CENTER FOR

QUALITY OF MANAGEMENT
JOURNAL

REPRINT NUMBER:

RP00300

From the Chairman of the Editorial Committee

David Walden, Senior Vice President, Bolt Beranek and Newman Inc.

Page 2

What is the Center for Quality Management?

Tom Lee, President, Center for Quality Management
and David Walden, Senior Vice President, Bolt Beranek and Newman Inc.

Page 3

Goal Deployment at Varian Crossed Field

and Receiver Protector Products
Page 9
Dennis Gleason, Vice President and General Manager,
Crossed Field & Receiver Protector Products Business Unit, Varian Associates

JIT II: A New Approach to Supply Management

Lance Dixon, Director of Purchasing and Logistics, Bose Corporation

Page 15

BBN's 7-Steps Implementation

Cliff Scott, Senior Consultant, Bolt Beranek and Newman Inc.

Page 19

7-Steps to Reducing New Product Time-to-Market

Dennis Buss, Vice President of Technology, Analog Devices Inc.

Page 28

Operationally Defining Metrics

for the Product Development Process
Metrics Subcommittee of the Center for Quality Management

Page 34

Other CQM Research on the Product Development Process

Page 47

Volume 1, Number 1

Autumn 1992

Copyright 1992, 2000 The Center for Quality of Management, Inc. Permission to make digital or hard copies of all or part of this work for personal or classroom
use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full
citation on the first page. To copy otherwise, to republish, to post to servers, or to redistribute to lists requires prior specific permission and/or a fee.
Copying is by permission of The Center for Quality of Management, Inc. One Alewife Center, Suite 450 Cambridge, Massachusetts 02140 USA
Telephone: (617) 873-8950 Email: publications@cqm.org The Center for Quality of Management Authors retain rights for re-publication
of their articles.
Autumn
1992
ISSN: 1072-5296

JIT II
A New Approach to Supply Management

JIT
eliminates
inventory and
supplier and
customer work
closer together.
JIT II
eliminates the
buyer and
salesman, and
supplier and
customer work
closer together.

Lance Dixon
Director of Procurement and Logistics
BOSE Corporation

The Bose JIT II approach to supplier relations began in 1987 when I happened to look out my
office door and noticed a top-notch salesman for
G&F Industries, an excellent manufacturer of plastic parts and related items and a major supplier to
Bose Corporation, talking to one of our best buyers.
And I realized what they were doing.
The salesman wasnt selling. The buyer wasnt
buying. These two highly paid people were talking
about day-to-day ordersadministering the relationship.
And I thought, That isnt right. Neither of
them were operating at the high end of their skill
set. The salesman ought to be out opening accounts, not servicing them. The buyer ought to be
working with design engineers, doing value analysis, or going to Malaysia to develop new suppliers.
They were doing work that could be accomplished
more efficiently by:

providing better access to Bose for our

suppliers

empowering the supplier representative

to do what he could do best in our system

selecting a person with a skill set different from either salesman or buyer to
manage the ongoing buying relationship
and design engineering interface.

In traditional supply management, a production planner inside your company estimates how
much of a particular part you will need and tells a
buyer in Purchasing. The buyer tells the salesman
who tells his company, and, if all goes well, the
parts arrive on schedule.
Good systems may skip some of these steps.
We had already gone a considerable way toward a
Just-in-Time production system that enabled us

to order in small quantities which arrived just when

we needed them and were delivered directly to
work in process, without either inspection or
storage in a warehouse.
But a considerable number of people and traditional procedures still stood between the people at
my company who had needs and the people at the
supplier who could fulfill them
Why not bring your trusted supplier in house,
not just as a liaison office, but with power to
function as an integral part of the system? Remove
the buyer, remove the planner, remove the salesman.
Replace these persons with a full-time supplier
in-plant representative empowered to use our purchase orders to place orders on his companyto
place orders on himself, in effect. This dramatically shortens the communication process, and also
brings the suppliers insights directly into the ordering process. Its the supplier, whos gotten all
those gray hairs from dealing with us over the
years, who best understands the parts and the processes involved. The system utilizes the best skills
of our direct purchasing personnel and the suppliers
personnel.
So we brought the supplier into our manufacturing plants. Today, representatives of seven
supplier companies work inside Bose plants. They
wear Bose badges, and are empowered with Bose
purchase orders. They sit in Boses Purchasing
offices and utilize these Bose purchase orders and
place orders on themselves. The only limitations
are the limitations we place on our own buyers:
they place orders for standard cost items, whose
price has already been calculated, and each supplier representative has a purchase limit. They
require a signature from a Bose purchasing supervisor for orders above that limit, similar to all Bose
buyers.
We call this approach JIT II (pronounced
J.I.T.-two), because it is the next logical step in
just-in-time supplier management and concurrent
engineering. Our seven JIT II suppliers have nine
in-plant employees, and handle 30 percent of our
outside purchases and 65 percent of our transportation expenditures. The purchased commodities
Autumn 1992 15

