A Make-or-Buy Decision at Baxter Manufacturing Company

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MGMT408 Week 3 You Decide Transcript
A Make-or-Buy Decision at Baxter Manufacturing Company Scenario Summary 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
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I know you looked into reusing one of the older systems we installed. I need to know what became of that effort. How do you think our customers will view this situation and what do you think is the best way to proceed? Character #2: Lucas Moore - Vice President of Manufacturing We are still using outdated technology for our scheduling.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,

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