Baxter and we are in fear of losing

Baxter Manufacturing
Company (BMC) is in a dilemma, they are trying to decide of the need to buy new
software or if they can build a new system on their own. They are a little
hesitant to buy a new system because they were let down in the past. I will be
talking to some of the head people in charge and see what input they have and
where we are more likely to go.

                We
are using out dated technology for out systems, many of our competitors have
passed us by and we are in fear of losing our reputation as world class
manufacturer. This is what Lucas had to say. He sees the time frame and by
outsourcing this will reduce the turnaround time, not to mention it will be
more effective, an estimate of $220,000 instead of $400,000 for in-house
system. Our customers are not concerned with our internal systems; this doesn’t
affect our reputation until we deliver quality parts to our customers. We have
always been innovative and we have changed as a company. Purchasing a new
system doesn’t only we have to change to the system our vendors will also. Our
vendors can be set in their ways and may not want to deal with a whole new
system, we definitely need to keep this in mind before we go off and spend all
this money.

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                We
have shown that we can successfully develop a system in-house. Developing a new
system will take two years and cost $420,000, this is about the same for a new
system, the cost is $220,000 plus we will need to spend an additional $200,000
to have an outside company come and train our employees. Once we finish the
in-house system out team will be working hand and hand with the ones using it
and we will be able to get their feedback, so once it’s up and running we won’t
need a lot of training since we designed it around us and our vendors.

                This
may take longer to develop but once we are done we can hit the ground running
and not have to wait to be trained. For us to move forward on our in-house
system we should review some of the project we have going on now and see where
we can cut costs. We need to look at some of our high-cost activities and
relocate them to lower-cost geographical areas. We will need to look at our
activities and see if we have to do all the work, which means we are caring all
the cost or if we can outsource them for a lower price. We want to start
cutting cost on other actives so it can run the over price of our in-house
system down. If we bought a new system that is the price, this way we still
have control of our overhead. We need to tighten our belts, and look into all
of our activities and see where we can other low cost technology and innovate
around our design. We need to make up difference by achieving savings in backward or forward
portions of the system, many purchased systems will not allow us to modify the
system to fit us and our needs. We mentioned the cost of training, that is
something that needs to be added when we purchase outside, we will also have
cost associated with data conversion and changeover. We may get the new system
in 6 months but once we factor in all the unknowns we can still be two years
out just like with the in-house.

            I
think we need to take some time and look into these two systems and also see
what else is out there that maybe more compatible with us and our needs and
let’s narrow it down to three or four most suitable systems for us. Then we
will invite each of them to submit proposals so we can evaluate them and pick
the best one that fits us. Once we have made our selection on the best one we
will then compare it to our plans for our in-house system. We need to get
started now because this can take from nine to twelve months and can cost us
anywhere from $50,000 to $90,000. Of course once we get a price that it not the
end we will need to negotiate more favorable price and terms. We will need to
stay on top of our in-house system costs at all times. We will need to cut
costs whenever posable, it will be best to integrate backwards into the
business of high cost suppliers to gain control over cost of purchased items.

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