Standardization simplifies benchmarking and the objective assessment of insourcing

Focusing on core competencies leads to a situation in which sales and marketing departments must consider new customer segments. The related restructuring of the value chain can result in insourcing. Strategic sourcing gains in importance as a well-founded evaluation of make or buy decisions.

Specific long-term insourcing can be an option to evade market entry barriers because capital for acquisitions is becoming more expensive. Until now, these market entry barriers increased the pressure in the direction of (corporate) acquisitions to the detriment of an independent build-up of competency. This build-up of competence culminates in innovative products, production procedures, and value chains. Innovative products which cannot be represented as derivatives of standard products are nevertheless often produced in a factory or outsourcing and less frequently on standard production lines. As a minimum, the first (test) generation is a candidate for outsourcing so that the success of the product is tested and first mover advantages are realized. The integration into the series production can take place later. At the moment, insourcing of such manufacturing is relatively attractive as a way of reducing the cash outflow/loss of learning effects.

Insourcing can increase the control over the generation planning and limit the premature disclosure of details to competitors. Generation planning requires the involvement of the partners participating in the product development, stable relationships, and a certain mutual ability to anticipate with short paths and common working hours.

The decision to leave the responsibility for the standardization up to the supplier – which in effect means that the supplier benefits from the learning effects! – should be made in full awareness of what it entails. This is less momentous in indirect areas than in direct areas. It leads to objective outsourcing and insourcing decisions which are fruitful in the long term.

Specific insourcing can currently be seen as an opportunity in this crisis when viewed against the backdrop of the long-term conservation of resources originally stemming from business administration principles, which also corresponds to lean principles. In the short term, the capacity utilization situation of the parent plants can be taken as a politically favorable opportunity to review the off-shoring sites and the scope of the outsourcing.