Global Village Transformations Pty Ltd.
"As a young consulting firm, requests for input from clients vary and it's sometimes impossible to provide expert solutions across a broad spectrum of requirements. That was before I discovered Flevy.com.
Through subscription to this invaluable site of a plethora of topics that are key and crucial to consulting, I
have been able to exceed expectations and deliver quality advice and solutions to my clients. The quality and expertise of the authors are exemplary and gives me great confidence to use as part of my service offerings.
I highly recommend this company for any consultant wanting to apply international best practice standards in their service offerings.
"
– Nishi Singh, Strategist and MD at NSP Consultants
Receive our FREE presentation on Operational Excellence
This 50-slide presentation provides a high-level introduction to the 4 Building Blocks of Operational Excellence. Achieving OpEx requires the implementation of a Business Execution System that integrates these 4 building blocks.
Click main image to view in full screen.
