Purchasing and supply management exam
Make or Buy case
1. Options to find the best sustainable solution for ABC:
– Make Kettoxyn
ABC can start own production of this material as it already has its own
plant for production materials (for example, Cydodur, Slytherid).
ABC can acquire OPG (its previous supplier) which has difficulties now.
OPG sites are integrated with ABC production sites but its plants in bad shape
and are required investments.
– Buy Kettoxyn from new supplier (Barner, for example)
– Update production processes and use cheaper raw materials
Make or buy solution is strategic choice between producing an item internally or
buying it externally. It is strategic because right choice allows company to achieve
competitive advantage. This choice is depended on cost, risk and growth issues of
alternatives so the company needs to minimize costs and risks and force growth
in result of this decision.
2. List of criteria for different alternative evaluation:
– Cost
o necessity of expertise
o initial investment
o transportation
