Executive Summary
As National Bicycle transitions to the production of a customized bicycle, employing a concept of mass customization, the Company must ensure that its supply chain is responsive enough to handle the characteristics of an innovative product. Demand will be highly unpredictable and the final product, with over 2 million options, will also be unpredictable.
Given National Bicycle’s current high level of automation, the transition to the POS system should be smooth. Its current supplier and delivery arraignments will accommodate the product switch.
The final critical factor to the success of the customized bicycle is a business decision: determining how much order lead time to incorporate into the production of the
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National bicycle needs to improve the efficiency and reliability if the customized bicycle product is going to be successful.
PRODUCTION CAPABILITY
Attached in the Appendix of this document is a detailed calculation of National Bicycle’s current customized bicycle production capability. The current capability of 53 bicycles per day, based on a three-hour per bike estimate, should be sufficient to meet current internal forecasts of 250 per week during peak seasons.
SUPPLY CHAIN RESPONSIVENESS
Current supply chain responsiveness seems adequate to support the customized bicycle product. The short production time required for the bicycle lends greater production flexibility to the Company. Parts can be ordered and received in one week.
The related issue of stock outs is a significant consideration. The success of the customized bicycle is predicated on having timely availability. As such, current supply flexibility should make the risk of a stock out very small, less than 5%. Stock outs should not affect the order to delivery schedule of the Company.
DELIVERY
National Bicycle relies on Hansha to deliver its bikes to the Company’s dealer network. They have proven to be efficient and reliable, and should be able to accommodate customized bicycle delivery. However, the Company will have to revise its process and scheduling to avoid multiple single item deliveries to the Honsha.
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