National Bicycle

National Bicycles:

National bicycles is one of the top 3 bicycle manufacturers in Japan. They have 3 product lines namely

transport bike, kid’s bike and sports bike. One of the primary concern in the management is how to boost

growth that has been flat for some time. There are other problems as well such as low margin, high

leftover inventory due to constant product changes end of year causing loss in revenue due to mark down.

In order to boost growth and to reduce leftover inventory, the new president Mr. Komoto has devised a

new strategy to expand their customized bicycles that was primarily used by sports persons to every

customers. This make to order strategy will remove the inventory cost completely.

In order to achieve this, they have come up with system called Panasonic order system. The retailers are

provided with equipment that resemble an adjustable cycle where the customer can measure his

requirements at the retailer and place a custom order. In the current system, it takes about a week for

the order to reach national bicycles and a week to 10 days to transport back to the retailer through

hansha. In their supplier side, they have a 99.4% service level currently and any order for parts can be

placed only on the 1st or 15th of the month. It takes about 40 days to get the parts after placing. There is

a flexibility to revise order till the 25th day. With the customized orders, Inventory management of parts

will be tricky. National bicycles have to keep stock of all possible combination of parts and keep them at

99.4% service level, since the time to replenish from the supplier side is way high. Presently, it takes about

3 months to make a customized bike with 3 workers. It takes only 166 minutes to assemble a bike if all

parts are in place. Aside from these there is a product switch over time, but the new customized bikes are

being produced at the new plant, there won’t be any switch over cost.

Having a fax based order will reduce the 7...