Make versus buy decision

Who this is for

Founder led lower-middle market companies with 5 to 50 million in annual revenue that are weighing in house production against outsourcing.

The quick answer

Score options on speed, control, cost, and risk. Keep in house when the work is strategic, drives quality, or protects lead time. Outsource when a partner can deliver faster or at a lower total cost with stable quality. Model demand swings, minimum order size, and logistics. Start with a pilot and a clear exit clause either way.

The method in seven steps

Define the decision and the success line
State the product or process, the promised service level, and the cost and quality you must meet.
Score in house versus partner
Use speed to scale, control of quality and process, total cost including freight and rework, and risk such as supply concentration.
Model demand and variability
Look at seasonality, minimum order size, ramp time, and the risk of idle time or missed orders.
Check capability and investment
List skills, equipment, tooling, and partner options. Confirm training time and certifications.
Run a pilot
If outsourcing, select a small scope and a partner with a test order and a clear exit clause. If keeping in house, run a controlled build and measure cost and yield.
Decide on the model
Choose in house, partner, or a split model such as core steps inside and overflow with a partner.
Manage the change
Update supplier or staffing plans, quality checks, and the playbook. Communicate with customers if lead times or warranties change.

Example

A light manufacturer kept precision steps in house to protect quality and outsourced finishing to a nearby partner. Lead time dropped and total cost improved.

Pitfalls and fixes

Comparing sticker prices only. Use total landed cost.
No exit plan. Add a clause and keep a second source warm.
Moving too much at once. Pilot and scale in stages.

Checklist

Success line set
Scorecard across speed control cost and risk
Demand and variability modelled
Pilot plan with exit clause
Quality and warranty rules updated