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Question 340 - CSCP discussion

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In a make-or-buy decision, if the product is modular and the company is dependent on knowledge and capacity, outsourcing most likely will be:

A.
company policy
Answers
A.
company policy
B.
viewed as a way to reduce costs
Answers
B.
viewed as a way to reduce costs
C.
considered necessary
Answers
C.
considered necessary
D.
considered risky
Answers
D.
considered risky
Suggested answer: C

Explanation:

In a make-or-buy decision, when the product is modular and the company is dependent on external knowledge and capacity, outsourcing is often considered necessary. Key considerations include:

Modularity: Modular products are composed of distinct components that can be independently produced and then assembled. This structure makes it easier to outsource production without compromising the overall product design.

Knowledge Dependency: When specific expertise or technology is required that the company does not possess, outsourcing becomes necessary to leverage external knowledge and capabilities.

Capacity Constraints: If the company lacks the internal capacity to produce the product in-house, outsourcing becomes a viable solution to meet demand without investing in additional resources.

Focus on Core Competencies: Outsourcing non-core activities allows the company to focus on its core competencies and strategic activities, improving overall efficiency and competitiveness.

McIvor, R. (2005). The Outsourcing Process: Strategies for Evaluation and Management. Cambridge University Press.

Arnold, J. R. T., Chapman, S. N., & Clive, L. M. (2008). Introduction to Materials Management. Pearson.

asked 16/09/2024
Pradap Singh
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