Crosby Manufacturing Corporation

"I've called this meeting to resolve a major problem with our management cost and control system (MCCS)," remarked Wilfred Livingston, president. "We're having one hell of a time trying to meet competition with our antiquated MCCS reporting procedures. Last year we were considered nonresponsive to three large government contracts because we could not adhere to the customer's financial reporting requirements. The government has recently shown a renewed interest in Crosby Manufacturing Corporation. If we can computerize our project financial reporting procedure, we'll be in great shape to meet the competition head-on. The customer might even waive the financial reporting requirements if we show our immediate intent to convert."

Crosby Manufacturing was a $50-million-a-year electronics component manufacturing firm in 1985, at which time Wilfred "Willy" Livingston became president. His first major act was to reorganize the 700 employees into a modified matrix structure. This reorganization was the first step in Livingston's long-range plan to obtain large government contracts. The matrix provided the customer focal point policy that government agencies prefer. After three years, the matrix seemed to be working. Now they could begin the second phase, an improved MCCS policy.

On October 20, 1988, Livingston called a meeting with department managers from project management, cost accounting, MIS, data processing, and planning.

Livingston: "We have to replace our present computer with a more advanced model so as to update our MCCS reporting procedures. In order for us to grow, we'll have to develop capabilities for keeping two or even three different sets of books for our customers. Our present computer does not have this capability. We're talking about a sizable cash outlay, not necessarily to impress our customers, but to increase our business base and grow. We need weekly, or even daily, cost data so as to better control our projects."

MIS Manager: "I guess the first step in the design, development, and implementation process would be the feasibility study. I have prepared a list of the major topics which are normally included in a feasibility study of this sort" (see Exhibit 12-1).

Exhibit 12-1. Feasibility study

• Objectives of the study

• Manual or computer-based solution?

• Objectives of the system

• Input requirements

• Output requirements

• Processing requirements

• Preliminary system description

• Evaluation of bids from vendors

• Financial analysis

• Conclusions

Exhibit 12-2. Typical schedule (in months)

Normal
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