Purpose – This paper aims to present a strategic framework for make-or-buy (MoB) decision-making process and a case study based on the framework. This framework can be applied to all the scenarios of MoB decision-making that includes making decisions for new components and reevaluating the decisions for presently in-sourced or outsourced components.
Design/methodology/approach – Based on this study of an Indian Automobile Company and review of the literature the paper proposes a strategic framework for MoB decision-making. Unlike previous academic attempts, where a framework is developed first based on the existing theories followed by illustration through case studies, our approach starts with a case study, the paper then proposes a framework that best suits the company's need. Later the paper discusses the specific features of the framework that makes it applicable to other manufacturing sectors.
Findings – The sourcing decision-making for any firm is a complex and dynamic process where, after stipulated period firms have to reevaluate their decisions. Existing frameworks treat both fresh and reevaluated decisions alike. It is found that the need for a framework with separate provision for outsourcing decision reevaluation. The paper identifies partial outsourcing as a strategic option to avoid supplier opportunism. It also explicitly suggests the exact decision point where risk evaluation is necessary during MoB decision-making process.
Originality/value – The proposed framework takes a detailed and critical look at actual outcomes in terms of costs, competences and risk. Three important considerations adopted from the literature and incorporated in the proposed framework, makes it unique: provision for reevaluating the MoB decision, consideration of partial outsourcing as a strategic option other than purely making or buying, identification of decision points where risk evaluation is necessary.