Baxter Manufacturing Company (BMC) is a family founded company. Started by Walter R. Baxter in 1978, the 140,000-square foot manufacturing facility is headquartered in the Midwest in the United States. Walter Baxter’s children work for BMC, Kyle Baxter is the President and his sister Sue Barkly is Vice President of customer relations. BMC is recognized as a world class supplier of tools, dies and deep-drawn stamping; serving customers such as: General Motors, Ford, Whirlpool, and General Electric. Baxter holds a strong market position and has maintained a 20% growth each of the nineteen years in business. In the 1980s business trends move to a Just-In-Time (JIT) system, this would streamline traditional business proving to be a faster more efficient way for customers to correspond with suppliers. BMC converted to electronic data interchange (EDI), which allows customers to place orders electronically. EDI works well for many companies; however, BMC has not upgraded their internal computer systems requiring personal to manually print out orders and re-key information. In the past BMC has turned away business because they met capacity limits therefore not able to retain more business. In 1989 BMC hired Nancy Shaw to lead and educate the IS department, as the manager of IS Shaw’s mission was to upgrade BMC’s hardware and software by outsourcing to vendors. After two failed attempts to upgrade the internal computer system Shaw resigned and was replaced by Don Collins. Collins has experience as being a manager of Information Systems, he quickly recognized that BMC’s computer system will become obsolete in a few years. By 1996 Collins proposed a plan to upgrade the system using the current MIS department to build and install a manufacturing system tailored to BMC’s needs in approximately two years. The same year Lucas Moore, Vice President of manufacturing, proposed a plan for BMC to purchase an integrated manufacturing software package. Moore is proposing to purchase software sold by Effective Management System Inc. (EMS), which he believes will give BMC a completive advantage. As Vice President of manufacturing Moore believes that this software will fulfill all the needs of BMC and will take only six months to install. Kyle Baxter and Sue Barkly are comparing the advantages and disadvantages of developing or purchasing a manufacturing system for Baxter.
Currently, Kyle Baxter and Sue Barkly are discussing the advantages and disadvantages two quality proposals: purchasing an integrated package as proposed by Lucas Moore or developing in-house system as proposed by Don Collins. In the past BMC had incurred major problems with outsourcing vendors to integrate their computers with hardware and software, therefore Baxter and Barkly are hesitant to buy from an outside source. However, looking at the time necessary for developing a system using BMC’s own Information Systems (IS) department, the company may not be able to afford the two years required to build a custom system.
Purchasing proposal for an integrated system from EMS
Moore believes that as a world-class parts manufacturing company, BMC must upgrade their internal computer system to maintain a competitive advantage. Moore feels that with his seven years of employment experience at BMC along with his MBA credentials he can make the advantageous division to purchase an integrated system from EMS. He has conducted extensive discussions with EMS and is confident that they will provide BMC with a system that will maximize the potential of their growing business. In the case, more has pointed out key advantages for purchasing a new computer system rather than developing one. (Refer to Exhibit4) Brown States:
A software package usually cots less than a custom solution because the software vendor will be selling the package to many organizations…A software package also typically can be implemented sooner than a custom...