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Bain Hard Sourcing/Outsourcing

Midwest Machinery Co.

#Industrial Goods #Manufacturing
ProHub Comment

This is a complex sourcing case requiring candidates to balance quantitative financial analysis with qualitative factors including community relations, employee concerns, and operational risks. The case tests both mathematical structuring skills (calculating per-unit costs and breakeven analyses) and strategic thinking, as the recommendation must synthesize numerical findings with the CEO's priorities and broader organizational context.

Estimated Time 15 minutes
Difficulty Hard
Source Chicago Booth
50 / 100
The MM team has proposed moving the manufacturing process for the XL292 machine, a critical machine for many of their end products, to India. These results may affect the CEO’s decision on whether to outsource other processes, as there is a total of $300M in costs with outsourcing potential. Before the CEO looks at the financial data, they want to have a clear understanding of the pros and cons of outsourcing. Develop a structure for thinking through the pros and cons of outsourcing this process to India. Explain the model and what you would advise the CEO to consider as they review the data.

Clarifying Information

  1. Community – The company is located in a small town in the U.S. and has been the largest employer there for over 30 years.
  2. Unions – Midwest is unionized but the union and management have typically been on friendly terms.
  3. CEO Personal Incentive – If they save the company over $50M this year, they will receive a $1M bonus.
  4. Competitors – They have been benefiting from lower costs associated with outsourcing for years.