Make it or buy it?
Project challenges
REE needed to understand the financial and operational impact on the business of making components and sub-assemblies in-house, or sub-contracting all or part of the processes.
Business challenge
Process Innovation
Sector
Manufacturing
Technology or capability
Industrial Transformation
Automation & Robotics
In-House or Outsourced? MTC's searching manufacturing and sourcing assessment tackles the Make versus Buy conundrum.
When REE Automotive began its journey to have a disruptive impact on the automotive industry, the company needed to define the best business model to suit their EV brand and their ambitious growth plans. They worked with experts at MTC to analyse Make versus Buy decisions for key components which would shape their manufacturing strategy.
The Challenge
REE needed to understand the financial and operational impact on the business of making components and sub-assemblies in-house, or sub-contracting all or part of the processes.
MTC's industrial transformation team carried out a detailed analysis to assess sourcing strategy, examining impacts on quality, cost, delivery, return on investment, up-front and on-costs, supply chain requirements and facility infrastructure needs.
MTC's Solution
MTC evaluated REE's sourcing strategies for key components and assemblies, considering the pros and cons of outsourcing versus in-house production. They analysed factors such as costs, skills and training needs, standardisation, production footprint and future-proofing. MTC engineers identified the potential to bring certain processes in-house with the added benefit to manufacture multiple product families or future ranges.
Importantly, we helped REE see the numbers behind the options and decide which was right for them.
Stephanie Rayner, Advanced Research Engineer - MTC
The Outcome
Achieving the right balance between in-house and outsourcing can be challenging, but after the detailed MTC assessment REE was able to see where financial benefits lay, what the impact on the business would be, what the payback period would be, and what would be the impact of changing the make versus buy balance.
With MTC's help, REE was able to judge what they should consider making in-house. MTC also carried out a supply chain capability assessment so that REE was able to get a clear and comprehensive overview of sourcing strategies and risks.
Benefits to the Client
- MTC's manufacturing and sourcing Make versus Buy assessment gave REE's management team hard evidence for their financial and operational decision making, and gave them an understanding of what would be needed from a future facility.
- REE was able to understand the effect of make versus buy decisions on their manufacturing capacity and scale-up strategy and speed.
- MTC analysis and findings gave REE an understanding of the competitive advantages of in-house manufacture.
