Make or Buy
Make or Buy is a fundamental business decision-making process where companies evaluate whether to produce items internally (make) or purchase them from external suppliers (buy). It's like when someone decides whether to cook dinner at home or order takeout, but on a business scale. Supply chain professionals use this analysis to determine the most cost-effective and strategic approach for obtaining materials, components, or services. This concept is also sometimes called "insourcing vs. outsourcing" or "internal production vs. external procurement."
Examples in Resumes
Led Make or Buy analysis resulting in $2M annual savings through strategic outsourcing
Conducted detailed Make vs Buy assessments for critical components across 12 product lines
Implemented Make-Buy decision framework for evaluating new supplier relationships
Typical job title: "Supply Chain Analysts"
Also try searching for:
Where to Find Supply Chain Analysts
Professional Organizations
Online Communities
Job Boards
Example Interview Questions
Senior Level Questions
Q: Can you describe a complex Make or Buy decision you've led and what factors influenced the final outcome?
Expected Answer: The candidate should explain a specific example involving multiple factors like costs, quality control, capacity, strategic importance, and risk management. They should describe how they analyzed these factors and the long-term impact of their decision.
Q: How do you incorporate risk assessment into Make or Buy decisions?
Expected Answer: Look for answers that discuss supply chain disruption risks, supplier dependency, intellectual property protection, quality control, and how they balance these risks against potential cost savings.
Mid Level Questions
Q: What are the key factors you consider when conducting a Make or Buy analysis?
Expected Answer: Candidate should mention cost comparison, quality requirements, production capacity, core competencies, supplier reliability, and market conditions as key considerations.
Q: How do you evaluate potential suppliers for a 'Buy' decision?
Expected Answer: Should discuss supplier evaluation criteria like financial stability, quality standards, delivery reliability, pricing, and their process for gathering and comparing this information.
Junior Level Questions
Q: What is a Make or Buy decision and why is it important?
Expected Answer: Should explain the basic concept of choosing between internal production and external purchasing, and how it affects company costs, resources, and operations.
Q: What basic costs would you compare in a Make or Buy analysis?
Expected Answer: Should identify direct costs like materials and labor for making, versus purchase price and shipping for buying, showing understanding of basic cost comparison.
Experience Level Indicators
Junior (0-2 years)
- Basic cost analysis
- Understanding of supplier relationships
- Knowledge of procurement processes
- Familiarity with supply chain basics
Mid (2-5 years)
- Detailed cost-benefit analysis
- Supplier evaluation and selection
- Contract negotiation
- Risk assessment
Senior (5+ years)
- Strategic decision-making
- Complex project management
- Global sourcing strategy
- Cross-functional team leadership
Red Flags to Watch For
- Unable to explain basic cost comparison principles
- No experience with supplier relationship management
- Lack of analytical skills or decision-making experience
- No understanding of supply chain risks and mitigation strategies
