08 September, 2019 By: Sakthi Prasad
(Photo Credit: Carlo Baus )
Bose Corporation is globally famous for its audio equipment, which range from headphones to car stereos. The privately-held company clocked annual sales of over $4 billion for the 2019 fiscal year. It has worldwide operations, with a total employee base of about 9,000.
In an interview with Beroe, Carlo Baus, Head of Global Strategic Sourcing at Bose Corporation (part of Global Indirect Procurement), stated that working for a well-known and established brand like Bose -- at times -- entails extra pressure.
“Our brand is our biggest asset, and we are watchful of our actions and those of our partners. We have strict nondisclosure agreements with our suppliers, including what can be communicated about our partnerships. For example, our suppliers need to share any article featuring our brand, products, or collaboration with Bose for approval before anything is published. Besides our sourcing activities, we also need to be the custodian of our brand,” Carlo said.
He added that global brand awareness also has its benefits: “It makes our job a little easier because, in most cases, there is a strong willingness on the part of suppliers to collaborate with us.”
Currently, there are several global macroeconomic headwinds, such as the U.S.–China trade war and Brexit. Carlo said the principal factor is the uncertainty surrounding these issues, and that no one knows what’s going to happen next.
“We have prepared projections and worst-case scenarios, but it is difficult to predict anything at this point in time. Many of these changes won’t happen overnight, and will only impact in the mid or long term,” he added
To make Procurement more effective and drive more value, Carlo said the team is focused on two key objectives:
For the first objective, Bose has implemented SAP Ariba, which has gone live in both North America and Europe. Efforts are underway to implement the system in the Asia-Pacific region too. With category management, the second objective, the goal is to become valuable business partners to all the different departments and business units within the company:
“We compare ourselves to internal consultants. If there is a project or challenge on hand, we bring the right team together, analyze, define the right approach, find the right partner, and implement it successfully,” Carlo said.
However, supporting the end-to-end value chain effectively is not without challenges.
“There are challenges on two levels: On the one hand, you have technical challenges in transitioning to the new platform. Prior to implementing Ariba, we were using the SAP SRM solution, though without any formal structure. Some regions or departments were using it as a standard tool, whereas others were hardly using it. At the same time, some units used the SRM solution only for the approval process, and managed all other procurement activities offline,” Carlo said.
To standardize processes globally and improve efficiency, the company also founded a Global Shared Services Center in Lisbon, Portugal to support all global teams with the right processes as well as to ensure compliance and consistency.
The second and more profound challenge is to change people’s mindset toward Procurement. It is to make them recognize the potential value that can be achieved by using the right approach and collaborating closely with the Procurement team.
Carlo said it is not only about placing a purchase order (PO) in the system or signing an agreement with a supplier, but also maximizing the value of the partnership and ensuring upstream engagement with the Procurement team.
“There are similarities between Bose and other companies regarding the challenges of ensuring that Procurement has a proverbial seat at the table. How do we ensure business teams appreciate the services we provide to them? Also, how do we change people’s perspectives about what sourcing truly means?” Carlo pondered.
As Bose continues to bet on innovation, supplier relationship management has gained primacy. The company is venturing beyond manufacturing conventional audio equipment by, for instance, recently unveiling smart speakers as well as noise-masking sleep buds specifically engineered to help people sleep better.
Whereas some of this innovation can be generated from the in-house R&D teams, it is also necessary to rely on external partners for new ideas.
“At the end of the day, we cannot have all the capabilities in-house, even though we have some of the best engineers and developers. This is because technology is moving so fast that you do need some partnerships to pull in the right competencies.
“We support all the departments, ranging from R&D and product engineering to manufacturing, and so on. We ensure that we have right partnerships in place that are tied to our product roadmap.
“We also assess the kind of capabilities we need -- say, three or five years down the road -- even as we deal with questions such as ‘Should we outsource or insource certain activities?’ Our team goes into the markets to scout for partnership opportunities that best align with our business requirements,” Carlo explained.
He said the global category management team helps build a bridge between business stakeholders and Procurement. In some categories, the maturity level is high and the relationship with business teams is pretty good. However, in few select categories, his team is working toward increasing the maturity level.
“We are highlighting how we can create value to stakeholders who are currently underserved by the global category management team. We are constantly looking to expand our support model,” Carlo said.
He further highlighted that besides looking for new ideas in the marketplace, it is also imperative to check the capabilities of existing suppliers.
“A supplier–partner may have been a fantastic fit for the company 10 years ago, but may not be the best match now due to the change in our product mix and requirements. This is also a service we deliver as a team -- to ensure we have the right supplier base that is in tune with our current and future needs,” he added.
According to Carlo, cost savings continues to be an important key performance indicator (KPI) measured as part of the team’s objectives.
“Besides cost savings, we also measure our suppliers and our own service levels toward the business. To stay in sync with market trends and innovation, we conduct QBRs with our key partners in each category.
“Once every quarter, we meet with our internal business teams, together with the suppliers, to not only discuss ongoing projects, but also try and gain market insights -- like for example what is changing within their sector and how are they innovating? -- provided they are willing to share some details. Basically, all this is an effort to create value beyond cost savings,” Carlo Baus concluded.