Make-or-buy and process-technology choice

Make-or-buy is more than comparing supplier price with internal material cost. First define the capability that differentiates the business, design rights, quality specification and customer lead promise. Then compare relevant cost: variable material and labor, incremental setup, inspection, freight, inventory, delay risk and capacity investment. A sunk fixed cost unchanged by the decision does not belong in the alternative difference; an avoidable fixed cost does. Volume growth or a capacity bottleneck can reverse the result.

Test the external supplier through qualification lots and process stability, not sales claims alone. Transferring drawings may require IP controls or customer consent, with explicit ownership of tools, dies and data. If making internally, check displacement of other products at a shared bottleneck; opportunity cost may exceed direct unit cost. If buying, plan receipt inspection and a fallback for supplier disruption. Moving a defect from plant to supplier does not count as quality improvement.

For automation versus manual work, compare cycle time, defects, worker safety and changeover flexibility, then include outage, maintenance and training. A fast machine for a high-volume item may be a burden under many low-volume variants. Record the break-even volume and invest in maintainability and data validation. Revisit the choice after operating evidence, not by counting installed machines or signed contracts.