JIT II

Case Study
On
Implementation
Program

GROUP: 2 Dharmik Vasani (191417)

Divaxi Patel (191419)
SECTION :
B Divya Punjabi (191421)
Jitendra Waswani
(191426)
Kunal Vijay (191432)
Sabyasachi Bhatta 1
(191444)
Case Facts

• Companies involved in case:

G&F Industries, Bose Corporation
• People involved in the case:
John Argitis – President, G&F Industries
Lance Dixon – Director Purchasing & Logistics
Tom Beeson – Vice President Manufacturing
Amar Bose – Chairman
Sherwin Greenblatt – President
Wayne Sauer – Purchasing Manager in Corporate Procurement
Joe Giordano – Vice President Finance

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 Case
Facts

• Company motto – “Better sound through research”

• Company mission – “Provide outstanding sound experience to everyone across the world”
• Headquarters- located in Westboro Massachusetts ,Ste-Marie Quebec , Carrickmacross
Ireland
• For first 3 years all the company’s revenues were earned by developing portable battery-
operated equipment
• In 1968- Bose launched 901® speakers
• In 1970- Bose introduced 501® speakers
• In 1973, Bose introduced 301® speakers
• Till 1990 no plants did purchases independently
• Westboro plant spent about 140million dollars per year from active base of 200 vendors
• In 1990, Dixon proposed JIT II
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Concerns regarding
JIT ll

Vendor representative should be treated as Employee of Bose

Should have access to all Bose facilities & everything

Some managers had concern about the same

Confidential information etc.

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Q: How does Bose’s strategy & sourcing policies affect supplier’s
relations?
Bose’s strategy aspects involved following
pieces:

Large
distribution Production of
channel components &
whole system

Entering into new market and working as a competitor for large companies globally
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Q: How does Bose’s strategy & sourcing policies affect supplier’s
relations?

• Bose and their vendors never had a

strong bond to work upon as their
had been a huge dispute due to
price negotiation
• They were not happy with their
suppliers as the components
required were not up to the mark.

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Q: Is Bose a good
buyer?

Decentralized purchasing
throughout the world
Self-reliant policy by Dixon
Provider of best sound
system but not a good
purchaser
Less or no manufacturing of
components
Bad relations with the vendor

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Q: Should Bose vertically integrate into
plastic? Should plant source their
components locally?

No, they should not vertically integrate into plastics.

• Reason for the same is that, vertical integration definitely help Bose in reducing
dependency on vendors and ensures that Bose gets best quality products and
reduced lead time, but it also requires huge investment and training cost

• It is uncertain that company can reduce the cost of plastic

• Local sourcing may affect the quality standards of Bose, and in case if they
meet the quality standards the cost will go up

• Hence Bose should not procure locally

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Q: Should Bose participate in JIT ll
Program?
Is JIT ll a good idea for Bose?
Yes, Bose should participate in JIT ll program.
The vendor and Bose each had their own priorities and agendas, which were often contradictory to the Bose’s
interest. So JIT II will be helpful in resolving such issues.
If supplier rep is working in collaboration with Bose than other principles like Kaizen could be executed
successfully.
Under JIT II, a vendor rep would replace the vendor salesperson, the Bose buyer and the Bose materials planner.
Clearly a lot of cost would be saved in this process. The estimated cost for the vendor to keep such a rep would be
$80.000/year. The money saved above could be shared with the vendors. Even Vendors like G&F and United
Printing would be benefited by lesser contract renegotiation and this would give them a long term business.
 Bose wants material when it is needed, not to keep in warehouse. Responding to constantly changing production
schedules without creating costly inventory, or even worse shutting down the line with late shipments, is United
Printing's challenge. The direct line of communication in a JIT II partnership will help anticipate Bose's needs
before those needs become problems and those problems become a crisis.
Bose will not try to switch suppliers in order to maintain long term business relationship with them with JIT II
implementation.
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Q: Should G&F participate in JIT ll
Program?
Is JIT ll a good idea for G&F?
Yes, G&F should participate in JIT ll program.
• The challenge for suppliers is fulfilling changing production schedules without creating costly inventory,
or even worse shutting down the line with late shipments .
• The direct line of communication in a JIT II partnership lets them anticipate Bose's needs before those
needs become problems, and those problems become a crisis
• Any manufacturer before starting JIT program, need to forecast customer demand, set planning and
specifications, then send that information out to buyers for competitive bidding.
• Under the JIT II program, however, the process is simplified.
• After Bose forecasts customer demand, the in plant checks every plant's inventory, combining and
reducing unit costs for any other needs, then orders the product to ship direct-to-stock to the Bose location
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What are the potential benefits and risks for both
companies?
Benefits to Bose: Benefits to G&F:

 Better communication  Improved profitability

 Lower lead times  High level of interdependence and commitment

 Synergies result in reduction of indirect cost

 More accurate information sharing
 Simplified processes
 Reduce efforts to renegotiation contracts
 More opportunities for big volume orders & to
 Long term relationship with suppliers
expand the range of products
 Cost reduction in inventory  More insights about industry and its changing

 Reduction in order processing trends

 Allow G&F to make long term investments

 More accurate forecasts for orders in
regards to collaboration with suppliers  Less negotiations in contracts
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What are the potential benefits and risks for both
companies?
Risks to Bose: Risks to G&F:

 Confidentiality of information  Increase the cost of $80,000 per year

 Loss of control over purchasing  May lose on price control in order to keep
relationship
 Possibility of unfair pricing
 Taking more care for one customer may
 Difficult to give feedback or change
affect the relationship with other clients who
policies to maintain long-term relationship
are potential competitors of bose
 Difficult to switch the suppliers if poor
 Changes in Bose's management or policies
performance
will affect the same in G&F
 Supplier Complacency
 Problems in Bose may affect G&F
 Potential conflict of interest performance
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