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BOSE CORPORATION

Submitted byAmu Prabhjot Singh-10BM60011 Divya Hamirwasia-10BM60025 Sampurna Rakshit-10BM60077 Siddharth Verma-10BM60086 Swarnabha Shankar Ray-10BM60092

Contents
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Bose history and supplier relationship

Purchasing Method and participation in JIT II by Bose

Benefit & Risk analysis for JIT and recommendations

BOSE History
1964
Dr. Amar Bose and Sherwin Greenbalt started BOSE corporation Launched 901 using the reflective technology

1968

Launched 501 smaller version of 901 1970 Approached GM for manufacturing car stereos Launched 301which fitted into a bookshelf

1973

1982

First Bose sound system in Cadillac servile

1990

Bose systems were incorporated in GM, Honda, Acura, Audi and Nissan

Continued..
Exploring new markets Highest selling manufacturer in Japan, France, Holland & Australia Believed in good sound is universal Corporate Procurement Buying Center Design engineer, Materials Planner, Buyer

Vendor salesperson from selling


organization visits Bose to get orders

Pre-1988 Broader channels of distribution High-end specialty stores Electronic retailers Direct marketing Produced systems and components Integrated systems trend Home theater systems Plug and play equipment Centralized purchasing by Corporate

Procurement; delivered to plants


No purchasing by plants

1990 Decentralized Purchasing by plants against contracts negotiated centrally

Bose-Supplier Relations
Backward integration Careful selection of vendors Vendors not considered partners

Bose as a buyer
Expected more commitment from suppliers Lesser variation from component specified to reduce cost and manufacturing errors Frequently monitored technology used by vendors Finalized vendor only after close monitoring of pilot project

BOSE manufactures high quality audio systems which are technically superior and looking for vendors on the same line would help them simplify the process

Traditional Supply Chain

Purchasing methods
Traditional
Longer lead times Relatively large lot sizes

JIT
Smaller lot sizes
More frequent deliveries Long-term contracts Minimal paper work Less formal communication Shorter lead times JIT II Supplier comes into the organization

Less deliveries at higher quantities


Lowest price is main objective Time consuming, formal paperwork Formal communication

Will vendors be interested?


The vendors will not be interested
We need to make them aware about the new approach of BOSE (JIT II) . The benefits of JIT from both the perspectives should be explained Long term benefits of the approach to be highlighted CBA should be done to make them interested in this

Both Benefits and risks should be communicated to the vendors

Benefits of JIT II Bose


Access to purchasing, product-expertise and
order fulfillment resource at zero cost G&F rep is aware of Boses needs Faster delivery lower lead times Reduced number of suppliers Long-term relationships Better quality at reasonably low cost Quality ensures good sound reproduction Reduced waste in order processing and

Vendor
Opportunity to work long term with Bose Corp. Possibility of bigger contract with Bose Corp. Continuous learning Relationship with Bose gets stronger Social Bonding Access to Bose systems, facilities and people Better synchronization of production and delivery schedules

Interaction with Bose gives insights


Improved Profitability

inventory

Risks of JIT II
Bose
Lack of top management buy-in/commitment

Vendor
Financial hit of $80,000 per year

Confidentiality of information
Loss of control on purchasing for Bose Purchasing might object Contract makes switching difficult in case of poor supplier performance Problems like strikes at supplier may hamper supply Possibility of unfair pricing Effects of inflation & changes in raw material prices on vendor price Lack of formal criteria to determine when and with whom to establish JIT II relationships - can create contractual liabilities

Insufficient volumes from Bose may render


relationship unviable A lot of investment in one customer problems at Bose may affect G&F Need for redesign of existing processes for new system Inability to react to quick changes can hamper relationship Inability to supply to upcoming plants in Mexico and Michigan may affect relationship

Recommendations
If Vendors agreed, how to deal with other issues
Treating Vendors Initially a restricted access to be given Confidential information about competitors will not be shared and so as other sensitive information. Access to necessary documents is ensured Over a period of time , the restriction will be minimized to reach the full potential of JIT II approach Competitors Competitors should be made sure that confidentiality of critical information will be maintained Number of suppliers will be drastically reduced in the future

Bose needs to incentivize vendor


Prestige of being a preferred supplier Bigger share of business for G&F Reduction in costs can boost profitability for G&F and Bose

Continued..
Collaboration in other areas such as product design as incentive for G&F to participate Open access for G&F representative to systems, facilities and personnel Badges for G&F representative - treated as Bose employees How to go about JIT II approach Criteria for JIT II approach Suppliers are selected based on the check list containing all the necessary conditions . Then, Top 3 suppliers are selected After due consideration about the product quality and quantity they produce one vendor is chosen A representative from the vendor should be seated in the manufacturing facility to ensure JIT II approach is maintained Maintaining Fair prices There should be a constant check in the market about the price. Innovation from the supplier side should be given due value Flexibility and quality of the product should be included while comparing the price.

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