Make vs Buy Decision System for Manufacturing Investment Appraisal
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Solution Overview
Problem
The make vs. buy decision in manufacturing is often made in an ad-hoc manner without a clear, fact-based methodology, requiring inefficient communication between finance and purchasing departments, and lacks integration with enterprise systems.
Innovation Solution
A computer-implemented method that enforces a series of steps to evaluate whether to make an item in-house or buy it from suppliers, including generating market and engineering specifications, estimating costs, and calculating net present value to determine the optimal decision, with integration into a computer system for streamlined decision-making.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If a standardized integrated system is implemented for make vs. buy decisions, then decision-making efficiency and consistency are improved, but system complexity and implementation cost increase
Solution Approach 1:
The patent merges previously separate functions (finance department's investment appraisal, purchasing department's supply base management, and enterprise system data) into a single integrated make vs. buy decision system. This consolidation eliminates the need for lengthy communication between departments and manual spreadsheet operations, directly improving decision-making efficiency while the system manages the complexity through unified architecture.
Solution Approach 2:
The system performs multiple functions within a single platform: it generates market and engineering specifications, derives materials requirement plans, estimates costs, calculates net present values, and integrates with enterprise systems. This multi-functionality improves productivity by eliminating the need for separate tools and processes while the system handles the inherent complexity through integrated design.
2Adaptability or versatility
If manual spreadsheet-based appraisal is used, then flexibility in analysis is maintained, but integration with enterprise systems and standardization are lost
Solution Approach 1:
The system establishes feedback loops between the make vs. buy decision platform and the enterprise system. Data flows bidirectionally: the system extracts relevant information from the enterprise system for analysis, and implementation decisions are played back into the enterprise system. This feedback mechanism maintains adaptability for analysis while preventing information loss through enterprise system integration.
Solution Approach 2:
The patent introduces an intermediary layer between manual analysis needs and enterprise system data. The system acts as a mediator that can perform flexible spreadsheet-like calculations while simultaneously maintaining standardized integration with enterprise systems, thus preserving both adaptability and integration without the information loss experienced in manual approaches.
3Reliability
If separate departmental processes are used for finance and purchasing, then departmental expertise is maintained, but communication efficiency and decision consistency deteriorate
Solution Approach 1:
The system merges finance and purchasing department processes into a unified make vs. buy decision platform. Both departments can access and contribute their expertise through the same system, eliminating the need for lengthy back-and-forth communication while preserving departmental knowledge through structured input mechanisms and role-based access.
Data Source
AI summary
A computer implemented method for deciding and justifying make or buy decisions in which it is determined whether to make an item in-house or to buy the item from outside suppliers. Also disclosed are computer implemented methods of determining and justifying an optimal timing to implement an engineering change order in which a more expensive item is replaced with a less expensive item.