Under the just-in-time II (HT II) system developed by Bose Corporation, the supplier pro-vides an in-plant person who resides in Bose’s facility. The in-plant representative coordi-nates the placement of orders from Bose with his company and does concurrent planning and adjusts order deliveries to serve Bose’s demands. In turn, Bose provides an evergreen contract that lasts for a period of time (e.g., four years), requires some price reductions, and permits the in-plant personnel to participate in product design, material selection, and access to all Bose personnel and meetings.
Bose has used HT II for a number of products. Note that under HT, suppliers still get fore-casts and have to use those forecasts to make decisions. However, forecasts are imprecise, often off by 10% to 15%, which requires suppliers to scramble. JIT II takes the next step from JIT by permitting in-plant personnel and hence suppliers to have an idea of demand trends before the orders are placed. An in-plant from a supplier of plastic components suggests that under JIT II he be allowed to see demand data and have the flexibility to adjust shipment timings and quantity so that the supplier production runs are efficient. He can also build up inventory in anticipation of other orders to his manufacturing system. This concurrent planning is a major source of benefits for this supplier.
An in-plant from a transportation provider claims that her terminals at Bose permit infor-mation to replace Bose inventory. Knowing when the deliveries are expected allows Bose to reliably use in-transit inventory to satisfy production demand so that the company can operate with low physical inventories. Also the transport company can possibly gain work from Bose’s suppliers and customers. About 65% of Bose’s customers are located outside the United States. An in-plant import and export specialist at Bose has data regarding order shipments and deliveries. Quick and timely access to information enables him to manage the international shipping operations and plan and react to contingencies. An in-plant from a printing company works with orders from Bose’s departments and coordinates the order placement, scheduling, and receipt between Bose departments to minimize overhead costs. Fixed prices reduce any need for Bose personnel. Bose’s senior management believes that JIT II enables Bose to have control without invest-ing in vertically integrated assets. 2a. Provide a 4C Supply Chain Audit of this case. 2b. How does in II help the supplier? What tradeoffs does the supplier have to consider in choosing whether or not to be involved in JIT H with Bose? 2c. How does JIT II help Bose?
