Should you buy in or manufacture materials?

At Grace Frank we can provide businesses with assistance and advice on a wide range of business issues. The following checklist might help when deciding whether to buy in materials or manufacture them yourself...

Sometimes, manufacturers have difficulty in deciding whether to manufacture materials for a finished product in-house or to buy them in from outside.

Although the principal consideration is financial, there are also other factors that need to be weighed.

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The following checklist will help you focus on the most important factors:

  YES NO
Does demand for the finished product seem relatively buoyant for the foreseeable future?    
Does demand for the finished product tend to fluctuate?    
Do you have unused plant and labour that could be utilised to manufacture the materials?    
Could you achieve greater economies of scale by manufacturing in-house than you could by buying in?    
Would manufacturing in-house give you greater control over such things as the quality of the materials and delivery time?    
Could you manufacture in-house without having to recruit extra labour?    

Every 'Yes' answer is a case for manufacturing in-house.

If you looking for support and help from experienced accountants and business advisers, contact Grace Frank.

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