Case Study of CBC Company Assignment Help
This is an individualism work CASE STUDY assignment on COMPACT BICYCLES COMPANY (CBC).
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The present report is based on the Compact Bike Company (CBC). It is a Canadian owned company established in the year 1996. It produces folding bicycles to the customers and is currently limited only to various marketplaces within Canada. The unique selling point (USP) of the company lies in its decent colour, compact design, and folding model. These bicycles are marketed especially to those customers who are space conscious and also willing to pay a premium amount for the models. The bicycles as such can be easily stored in a compact manner, compared to other traditional bicycles. Typical customers of these bicycles include boat owners, high-rise condominium owners, and trailer home owners, who are dedicated to its designing and space efficiency (Rivera, & Mes, 2017). In the initial days, the company used to manufacture the frame bodies and hinges of the bicycle, by outsourcing some of the major parts such as seeds, wheels, and brakes. However, at present, the operational procedure at CBC is only involved in assembling different parts of the bicycle by purchasing from different suppliers. This approach of the company has substantially increased its ability to maintain the quality of its bicycle produced and thus, are able to gain appreciation from local customers. It focuses on manufacturing only one premium model comprising of 2-inch wheel, aluminium frame, 7 speed twister-shift gearing, and spring suspension. Notably, they emphasize on sourcing the best available parts without any compromise on the product quality.
This paper reflects business analytical strategy focusing on the issues of supply chain management. The identified issues are based on the case study of CBC. In particular, it addresses the challenges faced by the company in terms of the supply chain, issues, limitations, possible opportunities and appropriate solutions. For a better understanding of the issues, the supply chain consultant will collect data from employees through direct interviews. In particular, a set of 10 employees, will be interviewed.
Identified business problems at CBC
The key issues which are found to be problematic at CBC includes:
(i) Multi-drop TL service versus LTL service for shipping products.
(ii) Expedited shipping service through airfreight
(iii) Load Brokerages
(iv) Round Trip and the responsibility of paint supplier and TL carrier
To gain a detailed understanding of these issues, a direct interview is conducted on 10 employees and the interview questions are mentioned in appendix.
Multi-drop TL service versus LTL service for shipping products
The sales of CBC cycles are conducted in a network across Canada comprising of limited boutique of high-end bicycle shops. The strategy of CBC for supplying its product to limited bicycle shops fits well with its limited assembly capacity. In addition to this, the strategy also helps to maintain the identity of CBC as a small, premium and niche brand.
Eddie Miller, the director of operations is concerned about the shipping of products to Eastern and Central areas of Canada. He believes to use a direct transport of products by using the multi-drop TL service, instead of the LTL carrier services. A TL service is basically a truckload method having different multi drops and pickups. This approach is able to receive the package and drop them to the specified location without going back to the pickup location. At present, the company is using a single carrier for its shipment process which costs approximately $4 per mile with an inclusion of 25% fuel surcharge for all distances more than 1,500 miles. However, for a distance less than 1500 miles, it charges at a rate of $4 per mile. Based on the report, it is evident that the outbound of the final product from the facility to the retail stores is carried out by LTL carriers, and the cost is directly charged to the receiving store. On the contrary, the LTL service charges an additional cost of $4 per mile with an inclusion of 19% fuel surcharge. However, this service is applicable to only one store at one time, which forces the store owners to order products more than one pallet. The LTL service carries several products that belong to the same organization and drops up the product at varying destinations. This system makes the LTL service relatively expensive and has to pay for each shipment and each store for every mileage. The service does not ensure the quality and safety of products delivered, as it can be either lost or destroyed during the process of loading and unloading at various drop off points (Badica, Leon, & Badica, 2018). Despite this, it is useful while shipping loads less than 15000 pounds.
Thus, it is evident that the use of LTS service for goods transportation implies multiple trips to these areas, which will be expensive. Thus, it could be concluded that the multi-drop TL service is highly prudent to be used as it needs only one trip to drop off all the goods (Christopher, 2016). The TL service is less expensive than LTL service in terms of total mileage required to cover all stores in Eastern and central location. It also ensures the delivery of products on time without any damage and also facilitates the boutique shops to order quantities less than one pallet, according to their suitability. Thus, the stores are able to order the number of products that they can comfortably handle in their storage place. Hence, it is inferred that the TL service being suggested by Eddie is effective and minimizes the risk of products stock-out in these regions.
Expedited shipping service through airfreight
There have been many cases of stock-out in different stores which made the store owners demand an expedited shipping service from CBC facilities through airfreight service. Juanita, the CEO of the company, has asked Eddie to find out the cost-saving approach or service improvement in this context and improve the supply chain system. The reason behind this order from Juanita is the increase in competition and the threat of new entrants. The rates of using air courier service have been mentioned in the appendix. Each final packed carton is weighted as 15 kg, with the final dimension is 85 cm (length), 35 cm (width), and 60 cm (height). For transporting a bicycle of weight 15 kg, the airfreight charges approximately $1.8 with an additional charge of $89 for screening and $45 for preparing the bill. Thus, the total cost will become $135.88 which is highly expensive for transporting a single bicycle. It is inferred that the shipment price of one bicycle through airways is approximately more than half of its cost price. Hence, the use of such a method will significantly minimize the revenue earned by CBC.
