Why development of sources of production is necessary?

Ans. It was assumed that the product required was already being manufactured by a number of vendors and it was merely a question of choosing the most suitable supplier amongst them. Quite often the sources of production have to be developed. However the main thing to be looked for in such case is, whether the firm has the minimum essential plant equipment and skilled man power? Once these basic resources are available, manufacturing capacity can be built up with the help of technical guidance from the purchasing organization.