Make-or-buy decisions are often treated primarily as cost comparisons. Can a product be manufactured more economically in-house, or is an external supplier the more efficient option? That question matters. But in my view, it is not the most important one. The more strategic question is: which capabilities must a company control itself to remain competitive over the long term?
Cost is important—but it is not the whole decision
A process may be more expensive to operate internally and still carry significant strategic value. Conversely, a process can be technically demanding without providing a compelling reason to build and maintain it in-house.
In MedTech, the assessment also has to account for expertise, regulatory requirements, validation, capacity, investment, scalability, supply-chain risk and time to market. Looking at production cost alone leaves too much of the strategic picture out.
The decisive question is where differentiation is created
An OEM should therefore identify where its genuine differentiation originates. In an implant system, for example, this might be the clinical design, the platform architecture or the digital workflow.
The manufacture of individual instruments or components, by contrast, may be performed more effectively by specialized partners with established processes, validated expertise and scalable capacity.
Own the differentiation. Partner for capability.
This leads to a compelling model: own the differentiation and partner for capability.
That does not mean outsourcing as much as possible. Outsourcing also creates dependencies. The objective is to combine control of the sources of competitive advantage with access to capabilities that can be provided more quickly, reliably or economically by the right partner.
Outsourcing must not mean losing technical understanding
Even when a process is externalized, the OEM must retain enough technical understanding to lead the partner, assess developments and evaluate risks.
Responsibility cannot simply be outsourced. Strong partnerships work because both sides understand their role, the critical requirements and the consequences of technical or operational decisions.
The goal is a deliberate architecture of capabilities
The ideal make-or-buy decision is therefore rarely found at either extreme: neither maximum vertical integration nor maximum outsourcing.
It is a deliberate architecture of internal competencies and external capabilities—designed around differentiation, control, speed, resilience and economics.
For me, make or buy is ultimately a question of strategy: where is our competitive advantage created, and which partners do we need to bring it to market faster, more safely and more economically?
Own the differentiation. Partner for capability.