BOSE CORP. (THE JIT II PROGRAM) Case Analysis No. 18 A written report Submitted to: Prof. Ma. Julie V. Johnson Ramon Magsaysay Technological University Graduate School Castillejos Campus In partial fulfilment Of the Requirement in BM 402 Management of Business Logistics Submitted By: Marlon D. Jaranilla January 23, 2010 1 Submitted by: Marlon D. Jaranilla BOSE CORP. (The JIT II Program) Case Analysis No. 18 I. GAINING FAMILIARITY / CASE BACKGROUND Bose Corporation was founded in 1964 by. Dr.
Amar Bose, a professor of Electrical Engineering and Computer Science at the Massachusetts Institute of Technology.
Sherwin Greenblatt and Hose shared a love of music, but recognized that the high fidelity (hi-fi) products then available did not accurately reproduce sound; Greenblatt become Bose Corporation’s first employee, the two (Dr. Amar Bose) planned to built a company based on innovations in acoustics and electronics. For three years, virtually all the company’s revenues were earned by developing portable battery operated equipment, hi-fi was considered “the hobby side of the business”.
In 1968, Bose Corporation launched the 901 speaker, which incorporated proprietary Direct/Reflecting technology, simulating the feeling of live sound by radiating sound waves to the listener directly and via reflections off walls, ceilings, and doors. This speaker was a huge success, landed by a growing market of audio enthusiasts. Two years later Bose introduced the 501 speaker, which also had Direct/Reflecting technology but was half the size of the 901 speaker. In 1973, Bose introduced the 301 speaker, which produced true hi-fi sound but could fit on a bookshelf.
In 1970’s, sales of Bose speakers grew rapidly and during this year, Bose develop a car stereo that would produce exceptional sound; Cadillac Seville first offered an option for a Delco-Bose sound system in 1982, by 1990 sound systems were available in cars made by General Motors, Honda, Acura, Audi, and Nissan. II. IDENTIFICATION OF THE PROBLEM Bose problem arises during the initial implementation phase of JIT II program. The primary objective of the program is to maximize purchasing of raw materials and inventory in a timely manner without additional dollar burden cost to the company.
The objective of the program will run contrary to the existing practices of Bose Corp. Vendors who will be accredited in the program will eventually take over the purchasing and inventory monitoring of raw materials Bose plants will be using in the production of their products. Vendor’s representative will have a full access to all Bose manufacturing plants which they never allowed before. 2 Submitted by: Marlon D. Jaranilla III. ALTERNATIVE A. To implement JIT II Program without letting the vendors representative take over the purchasing and inventory monitoring of their raw materials.
B. Accredit only qualified vendor/supplier based on their track record, financial capacity C. Allow only vendor/supplier representative on a limited “access” only in every Bose Manufacturing plants to protect business secrets and integrity. D. Required vendors to send only representative that has enough experience in purchasing & Inventory of raw materials; for this purpose, experience representative can suggest vital knowledge in choosing good raw materials for manufacturing of Bose products. IV. DECISION CRITERION / CRITERIA
A. JIT II clearly gives advantage over the Bose old raw material purchasing and inventory processes. B. The JIT II can make Bose maximize their potential in producing their product with less dollar to spend in inventory and monitoring C. The program will translate additional income savings for the company; this savings can be re-invested in R & D development of new product or improvement of existing product. V. ANALYSIS OF THE CASE STRENGTH ? Company is the only hi-fidelity speaker manufacturer in the industry. Products is well accepted in the market particularly music hobbyist and music lover due to its obvious advantage in delivering good quality music output. ? Bose product is always exceptionally excellent and high quality; music lovers always look for it. WEAKNESSES ? Purchasing of raw materials cost so much in the balance sheet of the company. ? Corporate procurement people always look for new verdor / supplier for their raw materials. ? Tight budget allocation for acquiring raw materials even thought company’s production increases substantially in the past years. Price of their product is too expensive that only few customers can afford to acquire. OPPORTUNITIES ? Hi – Fidelity speaker still new in the market; this product can be widely accepted due to its good sound output. 3 Submitted by: Marlon D. Jaranilla ? Raw materials procurement with the implementation of JIT II program can make easier for the corporate procurement purchasing the raw materials. THREATS ? Due to centralized purchasing of their raw materials, production cost of Bose product tend to be higher as compare with their competitor in the market. New competitor or existing competitor of Hi-Fi speaker always in the lookout for market penetration to grab portion of market share of Hi-Fi speakers. VI. RECOMMENDATION Based on the available data and the objective of JIT II Program, it is advantageous on Bose Corp. to implement such procurement process. This process can solve present problem that corporate procurement is encountering in sourcing their raw materials. The process saves Bose substantial amount of dollar savings because vendor representative will self monitor their raw materials supplies that Bose needed in the production of speaker product.
We recommend further that vendor representative should be given not full access to Bose manufacturing plants and system to protect Bose secret in manufacturing their product. VII. IMPLEMENTATION / PLAN The success of the program is totally dependent on the support of the company’s executives, manager and people who is primary user of the program. We recommend that a program support committee must be form to monitor the implementation and progress of the program. Once the program is totally implemented, the committee shall be immediately disbanded. 4 Submitted by: Marlon D. Jaranilla
Cite this Bose Corporation Case
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