Case Study 2 - Mgmt 408

Case Study 2

A Make-or-Buy Decision at Baxter Manufacturing Company

Date

MGMT 408

Professor

Introduction

Baxter Manufacturing Company (BMC) is a privately owned company that is a leader in deep-drawn stampings. After two failed implementations of Commercial Off the Shelf (COTS) scheduling packages they hired a new MIS manager, Don Collins. Don successfully developed a mini-computer based system to accept EDI orders from customers and allow customer service to create shipping schedules and track raw materials. Due to this successful system now the MIS department is overtaken with requests to develop new systems. Don wants to take the two years he feels it will take to develop an internal manufacturing software system for BMC so they can have a competitive edge; while the Vice President of Manufacturing, Lou Moore, believes that a COTS package from Effective Management Systems, Inc. (EMS) would be the solution to gain the competitive edge. This case study will outline what BMC needs to do to stay competitive, the options that they have, and what the advisable solution would be.

Background

BMC has been a leader for years in the deep-drawn stampings industry, and has been privately owned since 1978. The major players in this company’s growing business know that there is a need for a systems upgrade to keep a cutting edge with the competition. In the past the company has purchased two separate COTS packages which were not successfully implemented. Don Collins, the new MIS manager, wants to build an in house system that meets the company’s day to day needs and uses. While Lou Moore, the Vice President of Manufacturing, has been working with Effective Management Systems, Inc. (EMS) and believes that they have a successful COTS package that is widely used by many companies and could work for BMC as well. The software from EMS is quoted at $220,000 up front with a $55,000 per year service contract. The current estimate for Don and his team to build the...