Compact Bike Company: Supply Chain Optimization Report

This report, prepared for Compact Bike Company (CBC), a Canadian manufacturer of folding bicycles, analyzes its current supply chain and provides recommendations for improvement. The report examines the potential of converting from LTL to TL transport services, considering volume and cost advantages, and explores direct shipping to retailers. It assesses the benefits and drawbacks of using load brokers, recommending against their use due to increased costs and supply chain complexity. The report also outlines the roles and responsibilities of the paint supplier (Regina SK), the TL carrier, and CBC in establishing a supply chain for paint. The analysis highlights the importance of efficient transportation in the supply chain and provides actionable insights for CBC to optimize its operations and meet growing demand. The report emphasizes cost savings and efficiency gains through strategic transportation choices.

Running page: Management 1
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Management 2
Transportation Systems Canada
Executive Summary
Transportation service system remains an important aspect of the business today and also
acts as a determinant factor for that business that wants to expand its operations. There are two
types of transportation services that are available for the Compact Bike Company (CBC) when
transporting its bicycle products to retailers. These two-transport systems are TL service and
LTL transport system. Converting transport system that CBC used to transport its products from
LTL to TL services is attributed to some benefits that include ability of the company to increase
its production and volume that is transported overtime to retailers, faster transport as compared
to the LTL transport services, cost saving since customers are willing to pay for premium
delivery services. The company should, therefore, consider using TL service as oppose to using
LTL services. Working with brokers has both advantages such as easy connection and payment
of outbound services, reduced time since those brokers already have the experience for the
supply chain. These brokers also have some risks that increase delays resulting from the longer
supply chain, the possibility of an increase in cost as they also need to make a profit and increase
the complexity of the supply chain due increase in players. When establishing a supply chain
between CBC, paint supplier and TL carrier, each party has a role and responsibility to play.
Regina SK has the responsibility of meeting the legal requirement for paint business, chemical
dealings, standard or quality obligation and also has the responsibility of sourcing legal
documents for transporting chemicals from the necessary authority. TL carrier, on the other
hand, has the responsibility of meeting transport requirements such as a license for
transportation, driving codes and transportation standards such as the type of carrier for
chemicals or paints. CBC has the responsibility of paying the necessary cost for purchase,

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transportation, and loading or offloading paints. In addition, the company also has the
responsibility of meeting the requirement in terms of legal requirement for holding and using
chemicals such as paints.
Table of Contents
Introduction.................................................................................................................................................3
REPORT BODY..............................................................................................................................................3
1. Potential to convert the Central and Eastern Canadian cities from LTL shipments to TL.................3
Recommendation for converting LTL to TL..........................................................................................5
2. Charges for direct shipping of products to retailers........................................................................5
3. Benefits and detriments of Load Brokers........................................................................................6
Recommendations on using brokers...................................................................................................7
4. Roles and responsibilities of the paint supplier, TL carrier and CBC................................................7

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Role and responsibilities of Regina SK.................................................................................................8
Roles and responsibilities of TL Carrier................................................................................................8
Role and responsibility of CBC company.............................................................................................8
Conclusion...................................................................................................................................................9
Work Cited.................................................................................................................................................10
Introduction
Transport plays an important role in the supply chain as the transport service users have
the potential of increasing or cutting the cost of goods and service. There are two types of
transport service that is available within Canada and play an important role in determining the
cost of goods and services within the supply chain. These two types of transport systems include
low-truckload transport services and truckload transport services. Low-truckload (LTL) transport
services are where the goods being shipped are of low volume to be transported alone in the
truck are therefore transported with other goods. Truckload transport system on the other side is
where goods are of sufficient volume that can fill the truck and are therefore transported alone

