Case Study - Essay Example

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With years, many changes have impacted the industry. Most of the customers have opted the use of just in time manufacturing. The change has affected the BMC production schedules and…
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Baxter manufacturing company Baxter Manufacturing Company is a company involved in the manufacture of deep drawn stamps. With years, many changes have impacted the industry. Most of the customers have opted the use of just in time manufacturing. The change has affected the BMC production schedules and inventory management. The BMC has been pressured to use information technology and software so as to remain competitive in the market. However, the problem that has arisen is which way to follow. The choices to follow being either to purchase a manufacturing package or to develop an in-house system suited to the needs of BMC.
BMC started out in 1978. BMC uses state of art machines to make the stampings. The process allows for efficient developing large volumes of stamping. The process also allowed the stampings to be of high quality. As the years passed, a lot of technological advancements were experienced. The technological changes changed the way BMC customers interacted with the company. Many customers shifted into the just in time manufacturing. The BMC technological department was affected by these changes. The company’s production schedules and inventory management were affected. BMC had to make some changes to their technical sector.
CAD/CAM capabilities, a homegrown scheduling spreadsheet and financial applications, were added to their functions. All this was added to cope with the changes experienced in the technology sector. In 1989, a commercial off the shelf scheduling was purchased (COTS). The package implementation was, however, unsuccessful. The company purchased other COTS scheduling package in 1991. The package implementation also failed. A new manager recommended the development of a mini-computer based system. The internal system solved the issues of processing schedules and inventory. The company experienced other problems. The company flooded with many requests from customers.
The major problem that faced the company was coming up with a solution that can handle the many requests that flooded the systems. The problem with the system not handling all the requests leads to customer dissatisfaction. Customer dissatisfaction would make the company lose it, customers. It would limit the company’s productivity. The system should also address the previous problems of production scheduling and inventory management.
The company has a choice of purchasing a COTS package from Effective Management Systems. The COTS software costs $220,000 upfront and yearly maintenance contracts for $55,000 per year. EMS will allow limited customized changes to the software and those billed at $60 per hour. The EMS has undergone several improvement cycles and is a tested system. The EMS option solves the problem of processor scheduling and inventory management.
The other option is developing an in-house system. The total cost of developing an in-house system is $420,000. It will take two years to come up with the system. The system will, however, include other expenses of around $420,000. The other costs are for training activities.
The BMC Company had on earlier occasions tried to purchase manufacturing packages. The packages resulted in failure. The system failed because they failed to correlate with the conditions present at BMC. Due to the previous experiences of packages failing to deliver in BMC Company, I would not go with the idea of purchasing manufacturing packages from vendors.
As of schmidt (2015) a company should keep non-financial benefits in view. One should not only look for financial benefits in choosing a system to adopt. Many other advantages that are not quantifiable should be considered. Developing an in-house system may take two years. This time may be a lot. An in-house system will be designed to requirements of the company. The in-house system will allow BMC to remain competitive. It is modified to be capable of handling a lot of customer orders.
Schmidt, M. (2002). Business Case Essentials A guide to structure and contenr. 1st ed. schmidt, M. (2015). The It business Case keys to accuracy and credibility. 1st ed. Read More
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