A recent article over on Industry Week that asked you to show me the money laid out six money questions that the author believes should be asked and answered before a manufacturing decision is made because a product that can’t be manufactured affordably shouldn’t be manufactured at all. As a supply chain professional, it’s your job to ask, and answer, these questions even if product development doesn’t, and even if the product can’t be cut, your job to figure out if it’s cheaper to build in house or outsource.
So, what are the key questions that should be answered?
- How much will the total project cost?
- How many products will be sold in a year? and
- How many years will it take to get your investment back if you manufacture in house?
If the ROI will take years because an investment in new technology is needed, then, even if outsourcing adds cost, it might be the right idea.
For more insights, including the questions to asks (and calculations to do) if you’re trying to decide whether or not to manufacture a product in the first place, see the article.