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from manufactured to retailers. Compact Bike Company (CBC) is a Canadian bicycle
manufacturing company that manufacture and market bikes. CBC has been using LTL transport
service and is willing to convert its means of transport service to LT transport services. In
addition, the company wishes to consider direct shipping of products directly to retailers as
compared to its means of delivery. The following report, therefore, provides analysis and
recommendation for converting its transportation system from LTL transport to TL service.
REPORT BODY
1. Potential to convert the Central and Eastern Canadian
cities from LTL shipments to TL
There is a clear opportunity that is mostly like to result from converting the main
transport system from LTL to TL.
Firstly, TL transport services offer the opportunity for the company to increase the unit
that is transported to these regions. The TL allow a high number of bicycles to be transported in
one trip since the retailers are ready to take a high number of bicycles. In addition, there are
retailers that are willing to take a high volume of bicycles. This when compared to LTL service
that only focuses on customers that will ship a low volume of product, TL service can ship both
medium volume and high volume of product depending on the carrier. The TL transport system
will help measure retail requirement especially during the peak seasons that has a high demand
for bicycles (Kozlenkova and Palmatier et al., 2014).
Secondly, the TL transport services offer an opportunity that will enable the company to
ship products directly to customers as compared to the LTL service that allows carriage of other

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products that are not necessarily to the same customer. This will help reduce the time that a
bicycle will take to reach the end customer. Retailers will, therefore, have products shipped
directly to their store within time and depending on the volume required. The LTL service that is
used can allow shipping of different products to customers since the main product does not
measure the capacity of the truck. This has the potential of increasing time of delivery to the
retailer as compared to the TL service (Kildow 2011).
Thirdly, the cost implications will be fair since the changes will be catered for by the
retailers that are willing to pay the premium price for the products. TL pays drivers per week as
compared to LTL where drivers are paid per hour. This, therefore, means that TL service can
ship a huge volume of products without paying divers for one week. This is cost saving on
drivers as compared to LTL where drivers for the trucks will demand payment for hours of
service even before finishing product delivery. Moreover, any additional cost that may be
charged such as mileage and fuel will be forwarded to retailers who are willing to pay
(Kochetkova et al., 2015).
Recommendation for converting LTL to TL
In light of various advantages of TL over LTL, the company needs to convert LTL to TL
since there are volume and cost advantages of TL. Firstly, the TL service will be advantageous
for transporting products to long route since miles over 1500 is charged $4 per mile as compared
to miles below 1500 which charge $5 per mile. In addition, when transporting high volume
during the peak season the unit that will be transported over time is worth the service. Secondly,
TL service is advantageous in terms of volume that can be transported during off-peak seasons

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since the carriers are willing to transport low volume when necessary (Scott, Henriette &
Thompson 2011).
2. Charges for direct shipping of products to retailers
The company when considering direct shipping of products to customers or retails will
require to discuss various charges. Charges that are levied on transportation through TL services
is based on mileage, days and unit of the product that is being transported. The cost will be
determined by the distance between various towns where bikes are transported. Millage plus time
plus unit plus outbound services (Todo, Matous & Inoue 2016).
Using the TL service will be beneficial when used by CBC to transport the bike to
retailers since the service can allow fixed delivery of bikes to retailers as compared to its current
transport service. The TL transport system has a fixed price that will be beneficial when the
company is transporting high unit over long mileage as shown in figure 1 (Wallenburg, Cahill,
Knemeyer & Goldsby 2011). Furthermore, the transport service will also enable the company to
ship directly to retailers when necessary since the company only carries its products as compared
to LTL system that other products are also transported. The only potential risk of using the
system is based on low mileage and low capacity that will result in high cost during the off-peak
season. TL service is calculated based on the mileage and unit over time, during off-peak seasons
when only a few units of bikes are required will result in high cost but with a limited number of
units transported. Furthermore, transporting over low mileage can sometimes be less profitable to
the company (Chick & Handfield 2014).

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Figure 1
3. Benefits and detriments of Load Brokers
Load Brokers are business people that will ensure that they are also making some profits
over deals successfully achieved. Working with load brokers has some benefits while at the same
time brings huge challenges to the supply chain. Firstly, despite that cost-saving deal that is
based on 10% saving on TL and 15% saving on LTL, introducing Load Brokers will incur the
additional cost of the transport system. Even though these brokers have worked over the past
years, they will have to make a profit and this will bring additional cost challenges spilling over
to the retailer. Secondly, brokers are most likely to increase the length of the supply chain since
they will be another entity between the company and the retailers. This may delay delivery of
products to retailers as compared to where these brokers are not available (Mallik 2010).