include plastic tooling and parts, metal parts, corrugated packaging, maintenance, repair, and operating supplies, printing, import functions and domestic and international transportation.
JIT II eliminates the salesman and the
buyer, and often the production planner. It also
Lance Dixon is
empowers the supplier in-plant person to practice
Director of
concurrent engineering. He can attend any and
Purchasing &
all design engineering meetings involving his
Logistics for Bose
companys product area. He has full access to Bose
Corporation.
facilities, personnel and data.
Educated at Boston
Once we established these in-plant supplier
University and the
representatives, we discovered they led to imporUniversity of
tant improvements not only in Purchasing, but also
Minnesota, his
in Planning, Engineering, Importing and Transporbackground
tation.
includes
purchasing and
Who is Bose Corporation?
distribution
management. He
Let me provide you with a little background
was formerly
about Bose Corporation. Research performed by
Manager of
Corporate Central Dr. Amar Bose at Massachusetts Institute of Technology (MIT), led to the establishment of Bose
Purchasing at
Honeywell, Inc., in Corporation in 1964, and creation of the revolutionary Bose 901 Direct/Reflecting loudspeaker
Minneapolis, and
was also Director system in 1968. It set a new standard in music
reproduction.
of Purchasing for
Bose designs and manufactures some of the
General Mills'
most
favorably reviewed audio products in the
Kenner Division in
world,
and constantly explores the frontiers of new
Cincinnati.
technologies to improve the relationship between
sound and the listener. For example, Bose noisecanceling headsets flew with the experimental aircraft Voyager on its historic 1986 around-theworld nonstop flight. Bose professional sound
systems are used everywhere sound is important
from the Olympic games to the Queen Elizabeth 2.
Bose provides the sophisticated sound systems in
many top-of-the-line automobiles.
Manufacturing locations are in Framingham,
MA; Westboro, MA; Colebrook, NH; Hillsdale,
MI; and Canada, Mexico and Ireland. Corporate
headquarters is located in Framingham, MA with
sales subsidiaries located worldwide.

The Fox Running the Chicken Coop

Most Americans knee-jerk reaction to the idea
of having suppliers write their own purchase orders
is that the supplier representative will abuse this
relationship. The whole idea is just unthinkable.
But no abuse of any kind has occurred in 5 years of
JIT II operation at Bose.

The standard controls as placed on a buyer by

a purchasing manager and the standard controls
placed on Purchasing by a Finance Department
work well.
Weve never experienced any problems. The
supplier representative places enlightened orders
on his company, adjusted by his insight into our
business.
Take Chris LaBonte, for instance, who today is
the supplier representative from G&F. When a
plant in Europe calls up and says, We want 5,000
of Part X, LaBonte is likely to recognize if thats
a part in short supply and ask questions to determine whether the European plant is just ordering
5,000 to make sure it will have enough. LaBonte
is empowered to tell Bose plants, You cant have
those 5,000 parts. As part of his JIT II duties at the
Corporate Purchasing level , he coordinates the
supply of his material among several Bose locations worldwide.
We started the JIT II program in 1987 with only
three suppliers. As incentive for both sides, we
negotiated an increase in purchases and a reduction
in prices on existing orders that started immediately with the work of the in-plant representative.
We were both reducing costs and increasing communication, so the greater purchases and the lower
prices were natural.
The transition went smoothly, and we gradually expanded the program. Participating suppliers
business typically increases by 35-45% under the
new system. Boses savings in overhead alone are
approximately $1 million a year. On parts from
G&F Industries, moreover, the new system has
allowed a reduction in inventories to one-seventh
or even one-ninth the already low levels we had
reached with our conventional just-in-time program. G&F, on the other hand, has estimated that
the improved communication of the new system
increases the efficiency and machine loading is
therefore improved.
It only works, however, with excellent suppliers. And in several cases the supplier has not had
a person on staff who could easily be transferred to
Bose offices as a supplier representative. In those
cases, Bose and the supplier have jointly searched
for the right person. In some cases, the supplier has
found someone, in others Bose has recommended
someone, and the supplier hired him.
A key element is not merely the supplier
representatives physical location inside the plant,
but that the in-plant person is part of the system.
He spends a great deal of time with Bose managers not only obtaining information that suppliers
Autumn 1992 16

wouldnt ordinarily receive, but also analyzing

and critiquing Boses plans.

cash award as a participant in our Buyer Incentive/

Recognition Program.

