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Bossard Company’s Digital Transformation Essay

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Updated: May 21st, 2021

Introduction

Bossard is a hardware international conglomerate that specializes in the development of fastening technology and devices. It also uses a wide variety of smart and sensor technology to achieve a competitive advantage. It plans to utilize “smart factory” logistics and verge into various new sectors or initiatives where their innovative approach may be useful. This case study examines a potential transition for Bossard to achieve digital transformation and offer a better value proposition.

Business Model

Originally, Bossard was founded as a family-owned hardware store in Switzerland. It sold various small hardware and fastening products which consist of bolts, screws, rivets, and nuts. It then expanded to a regional, national, and international level in the $72 billion global fastening industry. It has continued to expand and experience profit with a 15% increase in sales year over year. It has over 70 service locations, 35 logistics centers, and 10 applications engineering laboratories (Michel et al. 2).

Bossard went from serving local individual consumers and regional businesses to cooperation with international industrial companies. It works with such large corporations as John Deere, Tesla, and Schneider Electric as a supplier of fastening parts, solutions, and logistics. Bossard is known globally for achieving an extremely high quality of products and creating standardized systems and processes.

From its early days in the 1980s, Bossard took upon a client-based approach in its business model. Not only did it sell basic parts, but it took an individual approach to each buyer to determine the fastening solutions necessary for them. Despite the common belief, the fastening business and its parts can be inherently complex as each client may require various needs and uses for the parts or specially adapted approaches. As the size of the clients grew to industrial companies and factories, the demands for parts increased. And Bossard saw the opportunity to become not only the seller but also the supplier and distributor.

The company standardized and created a logistics system that would help boost productivity, both for itself and the customer. By the 1990s, Bossard sought to introduce management of the fastening parts (also known as C-parts) for its clients. That included a smart and automated ordering system known as Smart bin that could check stock levels through weight sensors and automatically ship the predetermined batch.

The SmartBin technology was innovative and has become the centerpiece of Bossard’s business model and approach to customers. The high quality of standard for supply and logistics was above other competitors. The optimizations helped to simplify the complexity of various components of C-parts and the management of inventory. The gathered data analytics could be used to ensure the client needs are met while saving both money and time for customers and Bossard alike.

In 2014, Bossard introduced a wireless mobile model known as SmartBin Flex and an ordering technology called SmartLabel which allowed us to efficiently preorder specific parts by pressing a label. Furthermore, Bossard continued to develop its own logistics platform ARIMS that used the smart factory logistics aspect and the Internet of Things. The computer system was able to monitor all physical aspects of the manufacturing and logistics processes and implement decentralized decision-making. This significantly made Bossard a critical partner within the value chains of its clients. Such deep integration inherently meant continuous and expanded business opportunities as clients valued the “proven productivity” and dedication of Bossard (Stefan et al. 3).

Therefore, Bossard has embraced this approach in its current business model. However, as competitors have increased their quality of parts and logistics, the company seeks to diversify its business model by expanding into new sectors. Finally, it is taking advantage of increasing opportunities of the Internet of Things to which its system is already interconnected.

Logistics Solutions for Hospitals

Implementing the smart factory logistics solutions in the healthcare ecosystem is a potentially large market for Bossard. Healthcare supply management is inherently complex and requires significant resources to maintain. Furthermore, modern healthcare facilities are becoming integrated into the Internet of Things, including building digital infrastructure and supply-chain logistics. The new business model entails for Bossard to offer its logistics services, beyond the C-parts hardware side of the company. Meanwhile, pressure has amounted on hospitals to lower costs and increase efficiency (Stefan et al. 9). Despite the technology, the progress has been relatively limited for the healthcare sector in comparison to other industries.

The problem specifically beleaguers public hospitals, where purchasing is conducted centrally through warehouse inventory stock. Meanwhile, direct purchasing from manufacturers is expensive and there is the issue of maintaining stock and reordering supplies. Nurses constantly have to manually keep track of supplies and place orders in the computer system. The variety of items that hospitals need for their operations is diverse and complex, similar to factory manufacturing. The manual approach currently used, and poorly developed IT systems cause constant disruptions in supply delivery and, in turn, poorer patient care (Stefan et al. 9).

The private healthcare market which is more efficiency-focused uses consolidation of supply chains within large groups of clinics, taking on the issue through scale. C-parts that Bossard currently delivers and manages are similar in concept to small supplies such as syringes, bandages, needles, and other basic medical provisions. Material personnel in hospitals must use human judgment and skim data to determine the quantity, quality, and time for orders of these supplies. Some of the more highly technical devices such as pacemakers which are expensive must be in stock but cannot be overordered. Furthermore, the loss or misplacement of both small supplies and expensive devices is detrimental.

The introduction of the Internet of Things to the supply chain offers significant benefits such as real-time traceability to identify the ordering and location of any medical provisions. Medical supplies, many of which adhere to strict regulations such as expiration dates, can be digitally controlled to ensure that all relevant information is available to medical professionals. Furthermore, IoT offers resource allocation methods, to ensure that supplies are ordered and delivered by consumption or need. This helps manage costs with an emphasis on utilization. In turn, this may lead to up to 30% in inventory reduction and 20 hours per week of reduced labor.

The Internet of Things improves the customer manufacturing and ordering process by implementing Bossard’s Smart Factory and SmartBin services. Collection of big data is conducted and over time, analysis of trends and situation-based outcomes leads to emerging patterns. This can be used to predict and manage supply orders to some extent, introducing computerized and automated systems. Through this Internet of Things service, Bossard offers convenience usability and an enhanced experience for its clients.

