Review article
https://doi.org/10.7307/ptt.v22i4.193
A Make-or-buy Decision Process for Outsourcing
Patricija Bajec
Igor Jakomin
Abstract
Should firms perform logistics services on their own or should they buy them from a logistics provider? Today’s global competition forces companies to re-evaluate their existing processes, technologies and services in order to focuse on strategic activities. Outsourcing is now increasingly used as a competitive weapon in today’s economy. External parties can often do job quicker, cheaper and better. This has resulted in an increasing awareness of the importance of the make-or-buy decision, the dilemma organisations face when deciding between keeping logistics services in house or purchasing them from an outside logistics provider.
This article provides a make-or-buy decision process methodology that any manager can implement – whatever the size or industrial type of the organization. The make-or-buy methodology is one of the most critical strategic decisions within logistics outsourcing and should be taken in a structured and consistent manner. A practical guide to this decision is a step-by-step guide to addressing make-or-buy decision in a consistent and structured manner. The high-level steps are as follows:
• evaluate whether outsourcing is right for your company;
• determine exactly what functions to outsource and the performance expectations;
• use a well-defined professional selection process to evaluate and select which provider(s) are right for the job.
KEY WORDS: logistics, logistics outsourcing, make-or-buy decision, outsourcing methodology
Keywords
Hrčak ID:
82102
URI
Publication date:
1.7.2010.
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