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Company Background Founded -1964 by Amar Bose, MIT professor The business was based on innovations in acoustics and electronics. In its initial years the company’s revenues were primarily based on portable, battery-operated equipment. Bose launched the first successful model - 901 speakers, which were followed by further successful products like the 501 and 301 speakers. Bose entered the car stereo market with a partnership with Delco division of GM and eventually offered sound system to Honda, Acura, Audi, and Nissan.
BOSE Strategy for Growth Bose was a privately held firm and had equal distribution of revenues in Japan, Europe and United States. The company tag line was “Better Sound Through Research” Mission: Provide outstanding sound experience to everyone in the whole world The company followed three strategies through which it led its growth – Acquiring new markets persistently – Broader channels of distribution – Producing systems and components
Existing Corporate ProcurementProcess Design and product specification Solicit Bids Selection and Qualification of bids Negotiate Contracts Initiate Pilot Order Day to Day purchasing Handed over to Plant
JIT II Program Benefits and Risks for Bose – Immediate cost reduction – In plant representative – Defined ceiling on all pricing. – Less paperwork – Eliminates duplication of work – Less Inventory – Flexibility and on time shipments – Stronger supplier alliance, hence better cost control and employee count
JIT II Program (contd) Benefits and Risk for the Supplier – Consolidated orders and potential to supply to other plants as JIT II partner – Access to demands – Efficiencies and cost reductions. – Increased revenues – Better able to anticipate Bose needs – Better planning of schedule
Desirable Outcomes Successful implementation of JIT II in plastics and printing material Reduced procurement cost Improve internal manufacturing capability for the components in each plant Improving purchasing function through decentralization Maintain long term relationship with suppliers
Vendors will be interested or not First , 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 is to be highlighted CBA should be done to make them interested in this approach ( Placing one Rep instead of 3) Confidentiality of information Bose corporation should increase the business offered to Vendors participating in the JIT II program Help vendors in planning their schedule better Make them aware of the benefits of being part of JIT II
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
How long this approach should last This should be a perpetual relationship between the Manufacturer and the supplier This enhances the relationship with the supplier ,results in enhanced – Flexibility – Profits – Innovative capability – Better products to get competitive edge in the market
How to go about JIT II approach Maintaining Fair prices – There should be a constant check in the market about the price. – Innovation from the supplier side should be given due weightage – Flexibility and quality of the product should be included while comparing the price. Tracking the market price for the products supplied by vendors (could be performed by corporate procurement) New products must be given price based on the value provided to Bose
How to go about JIT II approach(contd) Criteria for JIT II approach – Suppliers are selected based on the check list containing all the necessary conditions . – Rank the vendors based on past performance, technology capability, quality etc. – Ensure Vendor commitment to the program – Set an evaluation period to understand the improvement in performance – Finalize the vendor that provided maximum benefits 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.