What is generally considered a poor reason for a company to decide to insource?

Insourcing refers to the practice of utilizing internally developed resources for production or service delivery instead of outsourcing to external suppliers. A desire to stay lean typically emphasizes minimizing waste, reducing costs, and streamlining operations. However, insourcing can often lead to increased overhead and fixed costs associated with hiring, training, and maintaining internal staff and infrastructure. This contradicts the lean approach, which focuses on efficiency and maximizing value while minimizing waste. In this context, the desire to stay lean does not align well with the strategic rationale for insourcing, making it a poor reason for a company to choose that route.

In contrast, diversifying services, exercising control over quality, and improving internal capabilities are all valid and strategic reasons for insourcing. These reasons often strengthen a firm's market position, enhance brand reliability, and foster innovation, which are critical aspects of competitive advantage. Therefore, while staying lean is an important operational strategy, it does not adequately support the decision to insource in most scenarios.