Operations Management: Sustainability and Supply Chain Management, Twelfth Edition

Sourcing Issues: Make-or-Buy and Outsourcing

As suggested in Table 11.2, a firm needs to determine strategically how to design the supply chain. However, prior to embarking on supply chain design, operations managers must first consider the “make-or-buy” and outsourcing decisions.

Table 11.2 How Corporate Strategy Impacts Supply Chain Decisions*

* See related table and discussion in Marshall L. Fisher, “What Is the Right Supply Chain for Your Product?” Harvard Business Review (March–April 1997): 105.

Low-Cost Strategy	Response Strategy	Differentiation Strategy
Primary supplier selection criteria	Cost	Capacity Speed Flexibility	Product development skills Willing to share information Jointly and rapidly develop products
Supply chain inventory ...