Compact bike company case study.

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Executive Summary
This report mainly focuses on addressing possible problems facing Compact Bike
Company. This is an organization which assembles and distributes folded bicycles in
Canada. The director of operations Eddie Miller hired me to solve the problems facing
the organization. The supply chain of the organization is obsolete and needs an upgrade
for the organization to be able to compete with other organization which is threatening
the premium market which belongs to the Compact Bike Company.
The first issue which needs to be addressed is the issue of shipping which the
director of operations was wondering if shipping directly to the eastern and central
Canada can be possible by using of multi-drop TL service. These issue needs to be
addressed and all the positive aspects brought by changing the mode of shipment needs
to be brought into consideration including the cost involved. The organization is using
this service to ship their bikes to the region of Regina DC.
The issue of shipping directly to the customers when some of the boutiques
responsible for distributing the CBC goods run out of stock. This request was passed
directly to the CEO Juanita who has other ambitions of establishing CBC own electronic
service distribution of their products to the market. The issue of shipping directly to the
customers has both its pros and cons which has to be analyzed in depth to be able to get

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a good option which will not harm the organization profit margins. It is an insightful
idea which many of their competitors are using them to address their distribution
channel problems.
Options are opening up to the director of operations of the organization on ways
they can use to ship their products using Canadian Load Broker who has approached
him and offered him a better deal. The deal will bring immense opportunities to the
organization but caution needs to be addressed so as to avoid making bad decisions
which might cause the organization supply chain. The advantages and disadvantages of
using the Canadian Load Broker need to be addressed before making a decision about
the supply chain to be adopted.
Another chance of saving cost is by facilitating a round trip between Regina and
Gatineau QC. During the trip from Gatineau to Regina, the truck is to ship finished
products from the organization. Then on the return trip, the same truck is to ship back
the pearl orange color used to dye the bikes to the Compact Bike Company trademark
color. By doing so the organization will be able to save some cost and also cut time used
to ship the dye used in the manufacturing process of the bike.
The organization needs to follow the issue addressed solution’s to the latter these
will enable them to run their daily business activities without any problems or
experience any downtime. The issues addressed will enable the organization to move
and compete with other new organization in its niche market favorably. Keeping in mind
that they already have a loyal customer base which have been using their products for a

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long period of time and are also willing to spend their money to have access to CBC
products.
Table of Contents
1. Introduction................................................................................................................................5
2. Multi-drop TL service Versus LTL. .................................................................................................7
3. Addressing CBC product stock-out problem. .................................................................................8
4. Canadian Load Broker issue..........................................................................................................9
5. Round trip suggestion to save transportation cost.......................................................................10
6. Conclusion/Recommendations...................................................................................................11
7. Appendix ..................................................................................................................................12

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1. Introduction
Compact Bike Company is based in the region of Gatineau Quebec. The company
was established in the year 1996. The organization specializes in making bikes which
can be folded. This makes it the best option for individuals who have access to smaller
storage spaces in their homes, cars, boats etc. The organization used to make some of
their bike parts and outsourcing some of the parts. This is long before they had
established themselves. By making part of their bikes it made it harder for them to
compete with other organizations because their products were not made of the latest
parts. The problem was solved when they embraced the issue of shipping all their parts
and only assembling the parts.
The organization produces only a single premium bike and does not customize its
products. This has helped them to build the best bike brand in Canada because the bike
is given the best and their formula has improved since the organization was started.
They use best parts around the world to develop their products hence coming up with a
durable product which fulfills the demands of their customers.
Their network of sales is done by small independent boutiques across the nation.
This strategy has helped in ensuring that the CBC identity of a limited capacity

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developer of bikes remains intact. The company is able to keep its niche market by
identifying their brand with these high-end boutiques which are accessible to a few
individuals who understand their products well. At the same time, the class associated
with their bikes is maintained which enables the organization to keep its place as the
best organization which offers high-end bikes in Canada.
The organization runs all their operations from Gatineau Quebec where the CEO
is mainly helped by the director of operations and other three senior most employees of
the company who are the director of IT, chief financial officer and the director of
marketing. The five senior most officers make the management body of the
organization. They are responsible for making decisions of the organization and also
ensuring that the processes of the organization run smoothly.
The supply team has four members each individual tasked with a responsibility
which they oversee. There is a member tasked with the transportation of suppliers
another individual is tasked with tender loads to carriers for transportation. Another
duty involves the managing of supply contracts of parts which are to be used during the
assembling process. The team is also tasked with managing the 200,000-foot facility
where the organization is located in Gatineau.
The demand for the product fluctuates based on the different climate pattern.
There are areas which face a huge gap between the peak and off-peak season. These can
be attributed to the wide winter and summer gap in such areas. While there are areas
which have near regular demand because these areas have relatively stable climate
patterns.

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2. Multi-dropTL service Versus LTL.
Shipping of CBC products to the Eastern and Central Canada is an issue which
needs to be addressed since the organization is interested in increasing their market
share. The director of operations saw a possibility of using TL rather than LTL based on
the cost reduction which can be felt. The charges incurred by TL are based on the
distance covered. For distances below 1500 miles, the charges are 5$ and distances
above 1500 miles are 4$. These means as the distance increases the cost of
transportation reduces which can be a big advantage for the organization when moving
goods to far places.
The TL service responsible for transporting goods to Regina DC is interested in
offering this service to CBC. Another charge when using TL is charging 150$ for any
stop to remove the products. If the distance between the headquarters and Eastern
Canada is over 1500 miles the organization will pay (1500*4)+150 = 6,150$. There are
far much cheaper than using the LTL for longer distances because the charges for TL
reduces with distance while the charges of LTL is based on the weight of the product.
Using TL for CBC products will give the organization relief because the bikes are
heavy and the TL charge does not use weight as its unit of measurements. Furthermore,
the organization has experienced some delays while using LTL in the past but they have
never experienced delays while using TL. This method of shipping will also provide the
boutique tasked with distributions enough time to restock their stock levels. These will,
in the long run, help the organization curb the issue of shortages of their products.
Shortages can be exploited by competitors to make more sales and also take over a
region because they will be offering a product which is missing in the market.

