Manufacturing Strategy: Make vs. Buy (PowerPoint PPT Slide Deck)

DESCRIPTION

This product (Manufacturing Strategy: Make vs. Buy) is a 25-slide PPT PowerPoint presentation slide deck (PPT), which you can download immediately upon purchase.

Internal manufacturing of a product versus procurement from external supplier sources is a difficult decision requiring careful and thorough assessment of multiple elements. The assessment includes organization's core competencies, business strategy, manufacturing strategy, internal capacity, resource limitations, demand fluctuations, time-to-market, and improved returns, among others. Top management has to negotiate the trade-offs between the make or buy alternatives.

Procurement from external sources liberates the organization's resources, cuts investment demands, increases flexibility and return on capital. However, there are associated quality and supply risks involved with this strategy. In contrast, "in-house manufacturing" employs internal capacity, absorb fixed costs, and safeguard intellectual property. Nevertheless, the "make" approach entails unwarranted complexities, and avert resources and focus away from more important strategic priorities.

This PowerPoint presentation on Manufacturing Strategy provides a comprehensive framework to help organizational leadership answer the make vs. buy question by evaluating their manufacturing network and strategies, developing an assessment criteria, detailed implementation process, and tactics for executing the framework.

There are 6 broad assessments to evaluate when making the make vs. buy decision:

1. Manufacturing Strategy compatibility – Does the product fit within our Manufacturing Strategy?

2. Total delivered costs – How do internal costs compare with third-party alternatives?

3. Capacity – Is there available or potential plant capacity for in-house manufacturing?

4. Intellectual Property exposure risk – What is the Intellectual Property risk of buying a product?

5. Business Case development – What is the Business Case for making vs. buying a product?

6. Contract manufacturers availability – Are there actually contract manufacturers available to make the product?

This framework also breaks down the 6 attributes to enable a successful make-or-buy process. These attributes allow for a company to establish a workable and consistent make-or-buy process.

The Manufacturing Strategy PPT also includes some slide templates that depict the 4 Manufacturing Categories and Make vs. Buy Assessment Criteria for you to use in your own business presentations.

The presentation categorizes manufacturing operations into core, supporting, secondary, and marginal, providing a structured approach to decision-making. It also includes templates for assessing strategic value and performance, aiding in the practical application of the framework.

Source: Best Practices in Manufacturing PowerPoint Slides: Manufacturing Strategy: Make vs. Buy PowerPoint (PPT) Presentation Slide Deck, LearnPPT Consulting

PPT SLIDE DEEP DIVES

Manufacturing Operations Assessment Framework

This PPT slide presents a structured framework for categorizing a company's manufacturing operations into 4 distinct categories: Core, Supporting, Secondary, and Marginal. This classification aims to enhance the make-or-buy decision-making process, which is crucial for optimizing resource allocation and operational efficiency.

Core operations are highlighted as the backbone of the manufacturing network. They possess high strategic value and performance, serving as essential elements for sustainable growth. The emphasis here is on maintaining high performance levels to ensure these operations continue to drive the company's success.

Supporting operations are described as complementary to core functions. They have lower strategic value and performance, but play a vital role in the overall network. The slide suggests that these operations may transition to core or secondary status in the future, indicating potential for growth or reclassification based on performance improvements.

Secondary operations are characterized by their low performance and strategic value. The slide notes that these operations are often candidates for divestiture unless significant improvements are made. This indicates a proactive approach to managing underperforming assets, ensuring that resources are not wasted on operations that do not contribute meaningfully to the company's objectives.

Marginal operations are identified as those with poor performance and low strategic value. The recommendation is to rationalize these operations swiftly to free up organizational resources. This highlights the importance of agility in manufacturing strategy, allowing companies to adapt to changing market conditions and internal dynamics.

Overall, the slide underscores the necessity of regularly reassessing the manufacturing network to align with evolving business environments and global dynamics. This structured approach can guide executives in making informed decisions that enhance operational effectiveness.

Key Attributes for Effective Make-or-Buy Decisions

This PPT slide outlines essential attributes that leading organizations utilize to enhance their make-or-buy decision-making process. It emphasizes the importance of a structured approach to this critical business decision, which can significantly impact operational efficiency and cost management.

The first attribute, "Clearly Defined Roles and Responsibilities," suggests that organizations must establish clear accountability among team members involved in the decision-making process. This clarity helps streamline communication and ensures that all stakeholders understand their contributions.

Next, "An Effective Manufacturing Strategy" highlights the necessity of aligning manufacturing capabilities with business objectives. This alignment is crucial for determining whether to produce in-house or outsource, as it directly influences cost-effectiveness and quality control.

