442
CASE STUDY III-2
A Make-or-Buy Decision at Baxter
Manufacturing Company
It is late Friday afternoon, and Kyle Baxter, president of
Baxter Manufacturing Company, Inc., and his sister, Sue
Barkley, vice president for customer relations, are dis-
cussing whether or not to purchase the Effective
Management Systems manufacturing software package
proposed by manufacturing Vice President Lucas Moore.
“I’m really fearful of buying such a large, complex
software package given our past experience,” Baxter
exclaims. “What do you think?”
“I really don’t know,” Barkley replies. “We do need
manufacturing software, and there are some obvious
advantages to purchasing this software. We have had bad
experiences in past attempts to buy such software, but we
have learned from some of our mistakes, so we might be
successful this time. But I have been impressed by the
success that MIS has had in building new systems for us,
so I am in a quandry right now.”
“We’re going to have to decide before long,” Baxter
notes, “but we need to talk with some of our people first.”
Baxter Manufacturing Company Background
Baxter Manufacturing Company (BMC), located in a small
Midwestern town, is a leading manufacturer of deep-drawn
stampings, particularly for electric motor housings.
(Exhibit 1 shows a few of BMC’s products.) The company
was founded in 1978 by its chairman, Walter R. Baxter, as
a supplier of tools and dies, but it soon expanded into the
stamping business. BMC is a closely held corporation,
with the family of the founder holding most of the stock.
BMC’s engineers have implemented some of the
most complex stamping concepts in the industry, as the
company has established its niche as a quality supplier of
deep-drawn stampings to the automotive (85 percent of
sales) and appliance (15 percent of sales) industries.
BMC’s major customers include Ford, General Motors,
Honda of America, General Electric, Whirlpool, Amana,
and Maytag. BMC puts great emphasis on quality and has
achieved Q-1 status from Ford, a QSP Award from GM,
and quality awards from Honda, and is recognized as a
world-class supplier within its niche.
Producing a deep-drawn part is a complex process
requiring repeated stampings, each with a different
male/female die pair. This process is performed on a heavy
press, using a very complex die that consists of perhaps 10
individual dies assembled together in a line. A coil of steel
of the proper width and thickness is fed into one end of the
press. After each stamping cycle a precision transport
mechanism moves the material forward exactly the right
distance so that a part that has completed one stage is posi-
tioned correctly at the next stage to be struck by the next
die on the next cycle of the press. Thus each cycle of the
press performs a different forming operation on each of 10
parts, and a finished part comes off the machine at the end
of each cycle. (Exhibit 2 shows the different stages of a
motor housing stamping.)
BMC’s strength lies in its ability to produce effi-
ciently large volumes of high-quality complex stampings.
It may take 6 to 8 hours to install the dies and set up theCopyright © 1997 by E. W. Martin. This case was prepared by
Professor E. W. Martin as the basis for class discussion, rather than to
illustrate either effective or ineffective handling of an administrative
situation. EXHIBIT 1 Some of BMC’s Stamped Parts