It is estimated that such automation in replenishment systems can help introduce savings of $1-4 billion and create a potential value of $98-342 billion per year (Stefan et al. 9). Bossard would establish itself as a valuable partner and vital distributor in the healthcare ecosystem. Furthermore, as a service provider, Bossard would offer significant technical support and logistics management that hospitals neither have the resources or expertise to implement independently. By bridging the gap, Bossard fills a niche but significant demand in the sector.

Alternative Market Entry Strategies

The healthcare industry is one of the most difficult markets to enter. In developed nations, the market is highly saturated and controlled by large industry players such as insurance companies, healthcare organizations, and major suppliers. Despite the continuously growing demand for healthcare services and trends for optimization in hospitals discussed earlier, the market can be volatile. This is largely due to healthcare policy which is constantly changing and varies from country to country. Regulatory frameworks lack standardization and can be difficult to navigate, even if a company like Bossard does not offer any health-related services itself. However, through carefully weighed analysis, strategizing, and marketing, it is entirely possible to successfully infiltrate the market.

The first alternative market entry strategy is direct exporting. Bossard sets up a manufacturing and distribution center for small medical supplies similar to its C-parts business. This will include its innovative SmartBin technology and high-quality products. As a result, Bossard will establish direct supply chain relationships with hospitals and gradually build up its size and reputation. However, this approach poses several challenges. Bossard lacks the infrastructure, expertise, or certification to manufacture medical supplies. Establishing this would require significant expense that would set the company back financially for years without a guarantee that it would be effective in gaining market share. Besides insurance, medical supply production is one of the tightest markets to enter the healthcare industry.

A second option would be to purchase an already existing supplier of medical provisions and integrate it into the Bossard network and logistics chain. The merger process will help to access new marketing channels and develop communication with partners and customers in the industry. The manufacturing capabilities of the supplier combined with Bossard’s strength as a supply chain behemoth and IoT technological capabilities may be effective at establishing a concrete presence in the sector.

However, the challenge of this proposal is that it may be difficult to find a supplier willing to sell a majority share. Bossard would be unable to afford a large company but buying a small supplier will make the purchase irrelevant in the grand sense of market share. This approach requires a significant evaluation of risk and balancing of interests.

The third alternative to market entry would be to focus on licensing Bossard’s SmartBin, SmartLabel, and ARIMS technology. This would include cooperating with a wide range of partners, both suppliers, and hospitals. Bossard would focus specifically on offering the technology, application support, basic infrastructure such as sensors, and further IT management. It would serve as the distributor by establishing the link to efficient ordering and supply chain logistics between manufacturers and customer recipients. Furthermore, the company can continue to collect large annual licensing fees for the use of its technology.

This point of entry inherently carries the least risk for the company in the short term. However, it may be important to consider whether it is sustainable in the long run. With easy access to Bossard’s technology, manufacturers will eventually be able to replicate similar digital IoT systems in their distribution networks, and potentially ending licensing agreements. To prosper in this case, Bossard would require to continuously innovate its technological capacities and operational efficiencies to remain competitive.

Disruptive Change

The Internet of Things offers a very unique technological transition for the supply chain industry. The potential of big data and its implications can generate trillions of dollars in value worldwide. Estimations of a potential $1.9 trillion in value for logistics indicate that it is a positive and inherently disruptive trend in the industry (Stefan et al. 4). Both homes and businesses alike are becoming dependent on “smart” technology and sensors, all interconnected and exchanging data within the Internet of Things. From a business perspective, it will lead to a rapid change in revenue, profit, and job creation. Meanwhile, the technological jump will innately revolutionize the industry.

The Internet of Things focuses on collecting data and exploiting it to its full potential. A highly complex analysis must be used by IoT devices to predict and optimize processes. Bossard can use this to its advantage to predict demands by clients. It would allow to accurately plan and prepare for services to the clients as well as any potential disruptions. The primary challenge that remains is to build data competence. Bossard’s primary focus of inventory optimization would be utilized for aspects such as strategic forecasting and network planning which focus on long-term client needs and transport capacity of supply chains.

Operational capacity planning ensures short-term evaluation of inventory capacity and optimal labor and resource utilization. Furthermore, the service can be used to analyze a customer’s product portfolio to determine the most efficient techniques for inventory management and product availability. Finally, market intelligence is a vital attribute of IoT systems as the volatility of markets and influencing factors can be monitored to predict any disruptions or changes to pricing that can affect Bossard or its clients (Stefan et al. 7-8). These services are inherently innovative and offer tremendous value to Bossard which can establish itself as a leading logistics analysis company in any industry.

As IoT continues to develop as a technology, the cost of its exploitation will drop while potential functionalities will continue to increase. It is considered the future of technological development as communication and data exchange are vital aspects to offer the fastest and most efficient services in any practical aspect or industry. The technology can be disruptive for Bossard if the company will be able to stabilize its operations, lower costs, and expand the wide array of functionalities which can be useful in industries as long as they are better than traditional practices.

Conclusion

Overall, Bossard is a very successful company that found its beginnings in the manufacturing and distribution of fastening products. However, innovation allowed it to create integrated systems for highly efficient logistics systems that can optimize the process of ordering and shipment of small parts. To remain competitive, Bossard seeks to expand to the healthcare sector, where it can help streamline the ordering of small medical supplies.

The company can offer its rich logistics experience and forward technology to create optimal and automated ordering processes for medical supplies which will provide a wide variety of benefits. The Internet of Things which Bossard integrates with its system is vital to success in the logistics industry as big data provides critical breakthroughs for any supply-chain processes. The use of technology and the direction of healthcare markets breakthrough that Bossard strives toward creates disruptive change for the company.

Work Cited

Michel, Stefan, et al. “Disruptive Change at Bossard with Smarthfactorylogistics.com.” International Institute for Management Development, 2017. Web.

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