Make or buy?
"Make or Buy" is the strategic consideration whether a product should be produced within the enterprise or should be purchased externally. This may be a complete product or individual components. Motive for a Make-or-Buy question often are market changes, the company structure/organization, new legislative regulations, a required investment, or an expansion of the product range.
With our approach, we want to focus on the additional purchase of components (for example communication modules like Profibus, Profinet, Ethercat, Ethernet/IP, or DeviceNET).
In the industry, Make or Buy requires a balance between the use of specialized suppliers and own production.
Especially with "Lean Production", there is a growing trend for reduction of the in-house production. Purchasing parts from specialized suppliers can strengthen the competitiveness. The aim of a Make-or-Buy strategy is always an increase in return.
What can be decisive for a buy decision?
In the field of communication modules, not only a production service, but also a development service is being bought: With a buy decision this includes production capacities as well as development capacities.
A buy decision always makes sense when:
- The communication modules do not represent a core competence, but only are a means to an end
- The resources in development and production are fixed excessively or do not exist
or
- The utilization of the resources kept in reserve is not assured (downtime costs for machines)
- The know-how is missing
Especially the field of fieldbuses and the Industrial Ethernet there are many variations which can economically only be produced in relevant quantities (and thus a mass production). This may still be the case with large companies, but often no longer with smaller and medium-sized enterprises with small quantities and many different bus systems. They can participate in the economical conditions of a specialized (mass) manufacturer.
In this case, the specialist always has a cost advantage, as he can allocate the development and certification costs to a larger number of units while mass-producing. This naturally also is reflected in the purchasing conditions of the specialists.
A further advantage is that the specialist normally can supply many bus systems "ex stock" and required development periods fall away. Only the time for the integration of the module still applies - and this is considerably shorter than a complete in-house development.
A "Make or Buy" decision in the field of external procurement of communication modules, which is only based on the cushioning of overshoots, is not possible or very difficult. This is based on the expenditures for the integration of a proprietary product (for example PINout, protocols, and interface with the application).
PARTNER REQUIREMENTS
- The quality of the purchased products should be equal or better
- The reliability of the selected partner must correspond to that of the internal suppliers
- The partner must have long-term financial stability
- The partner must be able to take part in technology leaps
- The purchasing prices + management costs must stay below the costs for development, material, in-house production, and management costs.
Please CONTACT us if you are interested in external purchasing of communication modules.
KUNBUS GmbH is your partner in the field of:
FIELDBUS:
- PROFIBUS
- DeviceNet
- CANopen
- CC-Link
ETHERNET:
- SERCOS III
- EtherNet/IP
- Ethercat
- Powerlink
- PROFINET
- Modbus
2011 A.Mueller