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The fixed delivery schedule will enable the stores to plan their stocks such that it
can benefit them based on the quantities of products they will ask to be supplied. This
time frame gives them the best opportunity to plan and get exact figures which they can
use so as to be able to maintain their customers and also ensure that there is no surplus
and also no deficit. A surplus will cause the stores to use more storage spaces and also it
will hold their capital which could be used to conduct other businesses.
3. Addressing CBC product stock-out problem.
The issue of deficit among the boutiques tasked with selling the CBC product is
another issue which needs to be addressed. The issue was raised by the boutique they
suggested that the organization should have a resource installed such that customers
affected by the shortage of the product from some regions can have their products
delivered directly to the customers. The issue was brought directly from the CEO
Juanita. The CEO had other ideas about putting up an electronic retailing business.
Electronic retailing business was suggested by the organization CEO. This
module will help the products to reach their customers directly without passing through
any distribution channel. This can help the organization, in the long run, to be able to
compete with other organization aimed at taking over the CBC market niche. This
business module is an upcoming trend in the world and the organization should embrace
it because of the many advantages which accompany it. The organization will have an
even platform to compete favorably.
Electronic retailing business will enable the organization to reach a wider market.
The use of technology will enable the organization to make more sales and also educate

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individuals about their product without using extra cost. The technology will also ensure
that the products of the organization are advertised to a wider geographical location.
These will translate to more sales and bigger profit margins.
Use of technology will also reduce the logistics problem which faces many
organizations which have not gone digital. The use of technology will enable the
management to easily track sales and also shipments. This will help in lowering the
instance where a product goes missing without any explanation. Use of technology also
curbs theft and damages which might have occurred during the bulk shipment of the
goods to the parties responsible for sales.
The demerits of embracing the use of technology are minimal. It might be costly
because of the issue where the products are moved in smaller quantities. The
organization might have to charge more to their clients to enable their products to reach
them in their houses. The organization will have to transfer the cost to their customers so
as to maintain their profit margins which will help them to operate normally. As a result,
these might push away many of their loyal customers and other potential customers.
Based on the information from Appendix B the charges of moving the products by air to
the customers will not have a huge impact on the organization business model.
4. Canadian Load Broker issue.
Eddie who is the director of the operation of CBC has been given an alternative
by the Load Broker which want to reduce the transportation cost. The Canadian load
broker wants to offer a rate which will reduce the amount used on the TL by 10% and

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their LTL by 15%. There is a lucrative offer but the organization needs to first check if
the Canadian load broker is able to offer their transportation obligation.
The Canadian load broker can be tested with the organization by offering them a
small contract which after they have fulfilled their obligations they can replace the LTL
service. These are because they are offering the same service but at a cheaper cost. The
LTL have at one place delayed in their shipment and their charge expensively. By trying
the new player in the market the organization will be able to get access to more funds
which can be used for other activities which will help the organization to grow.
5. Round tripsuggestionto save transportationcost.
The issue of paint supplier to the CBC operating from Regina DC and the
organization shipping their goods from Gatineau QC to Regina DC is a plus for the
organization. By ensuring that the TL carrier is able to conduct a round trip by taking
finished products from CBC and returning to the Gatineau headquarters with TL of
orange paint which is used as a raw material for assembling the bike will help cut the
cost by 25%. The organization should be able to use this method if the logistics are
done correctly.
The biggest problem facing this venture is the risky nature of paint. Paint contains
chemicals which makes it risky to transport it. The TL carrier will have to be fitted with
equipment to ensure that it is safe to transport the paint during the return trip. Another
problem which faces this venture is the legislation which addresses the transportation of
paint. The organization legal team will have to solve this barrier so that this venture can

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be made possible and the organization gains in the cost saving of 25% on transportation
of paint.
The function of the paint supplier is to ensure that the product there are supplying
is perfect and ready for usage. They have a task of ensuring that their product can also
be transported and it can’t be too dangerous for it to be shipped to the CBC
headquarters. The TL carriers have a responsibility of shipping the goods from the
source to the destination. Their carriers should be fitted with safety equipment to
facilitate transportation.
6. Conclusion/Recommendations
In conclusion, I will suggest that the organization moves away from their
traditional way of doing business and embrace the new technology which will help in
reducing the cost of operation. Technology will ensure that the operations of the
organization can be monitored from a central location. The issue of a round trip will help
the organization to cut its transportation cost. Although they should ensure that the
legislation and safety issue is taken care before they start using the service. The
organization should also consider moving away from the LTL service which is
expensive and unreliable at times. This carrier can cause them some of their loyal
customers because of the delays involved. Using LT carrier for their shipments to the
eastern and central regions will help them reduce their operational cost as compared to
using LTL carrier. Using the TL carrier it is favorable for long distance as compared to
shorter distance. This carrier offers the organization the advantage they require while
shipping goods to far places. These will help the organization earn more income while
shipping goods to far distance.

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7. Appendix
Using TL carrier
Distance of 1500 and above.
Distance 1500 miles.
Cost per mile = 4$
Cost per drop 150$
1500*4 = 6,000$
Total Cost = 6,000 +150
= 6,150
Distance below 1500
Distance 1400 miles
Cost per mile = 5$
Total cost = 1400 * 5
= 7,000