MGMT 408 Week 5 Assignment Help

MGMT 408 Week 5 Assignment Help | Devry University

Week 5: You Decide Scenario

A Make-or-Buy Decision at Baxter Manufacturing Company

Scenario

Role

Players

Deliverable

Scenario

Baxter Manufacturing Company (BMC) is a leader in deep-drawn stampings. It has been in business since 1978 as a privately held company. The process for making these stampings is very involved and complex. BMC developed methods for efficiently producing large volumes of stampings while keeping their quality very high. BMC uses state of the art machines to make the stampings and they make all the tooling necessary for those machines. In the years since their founding, many changes have impacted the industry – especially when it comes to computer networks and software. In the 1980s many of BMC's customers went to Just In Time manufacturing which affected BMC production schedules and inventory management. Automotive customers began asking for Electronic Data Interchange (EDI) capabilities around 1992. All of this has affected BMCs Information Technology department. Over the years, BMC has embraced the use of computers, computer technology, and software to enhance their competitive advantage and customer relationships. They have added CAD/CAM capabilities, a homegrown scheduling spreadsheet, and financial applications. A Commercial Off the Shelf (COTS) scheduling package was purchased in 1989 but the implementation was unsuccessful. Another COTS scheduling systems was purchased in 1991 but, again, the software did not match the needs of BMC. A new MIS manager, Don Collins, was hired in 1994 and he led an effort to develop a mini-computer based system to accept EDI orders from customers and allow customer service to create shipping schedules, as well as raw materials tracking, in process inventories, and finished goods inventories. These internally developed systems were so successful that the MIS department was flooded with requests for more systems. Don believes that it will take 2 years to internally develop the manufacturing software systems BMC needs to remain competitive. Lou Moore, Vice President of Manufacturing, thinks a COTS package from Effective Management Systems, Inc. (EMS) is the answer to BMCs manufacturing software needs. Specifically, he recommends the EMS Time Critical Manufacturing package. The software costs $220,000 up front and yearly maintenance contracts are available for $55,000 per year. EMS will allow limited customized changes to the software and the labor for those changes will be billed at $60 per hour. To deal with all the requests for new systems and to prioritize projects a steering committee has been established. The members of the steering committee are President Kyle Baxter, Controller Lou Wilcox, Sue Barkley (Vice President for Customer Relations) and Kyle's sister, and Don Collins. The steering committee is currently discussing the option of in-house development (make) or purchasing the EMS system (buy).

Role

Your role is that of Sue Barkley. You will recommend a course of action to your brother, Kyle, in regards to the new manufacturing software system. The obvious choices are do nothing, accept the EMS proposal and start implementation, or take Don Collins advice and create the system in-house. Are there others?

Players

We are still using outdated technology for our scheduling. The industry has passed us by in computer use for manufacturing and we are in danger of losing our reputation as a world-class manufacturer. My education and my experience with Don's new inventory system have convinced me that computer systems can significantly enhance our efficiency and improve our customer service. We cannot wait two years for a home grown system that will probably have to be upgraded before it is completed. I have had extensive discussions with EMS manufacturing specialists, read their literature, and seen the proposed systems demonstrated. I am convinced the system will do everything we will ever want to do. EMS assures me there will be no problem integrating their manufacturing system with our financial system and we can be up and running in six months. Purchasing from EMS provides many benefits including: 1. Six months to install an advanced system versus two years to develop our own basic system. 2. The upfront cost for EMS is $220,000 firm against an estimated $400,000 cost for in-house. 3. We will get a proven, advanced system instead of a simple, "first try" system in-house. 4. EMS has advanced programming capabilities that we do not and they have sold this package to hundreds of manufacturers. 5. The EMS software has already undergone several improvement cycles. It may not do things the way we always do but what makes our way better than hundreds of other manufacturers using this system? As for the failed attempts in the past, there are three main differences this time: 1. There was very little ownership of the new system before. However, I am the champion for the new system and my people will make it work. 2. Previous vendors attempted to install an entire system without having inventory data under control. EMS will install one module at a time according to a proven schedule. 3. Other systems were installed during times when we were expediting daily and did not have the time to devote to making sure the installations were successful. Capacity is not an issue right now.

Given the scenario, your role and the information provided by the key players involved, it is time for you to make a decision. If you are finished reviewing this scenario, close this window and return to this week's You Decide area, in your course, to complete the activity for this scenario. You can return and review this scenario again at any time.

Activity

Write a two (2) page paper that presents your decision and supports it with evidence from the course text, lectures, whitepapers, and discussions. Outside research is not required but if you use outside sources they must be cited and referenced properly. Use the Case Study Template found in the Files section.