Many companies ponder at length the decision of whether or not to outsource a certain business process. And there has been much academic material written on how to make that decision, including one of Next Level Purchasing’s own articles from 2005 entitled “The Make Or Buy Procurement Decision.” There are a lot of factors that organizations consider when making the seemingly tough decision whether to insource or outsource.

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But, in many cases, the decision doesn’t need to be difficult at all. And it can be made using two factors: (1) the importance of supply to your organization and (2) the importance of your business to the supply base.

So, I have created “The World’s Simplest Outsourcing Decision Matrix” to help guide decisions in these more basic cases. Here it is…

Graph of an outsourcing decision making matrix

The underlying premise is this: if getting reliable delivery, flawless quality, and accurate and timely information for a particular product or process is important to your organization yet the amount of your business is too small in the scheme of the industry to be considered uber-important to the supply base, outsourcing the manufacture of that product or the performance of that process exposes your organization to a level of risk that it is unlikely to find acceptable. Keep those activities in-house.

To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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Charles Dominick, SPSM, SPSM2, SPSM3

Charles Dominick, SPSM, SPSM2, SPSM3 is an internationally-recognized business expert, legendary procurement thought leader, award-winning entrepreneur, and provocative blogger. Charles founded the Next Level Purchasing Association in 2000, oversaw its incredible growth, and successfully led the organization to its acquisition by the Certitrek Group in 2016. He continues to blog and provide advisory services for the NLPA on a part-time basis as he incubates his upcoming business innovations. Charles is also the co-author of the wildly popular, groundbreaking book, "The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals."

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