The third point, "Identification and Endorsement of Capable 3rd Party Manufacturers," stresses the importance of vetting external partners. Organizations should not only identify potential suppliers, but also assess their capabilities to ensure they can meet quality and delivery standards.

"Cost Transparency" is another critical factor. Organizations need to have a clear understanding of all costs associated with both making and buying. This transparency allows for more informed decision-making and helps avoid hidden costs that can erode profitability.

The fifth attribute, "Business Models," suggests that organizations should evaluate how different models affect their make-or-buy decisions. Understanding the implications of various business models can lead to more strategic choices.

Lastly, "Recurrent Review of Decisions" indicates that the make-or-buy process is not a one-time event. Continuous evaluation ensures that decisions remain relevant and aligned with changing market conditions and organizational goals.

These attributes collectively support a robust framework for making informed and effective make-or-buy decisions.

Assessing Manufacturing Compatibility: Make vs. Buy

This PPT slide outlines critical assessments for determining whether to manufacture a product in-house or outsource it. The primary focus is on the compatibility of a product with the firm's existing manufacturing strategy. It emphasizes that many companies opt for in-house production based solely on their current capacity, which can lead to suboptimal decisions. A thorough evaluation of the facilities, technologies, processes, and materials required for in-house manufacturing is essential. This evaluation should be conducted against predefined standards to ensure that the product aligns with the firm's capabilities.

If the product does not meet these standards, the recommendation is to consider external sourcing. The slide also highlights the importance of a cost analysis in this decision-making process. This analysis serves as a practical check on the feasibility of the manufacturing strategy. If the cost analysis indicates that in-house production is not economically viable, the existing strategy must be reassessed.

Additional assessments listed include capacity, intellectual property exposure risk, business case development, and the availability of contract manufacturers. Each of these factors plays a role in the overall decision-making framework. The slide concludes with a note that not all assessments may be necessary for every company, suggesting a tailored approach to the make-or-buy decision. This nuanced understanding of the assessments can guide executives in making informed choices that align with their strategic objectives.

Essential Factors in Strategic Make-or-Buy Decision Making

This PPT slide presents 3 critical attributes essential for a successful make-or-buy decision process. The first attribute, Cost Transparency, emphasizes the importance of thorough cost comparisons between internal and external manufacturing options. Organizations are urged to not only assess external quotes, but also to consider internal conversion costs, including fixed costs, logistics, testing, and quality assurance. This comprehensive cost analysis is crucial for making informed decisions.

The second attribute, Business Models, highlights how leading firms utilize business case models to gather extensive information. This information aids in preparing accurate forecasts necessary for making strategic decisions. The analysis must encompass various elements, including strategic assessments, detailed project plans, risk evaluations, and financial analyses. This structured approach ensures that decisions are grounded in solid data and strategic foresight.

The final attribute, Recurrent Review of Decisions, stresses the need for ongoing evaluations of analyses and environmental factors. Given that conditions can change rapidly, organizations must regularly reassess their make-or-buy decisions. The slide suggests that thresholds should be established for products, and if these thresholds are crossed, it should prompt a reevaluation of the decision. This proactive approach allows organizations to remain agile and responsive to shifting market dynamics.

Overall, the insights provided in this slide serve as a guide for organizations looking to refine their decision-making processes regarding manufacturing strategies. The emphasis on transparency, comprehensive analysis, and regular review is critical for achieving optimal outcomes in the make-or-buy process.

Framework for Categorizing Manufacturing Operations

This PPT slide presents a framework for categorizing manufacturing network operations based on their strategic value and performance. It features a two-dimensional matrix with "Manufacturing strategic value" on the vertical axis and "Performance" on the horizontal axis. The matrix is divided into 4 distinct categories: Core, Supporting, Secondary, and Marginal.

The Core category, located in the upper right quadrant, signifies operations that are both high in strategic value and performance. These are critical to the network's success and should be prioritized for investment and development. The Supporting category, adjacent to Core, also holds high strategic value, but may not perform as well. These operations are important, but may require enhancements to reach their full potential.

In the lower half of the matrix, the Secondary category indicates operations that have moderate performance, but low strategic value. These may not be essential to the core business, but still contribute to overall operations. Lastly, the Marginal category represents operations that are low in both strategic value and performance. These should be evaluated for potential divestment or restructuring.

The framework provides a structured approach for decision-making regarding manufacturing operations. It helps organizations identify where to allocate resources effectively, ensuring that high-value operations receive the attention they need while also recognizing areas that may be less critical. This categorization can serve as a foundation for guiding make-or-buy decisions, enabling companies to align their manufacturing strategies with overall business objectives.