Considerations in Purchasing Parts

From a control standpoint, manufacturing all components is the preferable route. In this scenario, all parts of the finished piece are manufactured by the company, with the result that the company is ultimately responsible for the quality, quantity, schedule and design of all parts. In this way, the company can keep manufacture no more parts than are needed at any point in time, maintain a high level of quality and design custom parts exactly to specification. This approach makes advanced process controls, such as just-in-time inventory management, easier to implement since there are no outside vendors to include in the process.

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s are built into the contract. If the vendor fails to meet these stipulations, the contract can be canceled, or payment withheld (Harding, 1990, p. 18). In addition to providing adequate controls with regard to schedules and quality, purchasing from outside vendors also eliminates the need to have additional manufacturing personnel and equipment on site. This can often reduce the amount of space required for the company, with the result that a smaller manufacturing facility can be used, saving the company additional funds. Purchasing from outside sources does not eliminate the need to add additional staff, however. While the staff required are not in the manufacturing area, this strategy does require additional purchasing staff. In addition, the company will need to ensure that a manufacturing engineer is included in the procurement process if the part in question is of a highly technical nature, or changes in configuration. This engineer will work with the engineers at the vendor in order to draw up specifications that fit the company's needs precisely. There are other drawbacks associated with purchasing parts from outside vendors, most of which stem from the loss of control that the company faces when it chooses to purc
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