Case Study III-2 • A Make-or-Buy Decision at Baxter Manufacturing Company 445change another five machines, and I have to go
through the cycle again. It’s just a continuous
process of change, change, change!”
We tried for another month to make the system
work for us, but we were in such bad shape with our
capacity that we just couldn’t take the time to try to
cope with the system anymore. So we abandoned it
and went back to our Lotus spreadsheet. The
$150,000 that we had spent for that system was
down the drain!The Present MIS Department
In 1994 Shaw left and BMC hired Don Collins to replace
her as MIS manager. Collins had 20 years of experience as
a lead systems analyst with a large manufacturer and broad
experience with manufacturing systems. In 1996, Collins
has a programming staff of four. The 1996 capital budget
for hardware, software, and other information technology
items was about $200,000. The MIS expense budget for
payroll, supplies, and education was about $350,000.
The MIS department is using a development tool
called Cyber Query Cyber Screen (CQCS) from Cyber
Science, but Collins is giving some thought to what BMC’s
development environment of the future should be. The
Data General MV computer is becoming obsolete and is
reaching capacity, so BMC will have to obtain additional
capacity soon.
In order to plan a production schedule you need to
know what you have in inventory, so the MIS group has
created systems to track raw-material, in-process, and fin-
ished-goods inventories. MIS has also developed a mini-
computer system that accepts EDI orders from customers
and allows the customer service group to create a shipping
schedule on the computer. Collins believes that within 2
more years the MIS group can build and install a set of
manufacturing systems that will satisfy BMC’s basic needs
and provide quite satisfactory EDI service to customers.
This success in building new systems opened BMC
managers’ eyes to the possibilities for using the computer,
and they have generated so many requests for new systems
that an MIS steering committee has been established to
approve projects and set systems development priorities.
The members of the MIS steering committee are President
Kyle Baxter, Controller Lou Wilcox, Sue Barkley, and Don
Collins.The New Proposal
In late 1996 Lucas Moore, vice president of manufactur-
ing, suggested that BMC purchase and install an integrated
package of manufacturing software sold by Effectiveto software, and it was a terrible experience. Each
vendor claimed that his software would do anything
you wanted to do, and there were so many questions
we should have asked but didn’t.
Vendors all offered integrated packages that
included production scheduling, but you also got
sales, inventory, purchasing, shipping, etc. We made
our selection and paid about $120,000 for the sys-
tem, including both hardware and software, which
was a large expenditure for us at the time.
Then we started to load the data and imple-
ment the scheduling package. The training the ven-
dor provided was poor, the manual was full of errors,
and support from the vendor was minimal. We
worked and worked, and finally became so frustrated
by our inability to get the system to do what we
wanted it to that we just gave up. On top of every-
thing else the vendor went bankrupt. It was a total
disaster—$120,000 down the tube!As mentioned previously, by 1991 the problems in
meeting shipping schedules had gotten so bad that BMC
began to have to turn down new business. Management
again decided that they had to do something about machine
scheduling, so again they decided to purchase a scheduling
package. Sue Barkley remembers:
This time things went better. Nancy Shaw and I got
more people involved in the decision on what pack-
age to buy. This vendor provided some in-depth
training to our MIS people, and vendor people came
down here for 2 weeks to help us load the data and
get the production scheduling module working.
Again, we found that the manual was full of errors
and that the vendor people did not fully understand
the logic that the system was using. But we got the
system up and working and taught the production
scheduling people how to use it.
The problem was that whenever we had to
expedite something—give it top priority because it
had to be shipped quickly—the schedule had to be
regenerated, and that took 2 hours. Then we had to
take the schedule for each machine and examine it to
see what the impact on its schedule was and change
what it was going to do. Because we were always
expediting something, we were constantly churning.
After about a month the production scheduler
came to me and said, “I’m not getting anything done.
It takes me 2 hours to regenerate a schedule. I look at
it and I then have to change five or six machines
because of what the system did. Then it takes me 2
more hours to generate a new schedule and I have to