THE MAKE OR BUY DECISION IN THE CONTEXT OF MANUFACTURING STRATEGY-DEVELOPMENT

This paper describes an approach to structuring the make or buy decisi on process, basing it firmly in the context of an overall manufacturin g strategy. The work has been carried out jointly by the University of Cambridge Manufacturing Engineering Group and Lucas Industries. A rev iew of the current state of ideas surrounding the linked issues of ver tical integration and make or buy decisions is presented. Important fe atures of the approach include identification of core manufacturing ca pabilities, assessment of the role of technology in manufacturing, the development of a cost model to support make or buy decisions and a re view of the strategic implications of varying degrees of vertical inte gration. Further, the approach has been embodied in a practical method ology that has been applied within Lucas Aerospace. A brief review of this practical application is included.