The In-Plant Representative

and Concurrent Engineering

The JIT II Relationship in Daily Work

One of the biggest benefits to Bose is the

suppliers participation in engineering. We enjoy
having experts from our major suppliers working
closely with us. Suppliers know that the best way
to sell their product is not to call on buyers in
company lobbies, but to seek out design engineers
and present their products for design into Bose
products. As a result, the in-plant supplier representatives spend a lot of their time working with our
engineers, saying Look at this idea.
In some companies, participation of supplier
personnel in the design process is called backdoor
selling, and its frowned on. But all of the suppliers with in-plant representatives are suppliers from
whom Bose would like to buy more.
Engineers know that they should interface with
suppliers for insights on design of new parts, but
human nature and events get in the way sometimes.
The supplier people being available on the premises 40 hours a week significantly increase the
application of concurrent engineering in our product development.
One example of the effects of this cooperation
is a complete line of mounting brackets and stands
for Bose products designed entirely by Doranco, a
metal parts vendor.
Moreover, the work of the in-plant representatives is in effect a living, breathing standards program. Design engineers in all companies will
sometimes design with non-standard parts. They
may not use standard, off-the-shelf parts as much as
management would like. As a result, the number of
parts increases, and economies of scale are harder
to achieve. But the in-plant representatives are
constantly pushing a standard set of parts and
processes with the design engineer. Theyre more
effective at encouraging standardization than systems that tell the design engineer to look up the
standard in a book or computer file. They enhance
our normal standardization programs.
When the supplier or in-plant representative
develops an idea for a cost reduction on existing
Bose products, on the other hand, the benefits are
split between Bose and the supplier. The supplier
in-plant representative may also be eligible for a

To better illustrate how all this works, lets

follow Chris LaBonte, in-plant representative from
G&F Industries, for a typical day.
G&F Industries supplies tooling for plastic
injection molding, plastic parts, and metal parts. It
ships to Bose plants worldwide, and also supplies
Bose from its own plant in Ireland.
Chris starts some days at G&Fs plant in
Sturbridge, MA, where he controls various production schedules.
He arrives at the Bose Westboro manufacturing plant, where he confers with John Argitis, Jr.,
the other G&F In-Plant representative. (G&F is
one of three companies who have asked to place
two persons to keep up with all aspects of the
business.) John is heavily involved in the daily
planning and ordering of G&F material for the
Westboro plant, doing work that a Bose production
planner would do, and writing Bose purchase orders from his desk in the plant purchasing department. (We operate with the Buyer/Planner concept in our Westboro plant.)
Chris office is in the corporate purchasing
department. When he arrives late in the morning,
he confers with the Bose Framingham plant material planners and receives material requisitions
from them. He gets a sign-off from a Bose
purchasing manager on orders that exceed his dollar authorization per order, just like any Bose buyer
would. Then he calls in the orders to his
companys plant.
At 1:00 he attends a Bose New Product Project
review at the Bose Mountain headquarters in
Framingham, gathering information of importance
on parts G&F will be supplying.
2:00 brings Chris into contact with Bose design
engineers who have questions on process possibilities and cost tradeoffs on a plastic part and related
materials.
At 3:00, a quality control issue is addressed
with corporate and plant quality personnel.
Today, Chris is leaving early for the airport to
fly to the Bose San Luis, Mexico, facility where a
new product start-up is to take place using various
G&F parts. He is versed in all aspects of the
product start-up and possible difficulties, having
participated in the pilot production in the Bose
Westboro plant.
A typical day for a supplier in-plant representaAutumn 1992 17

tive in the Transportation Department is quite different. The day is spent controlling movement of
freight by truck, sea and air worldwide.
Both Roadway Express (domestic trucking)
and the Proctor, Inc., Division of McGraw Hill
(import/export) provide access to their mainframe
computer systems controlling domestic U.S. and
worldwide material movement. They also provide
professional on-site staff at Bose committed to
total system control, support and interface with
Bose worldwide.
Appropriate on-site computer terminals and
software are at several Bose locations. Bose
achieves an excess of 95% paperless electronic
data interchange (EDI) clearance of inbound freight
through U.S. Customs, which places us in the top
1% of manufacturers, because of the interface
between these computer systems and Customs
computer systems.
A Bose container leaving on a boat from
Kaoshung, Taiwan, or a package on a plane from
Japan is entered into the Proctor computer system
based on information from the freight forwarder at
the location. That data, which outlines every aspect
of the shipment, is sent to the Boston location of
Proctor Inc. From there, it can be accessed by Bose
terminals.
The fingertip availability of that data, essentially real time, allows us to operate our business
differentlyand better. When a day or two is the
difference between on-time delivery and a negative
impact on a Bose factory production schedule, the
JIT II transportation relationship and EDI system
give Bose information that enable us to solve
problems.
When material flowing towards Bose from
locations offshore can be located and routinely
accessed, the material functions as inventory,
just as effectively as such inventory in our plant or
warehouse. This is a major benefit of the JIT II
transportation system.

