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On The Spot

A new twist on just-in-time management pays off for entrepreneurs and their customers.

A couple of years ago, Joe Doran was meeting with some marketing people at Bose Corp. when he heard that one of the giant audio equipment maker's clients had just snapped up its entire inventory of a popular loudspeaker.

In other circumstances, that might have been only mildly interesting industry gossip. But Doranco, a family-owned metal-products maker in Mansfield, Massachusetts, has a special relationship with Bose. As part of a supplier program Bose calls JIT (just-in-time) II, Doran had virtual run of the billion-dollar Framingham, Massachusetts, company's facilities.

After hearing the story, Doran walked over to Bose's engineering department to see if they knew they were about to be out of stock. It turned out he was bringing news not only of a problem but of a potential solution as well.

"We were able to call our manufacturing facility, intercept second- shift production, realign production, and deliver finished product to the Bose distribution warehouse by noon the next day," Doran says. His company's rapid response not only allowed him to make a sizable sale but also helped Bose quickly replenish its stock of an important item, pleasing Bose's customers.

Mutual benefits are frequently the result of JIT II, an innovative program Bose pioneered in the late 1980s. With JIT II, suppliers work hand-in-hand with customers, acting more like partners than traditional buyers and sellers.

Having the supplier's employees on-site, almost as if they were employees of the buyer, is one unusual JIT II characteristic. This allows suppliers to help their customers in ways few would dream of, just as Doran did.

But that's not the end of it. Many JIT II arrangements call for the supplier's on-site representative to monitor the buyer's inventory and be responsible for keeping it replenished--including placing orders on his or her own authority.

Lance Dixon, former Bose director of purchasing and logistics and the man credited with creating JIT II, calls this "empowerment of the supplier within the customer's organization" and says it is the major innovation in JIT II from which numerous benefits flow.

"JIT II allows customers and suppliers to work together closer than they ever did before," says Dixon, now executive director of the Bose JIT II Education and Research Center, a nonprofit organization in Framingham. "The resulting efficiency drops to the bottom lines of both companies."

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This article was originally published in the May 1997 print edition of Entrepreneur with the headline: On The Spot.

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