Assess whether a component or service is core to competitive advantage or suited to external sourcing.
Warehousing & Procurement
Make-or-Buy Analysis and Insourcing Decisions for Components and Services
Guides operations and procurement leaders through make-or-buy analysis, cost and capacity comparison, risk assessment and insourcing transition planning.
🗓️Duration5 training days
📚Content4 modules · 8 sessions
🎓On completionAccredited attendance certificate
About the programme
Course Overview
A make-or-buy decision made on unit price alone usually ignores the fixed investment insourcing requires, the capacity already sitting idle on the shop floor, or the intellectual property risk of teaching a supplier too much. This course builds a complete make-or-buy method: assessing whether a component or service is core to competitive advantage, building a weighted decision matrix that covers cost, quality control, capacity and strategic fit, and separating full absorption cost from the incremental cost a decision actually changes. Delegates calculate break-even volumes for insourcing, model the effect of demand volatility on unit cost, and weigh supply risk against the execution risk of building unfamiliar internal capability. The course addresses the governance side directly: aligning operations, finance and HR stakeholders who weigh the same decision differently, stress-testing a recommendation against a downside scenario, and negotiating an exit or wind-down clause with the incumbent supplier so continuity is protected during transition. Delegates finish by reviewing a completed insourcing decision against defined metrics to confirm the expected benefit was real. The course leaves delegates able to build, defend and execute a make-or-buy recommendation rather than default to whichever option was chosen last time.
Expected Learning Outcomes
Build a weighted make-or-buy decision matrix covering cost, quality, capacity, risk and strategic fit.
Compare full and incremental costs, including total cost of ownership, rather than price or standard cost alone.
Calculate break-even volume and capacity investment required for a credible insourcing option.
Weigh supply risk against execution risk when deciding between continued outsourcing and insourcing.
Present a business case that aligns operations, finance and HR stakeholders behind a make-or-buy recommendation.
Plan and manage the transition, including supplier exit terms, when moving from buy to make.
Who Should Attend
Supply chain and operations managers evaluating whether to insource or outsource production.
Category managers and buyers assessing the long-term sourcing strategy for a component family.
Finance business partners reviewing the cost case behind a make-or-buy recommendation.
Operations directors planning capacity investment tied to an insourcing decision.
Engineering and manufacturing leaders assessing capability gaps for bringing work in-house.
Programme managers responsible for transitioning work between an external supplier and internal operations.
Course Modules
Select any module to see its sessions and points.
01Framing the Make-or-Buy Question
2 sessions · 8 points
Session 1Strategic Drivers and Core Competency Assessment
- Identify whether a component or service is core to competitive advantage or a commodity activity better left to a specialist supplier.
- Assess intellectual property exposure and the risk of a supplier learning enough to become a future competitor.
- Distinguish a strategic make-or-buy review from a tactical capacity decision driven by a short-term demand spike.
- Map which capabilities the organisation would need to build, buy or partner for if a decision to insource proceeds.
Session 2Setting the Scope and Decision Criteria
- Define the boundaries of the make-or-buy analysis, including which volumes, sites and time horizon the decision covers.
- Build a weighted decision matrix covering cost, quality control, capacity, risk and strategic fit rather than cost alone.
- Agree the decision criteria and their relative weighting with finance and operations before analysis begins, not after.
- Identify the stakeholders, including HR and operations, whose input is needed before a make-or-buy recommendation is finalised.
02Cost and Capacity Analysis
2 sessions · 8 points
Session 1Cost Comparison: Full Cost Versus Incremental Cost
- Separate fixed costs that exist regardless of the decision from the incremental costs that a make-or-buy choice actually changes.
- Build a total cost of ownership comparison that includes tooling, quality, logistics and inventory carrying cost, not price alone.
- Avoid applying a full absorption overhead rate to an insourcing decision when spare capacity means the true incremental cost is lower.
- Calculate the break-even volume at which insourcing becomes cheaper than buying, given the fixed investment required.
Session 2Capacity, Investment and Utilisation
- Assess current plant, equipment and labour capacity against the volume an insourcing decision would add.
- Estimate the capital investment and lead time needed to bring a make option to the same quality and volume as the current supplier.
- Model the effect of demand volatility on utilisation and unit cost if the volume were brought in-house.
- Compare the opportunity cost of using existing capacity for insourcing against its next best alternative use.
03Risk, Quality and Control Considerations
2 sessions · 8 points
Session 1Supply Risk Versus Execution Risk
- Weigh the supply risk of continued dependence on an external supplier against the execution risk of building new internal capability.
- Assess single-source and geographic concentration risk in the current supply base as a driver for the make-or-buy review.
- Identify a quality or compliance failure history that would justify bringing an activity back in-house despite a cost disadvantage.
- Evaluate whether a dual-sourcing or partial insourcing option reduces risk more effectively than an all-or-nothing decision.
Session 2Quality, Intellectual Property and Regulatory Control
- Assess the value of direct quality control and faster engineering change response that insourcing could provide.
- Identify regulatory or export control requirements that make insourcing safer than depending on an external supplier.
- Weigh the loss of a supplier's specialist process knowledge against the control gained by bringing the work in-house.
- Evaluate whether a joint development or licensing arrangement captures the benefits of both making and buying.
04Deciding, Transitioning and Reviewing
2 sessions · 8 points
Session 1Building the Business Case and Aligning Stakeholders
- Present the make-or-buy recommendation as a business case covering cost, risk, capacity and strategic fit to the decision-making forum.
- Address operations, finance and HR concerns separately, since each stakeholder group weighs the decision criteria differently.
- Stress-test the recommendation against a downside scenario, such as lower-than-expected volume or delayed capability build.
- Secure sign-off on the investment, timeline and exit plan for the current supplier before transition work begins.
Session 2Managing the Transition and Supplier Exit
- Plan a phased transition that qualifies internal capability before fully exiting the incumbent supplier's contract.
- Negotiate an exit clause or wind-down period with the current supplier that protects supply continuity during the changeover.
- Transfer technical documentation, tooling and quality records needed to replicate the supplier's process internally.
- Review the make-or-buy decision against a defined set of metrics after transition to confirm the expected benefit was realised.
What the participant receives
4 course modules
A structured syllabus
8 training sessions
across 5 days
32 detailed points
Applied, detailed content
Accredited attendance certificate
On completing the programme
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