The determination of what products or product components will be acquired is frequently referred to as a “make-or-buy analysis.” It is based on an analysis of the needs of the project. This make-or-buy analysis begins early in the project during the first iteration of design, continues during the design process, and is completed with the decision to develop, acquire, or reuse the product.
Factors affecting the make-or-buy decision include:
The make-or-buy decision can be conducted using a formal evaluation approach.
As technology evolves, so does the rationale for choosing to develop or purchase a product component. While complex development efforts may favor purchasing an off-the-shelf product component, advances in productivity and tools may provide an opposing rationale. Off-the-shelf products may have incomplete or inaccurate documentation and may or may not be supported in the future.
Once the decision is made to purchase an off-the-shelf product component, the requirements are used to establish a supplier agreement. There are times when “off the shelf” refers to an existing item that may not be readily available in the marketplace. For example, some types of aircraft and engines are not truly “off the shelf” but can be readily procured. In some cases the use of such non-developed items is in situations where the specifics of the performance and other product characteristics expected need to be within the limits specified. In these cases, the requirements and acceptance criteria may need to be included in the supplier agreement and managed. In other cases, the off-the-shelf product is literally off the shelf (word processing software, for example) and there is no agreement with the supplier that needs to be managed.