Your Decide

You Decide – Baxter Manufacturing Make-or-Buy Software

21 Jan 2015

MGMT408 Management of Technology Resources

Professor Michael Bird

Introduction

Case study on a “Make-or-Buy” decision at Baxter Manufacturing, involving a “steering” committee involving BMC President Kyle Baxter, Controller Lou Wilcox, Sue Barkley (Vice President for Customer Relations) and Don Collins. The main issue for this case study lies in should BMC make or purchase manufacturing software system needed to remain competitive. On one side, the making of their own will cost an estimated $400,000 and two years where the buy will cost is expected to be $220,000 and take six months to integrate their software fully.

Background

Lucas Moore, VP of Manufacturing, believes a package from Effective Management Systems (EMS) is the way to go over an in-house developed solution at a cost he believes to be half that which can be down in-house. Specifically, Lucas believes that EMS’s Time Critical Manufacturing package is the right choice at a cost of $220,000 with maintenance contracts being available for $55,000 per year. Lucas’ experience with Don's new inventory system has convinced him of the benefits that computer systems can have in enhancing efficiency and improved customer service, but believes the company cannot wait two years for a home grown system. Through Lucas’ extensive discussions with EMS, reading of their literature and a proposed system demonstration, he is convinced the system will work for years to come.

Don Collins, MIS Manager, thinks the MIS department can develop in-house a system in two years at a cost of $420,000; using outside help at a cost $220,000 including training for BMC people and internal cost of $200,000. Don believes the EMS software is designed for manufacturing facilities that use a process more complex than BMC, which he feels they would utilize just a small subset of EMS’s package. Don also thinks that Lucas has not fully understood the complexity...