However, this service is considered to be useful for bulk shipment. To take bulk order, the company has to wait for orders from multiple customers from the same locality, which is not possible all the time. In this way, CBC has to salvage some of its revenue. Additionally, the air courier service is also a good opportunity for the company to start its electronic business, where retailers and customers can directly purchase a product through the internet. This can be a good initiating for CBC to increase its revenue, which will require deep planning and marketing to increase the online customer base. Air courier service in conjunction with the e-commerce business, will make the job of ordering and shipping products quick and cost-effective (Lai, & Cheng, 2016). However, this approach will render the store owners to lose their existing customers and disrupt their business.
As per the report, it is identified that a Canadian load broker has offered Eddie a provision of 10% savings on TL service along with a 15% savings on LTL service. According to Sharma, & Modgil, (2015), a load broker is defined as an intermediary person who links the client to the other person who is able to carry the load. These kinds of services provided by the load broker are useful and effective to a certain extent. Moreover, the provision of these services from a third party helps to save time as well as the resources of the company because it has tools no longer take the burden of rates and opening different accounts with the carriers. The load brokers are considered to be flexible who can provide the company with several options for company growth. The load brokers are considered to be an expert in their job and working with them we provide the company with real-world experience. Working with these brokers will help the company to get huge discounts, as they have extensive connections and wide network.
Despite the fact that working with the load brokers is highly beneficial, there are some of its downsides also. When a company offers a contract to a load broker, it directly means that the credits are also transferred. Moreover, the load broker also becomes the person-in-charge of the entire process of shipment and transportation of goods. This will eventually minimize the control of the company over its supply chain system, especially over the transportation system. After the shipment process moving under the control of load brokers, the freight will also move beyond the jurisdiction of the client and can only gain control after the arrival of goods. This fact cannot be denied that the relationship between the client (CBC) and the load broker depends completely under trust and communication. The broker is responsible to deliver the product according to the instruction given by CBC (Rana1a, Osman2b, Bahari3a, & Solaiman, 2015). Thus, with the rise of instances related to communication breakdown will lead to the detriment of this type of contract and transaction.
Round Trip and the responsibility of paint supplier and TL carrier
At present, the company is using a trademark orange paint for its product. This orange paint is outsourced from a different paint specialty manufacturer located in Regina SK through the TL method. Thus, the CEO of CBC Juanita proposes Eddie with an idea of conducting a round trip where after delivering the goods (bicycles) to Regina DC it will be again loaded with the required orange paint from that particular manufacturer and will come back to Gatineau QB. With the acceptance of this proposal, the carrier provider also agreed to provide a discount of at least 25% on transportation services. It is also to be considered that the transportation of paints from one location to the other is highly complicated under different legislation rules. Furthermore, the paint manufacturer has a responsibility to ensure that the paint-related products are properly packed, sealed and labelled. The TL carriers are also responsible to pack and check the product before loading them into the truck. In addition to this, the CBC should ensure that the trucks are filled with fuel and are given full payment for shipment service. After the commencement of delivery of paint products to Gatineau QB facility, it comes under the company's jurisdiction and the company has to handle if there occurs any damage (Wang, & Kopfer, 2015). Hence, it is a good idea to consider the round trip from Gatineau QB to Regina DC and transporting the required goods. This approach is cost effective and saves a lot of time for the company.
Summary and Conclusion
CBC is well known for its high quality product and service which attracts customers and they are ready to pay a premium price for this bicycle. However, most of the competitive bicycle manufacturers are trying to incorporate CBC's strategy of premium category which creates risk on future demand. The company has been managing its operational strategies quite efficiently which explains their success for the long-term. However, it is to be noted that there exist several opportunities that are yet to be explored by the company as it can boost their revenue. The shipping strategy related to the TL method is effective but needs few modifications to receive a higher success. The employment of the TL truckload service is more beneficial and effective than the LTL service. The service also saves a lot of their resources and money and deliver the product without any damage. Timely and quality delivery of the product is an effective way to win the trust and confidence of customers. Similarly, the use of air courier service along with the internet will be an effective tool for the business. If CBC would harness both e-commerce and air service in their product delivery system, it would be of great value for the company. This approach will provide customers with easy accessibility and quick delivery. Internet is considered as a vital tool for marketing and transferring information over a wide range of areas in minimum possible time. Thus, it is recommended that CBC should invest in airways and electronic retailing business which holds the potential to increase its revenue. Nevertheless, there is needed to strike a balance between traditional store retailing and online retailing. In this context, load brokers are considered as an advantageous factor the company as they can improve company's revenue with minimum investment on resources and time. With the assistance of these brokers, CBC will able to reach the unexplored areas, under their experiences. They can also suggest the routes to be invested and can definitely reduce their unnecessary expenses. Moreover, the suggestion of conducting a round trip from Gatineau QB to Regina DC for shipment of bicycle and paints has proved to be a successful initiative for CBC as it cut down some additional expenses. Hence, it can be concluded that CBC should explore these opportunities with suggested modifications to surpass their sales rate.
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