Kraft Heinz Case Analysis

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What is the purpose of making a make-or-decision made by GAT department at the Kraft Heinz Company?
There are many objectives that want to be achieved from make-or-buy decision. However, the main reasons are to optimize internal factories and leverage the cost opportunity. Optimizing internal factories means that we fully utilize the production line. While leveraging the cost opportunity is for example combining volume to obtain lower price.

Within the 5 Operational Objectives, which is the most and the least importance goals in making the make-or-buy decision?
First, I would choose quality. Definitely quality. You should not compromise with the product’s quality. Nothing should go wrong with the product’s quality as it can hamper the growth
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This is highly critical for the commercial and marketing team. I’ll give you an example of L&P sauce for China. L&P sauces are manufactured in our factory based in US. Currently, our factory in US is producing in full utilization 24 hour a day for 3 shifts. The Chinese commercial department requested to provide L&P sauces in the Chinese label. It is impossible to stop the whole US production to produce only 0.01% of the total production. Therefore, what we are doing is hiring a co-packer to do the relabeling for us. Hence, we can still being efficient in the production and have more flexibility.

Last is dependability. I would not focus much on this objective. Because I believe this dimension is highly correlated with the other objectives. If you can achieve all of the other objectives, most likely you can achieve dependability.

Do you believe that the make-or-buy decision should align with the business strategy?
Definitely. All of the make-or-buy decisions have to align with the business and corporate strategy. It is important to see the direction of the strategy to determine our next steps.

How to align with the business strategy?
We are constantly communicate with the commercial department. In the make-or-buy decision, basically there are two kinds of initiatives. The first initiative made by the Import Affiliate Commercial Department to introduce new products in their country. Meanwhile the second initiative made by GAT in order to optimize the sourcing by combining
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