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However, using brokers has some few advantages and this include deduction in the cost
of sourcing another outbound service that is carried out by brokers, the ability to work without
prior experience when using the transport services. Firstly, using brokers for the transport service
has the benefit of reducing the time and cost that may be incurred when sourcing outbound
services directly without involving brokers. Secondly, the complexity of the supply chain is not
felt where brokers are involved since most of the service will be done by these brokers.
Moreover, these brokers will have known the system from the source company to the retailers.
Thirdly, another potential benefit most likely to occur when the company decides to use brokers
is to increase connection with other players within the supply chain. There are some other
players within the supply chain that are already known to brokers that are equally important for
the smooth transport system. For instance, various licensing agencies, brokers have experience of
dealing with such agencies and this will be added advantage to the company (Lam 2018).
Recommendations on using brokers
In light of the above analysis of the supply chain, the company could not consider using
Load Brokers for the transport system since the cost will increase while the length of the supply
chain is also increased. Despite the attractive cost-saving plan that is shown by brokers, when
using TL service, the delays will be eliminated as compared to using LTL service. This may still
have delayed when another entity the broker is introduced into the supply chain. Furthermore,
the cost that will be incurred when using brokers is higher as compared to cost saved when using
brokers. Therefore, the company can consider developing its own transport service system that
will source for outbound services in future without involving other companies in the name of
brokers (Andreas & Handfield 2013).

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4. Roles and responsibilities of the paint supplier, TL
carrier and CBC
When establishing the supply chain for the pain supply that will be transported from
Regina SK supplier requires responsibility of each of the three parties that include TL carrier,
Regina SK and the CBC. The three parties have roles and responsibilities that range from
payment of necessary cost, legal requirement, and security requirement fees (Poluha 2016).
Role and responsibilities of Regina SK
Firstly, Regina SK has full responsibility for ensuring that the paint is of the required
standard and within the regulations. This will require the Regina SK to source for certification
required to prevent any case of a substandard product being impounded. It also the responsibility
of the Regina SK supplier to make any necessary arrangement to provide documents that show
no hazardous properties of the paint transported. Moreover, Regina SK has the responsibility of
producing safer and quality products that meet the requirement and can not result in impounding
goods (Christopher 2010).
Roles and responsibilities of TL Carrier
Secondly, the TL carrier has also the responsibility of ensuring the carrier has all the
required transport required documentation. This includes the carrier meeting the requirement to
transport dangerous products such as paint as laid out in the legislation. The TL carrier has also
the responsibility of meeting the general transport license as set out in transport and safety
legislation of the country (Geissdoerfer, Morioka, de Carvalho & Evans 2018).

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Role and responsibility of CBC company
CBC company has its role and responsibility that it needs to meet before forming part of
the supply chain for transporting paints from Regina SK supplier. The company has the
responsibility of meeting the required to use paint chemicals. In addition, the company has to pay
all the cost ranging from purchase cost, transportation cost, loading or offloading cost and legal
cost for security screening of goods. Moreover, the CBC is the customer is required to meet the
necessary legal permit to handle paints as required by the law. Some of the payment that the
CBC company will be responsible for are shown in figure 2 below (Bowersox, Closs & Bixby
2012).
Figure 2
Conclusion
In conclusion, the type of transport service that the CBC company will use has both cost,
unit and speed implication on the supply chain of a bicycle. The TL transport service has
numerous advantage over LTL transport system and this is evidence on the cost implication and
the volume that is transported over a limited period of time. In addition, TL service has the
ability that will enable the business to deliver products directly to retailers without partnering

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with brokers that increase the cost of products to retailers. Therefore, there is a need to reduce
brokers and ship products to retailers directly where necessary.