It is often necessary to conduct a comparison or risk assessment of internal or external operations when verifying the key competencies in logistics.
When it comes to the question of ‘in-house or third party services’, the available capital and level of know-how within the company are decisive factors. The answer to the make-or-buy question is very significant in strategic corporate planning. In addition to the qualitative opportunities and risks, it is important to perform a quantitative assessment of the existing potential within the make-or-buy decision when it comes to logistics services. You can comprehensively evaluate the opportunities and risks if all the affected functional areas and organisational units, such as logistics, purchasing and sales are factored in. In order to quantitatively assess cost differences, you have to know service providers in the current market and standard market rates for the defined services. This makes it easier for the company to reach decisions.
Metroplan - Approach and methodology
Metroplan has developed a structured procedure for examining the possibility of sub-contracting or in-house operation for logistical services.
During workshops, the relevant service content is identified with the help of all the company’s affected organisational units, including the relevant data, interfaces, information and communication channels.
The future strategic and logistical service requirements are determined and assessed qualitatively using the existing processes, the result of which is used to determine the use of in-house or external operations. The potential service contents are identified and qualitatively assessed. Key figures, cost rates and experience from various outsourcing projects and projects with logistics handling using the company’s in-house operations are used. The evaluated potential goes into the rough planning of a ‘make’ concept. The advantages and disadvantages are also examined. The decision proposal contains a clear recommendation for action, as well as further steps.
- Identify existing risks in current logistics handling
- Neutral evaluation of the opportunities and risks of various make-or-buy options
- Establish the economically viable division of responsibility between the company and the service provider
- Define the responsibilities for logistics handling between the company and service provider
- Provide recommendations for a make-or-buy strategy
- Decide on a make-or-buy strategy on the basis of objective data