Abstract
The decision to outsource has traditionally been made on the basis of comparative cost. However it has been recognised that if properly implemented, outsourcing can provide a number of strategic benefits which include improved quality, focus, flexibility and leverage. If companies are to reap these benefits, it is essential that strategic sourcing decisions are based on sound strategic principles. It is important that managers consider the protection, development and exploitation of core activities, as well as the need to relate such sourcing decisions to the competitive advantage of the firm. Arguably then, the decision to ‘make or buy’ can be regarded as one of the most fundamental components of manufacturing strategy, as well as the most complex.
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