The Customer/Supplier
Relationship Profile
This system can be implemented for a wide
range of purchased commodities. It can support
production materials such as plastic parts supporting our audio products, non-production materials
such as printed company brochures, maintenance,
repair or office supply materials.
The concept works well in either sole-source or
multiple-supplier-per-commodity situations. But
we only implement one JIT II supplier in a

given commodity. We have found it is not a

problem to have one most favored nation supplier relationship, and still carry on a professional,
mutually satisfying, fair relationship with other
competing suppliers in the same commodity.
The indicators that suggest a supplier can
work with us in this kind of supplier/customer
relationship include:

General Supplier Excellence (Must be the

best in a given commodity)
Dollar volume over $1 million
Good quality is already being achieved
Good delivery record
The supplier does a substantial number of
purchase order transactions
Evolving technology, but not revolutionary change pace
Good cost levels have already been
achieved
Supplier operates in an area that does
not involve key trade secrets or sensitive technologies of the customer
company
Supplier already provides good
engineering support

The Future
Bose plans to bring more suppliers into the JIT
II program. Three more suppliers are nearing
startup on the program.
Bose JIT II suppliers are using the program as
a sales tool and have implemented it with other
customers.
Various companies are proceeding in the general direction with JIT II programs and similar
programs led by various company disciplines.
A 27 minute video presentation is now available with a textbook scheduled for publication this
Fall addressing just-in-time and JIT II.
A series of one-day seminars addressing the
JIT II purchasing and transportation program is
being presented by the MIT Center for Transportation Studies. The next seminar is scheduled for
October 1992.
Assistance to interested companies will be
available from major consulting organizations in
response to such requests.
JIT II is a registered trademark of Bose Corporation. Further information can be obtained by
contacting Bose Corporation, The Mountain,
Framingham, MA; Attention: Lance Dixon, Director of Purchasing & Logistics.
Autumn 1992 18

Journal On-Line

CENTER FOR QUALITY OF MANAGEMENT JOURNAL

The Center for Quality of Management Journal is a forum for disseminating the
experience of organizations learning to implement modern management practices. It
seeks to capture experiences and ideas that may be useful to others working to create
customer-driven, continuously improving organizations.
The CQM Journal is refereed. However, it is not an academic publication. Experiences
and ideas will be published if they seem likely to be useful to others seeking to improve
their organizations.
Send to:

Editorial Board
David Walden, Chairman
Center for Quality of Management

Stephen Graves
Professor & LFM Co-Director
Massachusetts Institute of Technology

The Center for Quality of Management Journal

Editorial Department
One Alewife Center, Suite 450
Cambridge, MA 02140
Tel. 617-873-8950 Fax 617-873-8980
E-mail: publications@cqm.org

Ted Walls
Boston College

Robert Chapman Wood

If you have thoughts for a paper and you would like to discuss it with us, please write,
call or submit an outline. We welcome your ideas.

Writer

Alan Graham
Consultant
Pugh-Roberts Associates

Shoji Shiba
Tokiwa University

Production Team

Final Manuscript Requirements:

Entire manuscript should be double-spaced, including footnotes, references, etc. Text
should include all the elements listed below. Generally, The CQM Journal follows the
editorial principles of The Chicago Manual of Style. We strongly prefer submissions in
eletronic format for all text and as many of the figures as possible. IBM-based software
(particularly Microsoft Word for Windows) is preferable to Macintosh-based software if
you have a choice, but is by no means a requirement.

Eric Bergemann
Please include:

Publisher

Kevin M. Young
Design & Production

Jay Howland
Copy Editing

1. Title page, stating the type of article (e.g., 7-Step case study, research paper, short
communication, letter to the editor, etc.), main title, subtitle, and authors full name(s),
affiliation(s), and the address/phone/fax of the submitting author;
2. All needed figures, tables, and photographs (see below);

CQM Officers
Ray Stata
Chairman

Gary Burchill
President

Thomas H. Lee
Treasurer and President Emeritus

William Wise
Clerk

3. Footnotes (if appropriate), numbered consecutively from the beginning to the end of
the article;
4. Reference list, if appropriate.
Figures, Tables and Photographs:
If you can, insert each figure or table into the text where you would like it to fall. Figures
should be composed to conform to one of two widths: 3 1/8 or 6 1/2 inches. The
maximum height for any figure is 9 3/8 inches. Text within figures should not be
smaller than 5 points and lines not less than 1/4 point at the figures final size. Figures
should labeled with the figure number underneath and title on top. Be sure that the text
mentions each figure or table.
Please retain separate PICT or TIFF files of figures generated in drawing programs and a
file with the text only for final submission.