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CASE STUDY - Global Bike Incorporated GBI Background Global Bike is a world class bicycle company serving the professional and “prosumer” cyclists for touring and off-road racing. Global Bike Inc. is...

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CASE STUDY - Global Bike Incorporated
GBI Background
Global Bike is a world class bicycle company serving the professional and “prosumer”
cyclists for touring and off-road racing. Global Bike Inc. is registered as a US company,
following US GAAP accounting standards. Due to several tax and export issues, Global Bike
Groups’s headquarters remains located in Dallas while its subsidiary company, Global Bike
Germany GmbH, which is based in Heidelberg is subject to IFRS accounting standards and
German tax regulations.
History
GBI divisions were running multiple, independent application environments. This was
inefficient, inaccurate, and expensive, and information was not available in real-time. In
fact, many of GBI’s processes were obsolete and there was a need to dismantle existing
processes into individual activities and put them back together in a new set of business
flows. In addition to this, GBI ran into trouble with its reporting to the IFRS in 2017 because
some significant financial transactions could not be accounted for.
GBI started to struggle for market share with a relative newcomer to the bicycle industry,
FED Bicycles who was emerging as a formidable player largely due to the company’s culture
of em
acing technology as a strategic competitive advantage in improving efficiency and
customer service. GBI was experiencing shipping e
ors due to the wrong address or loading
the box on the wrong truck. E
ors happened frequently on systems that required manual
data entry, and multiple systems required redundant processes to utilize the data. Much of
the bicycles looked similar, which allowed for picking e
ors. Fixing these e
ors were
expensive and time consuming. GBI’s customer service received an overwhelming number
of phone inquiries each day that required time and cost-consuming processes to locate
approximate package status.
GBI divisions were running multiple, independent application environments. This was
inefficient, inaccurate, and expensive, and information was not available in real-time. In
fact, many of GBI’s processes were obsolete. In 2017, GBI ran into trouble with its reporting
to the IFRS because some significant financial transactions could not be accounted for.
It was at this time that GBI decided to dismantle existing processes into individual activities
and put them back together in a new set of business flow, with an ERP system as the
enabling technology.
Technology Implementation
GBI integrated a shared services model for all IT functions, located in the Dallas office. Along
with this move to centralized IT, Global Bike also implemented SAP ERP (version 6.0). GBI set
up teams to implement hardware and software, modify the software to meet the goals,
convert the legacy data to the new system, and develop a reporting framework and initial
set of reports to be included in the system implementation. Not having highly skilled IT
developers and a proven process for managing such big technology projects, GBI engaged
an external company as an implementation partner. The external consultant evaluated the
different ERP systems on the market and recommended SAP. GBI initially believed that SAP
was not a good fit, but as the company went through the evaluation process, finally decided
SAP actually was the best system for them. The implementation approach started off with a
goal to minimize the tailoring of SAP but later changed to become focused on changing the
system to match their processes.
Eight different modules were implemented, first starting with the Sales and Distribution,
Procurement, and Accounting modules. Next the Warehouse Management, Production, and
Asset Management were included, and finally, the Project Systems, and Quality
Management modules were incorporated. Problems experienced in the implementation of
the first three modules were also experienced in the implementation of the subsequent
modules. Interviews with staff during the project revealed a culture of closed
communication and very little commitment to training. At some point, there seemed to be
no more contribution from the implementation partner, who was also responsible for
providing training. The project took eighteen months to complete, and several staff resigned
efore the end of the project as they were unsure of the changes happening in the
company.
Despite the issues, the system went live. Difficulties continued in the first sixty to ninety
days. Further interviews with staff indicated that there was a huge number of support calls
ecorded as many of them could not utilise the capabilities of the system and had in fact
forgotten most of the things they had been taught about the new system. Many comments
eflected that it took so much time to learn the system. There were also many comments
eflecting incomplete integration of the Warehouse Management module with the
Production and Sales and Distribution modules. Particularly, stock in the warehouse was not
displaying co
ectly when viewed from the Sales and Distribution module.
Stabilisation took a little longer than expected. One year later however, the implementation
one year was considered successful.
Outcomes
By implementing the ERP, GBI saved a tremendous amount of money for the goods and
services purchased from hundreds of locations around the globe. In addition, the GBI
procurement network, which is very extensive due to numerous materials, is now rigorous
ecause it was built on well-defined technological standards. When GBI adds new
applications, therefore, they fit into the rest of their interconnected IT infrastructure, which
doesn’t tolerate excessive waste. GBI makes sure all new technology fits in nicely over their
architecture.
Cu
ent Situation
In the end, all ERP functions are centralized with the primary objectives to reduce costs and
deliver best-in-class technology to all divisions globally. This centralized approach offers
Global Bike an advanced business platform under a highly controlled environment, which
enables consistency of operations and process integrity across the globe. Given the
equirement for multiple accounting standards across the US and German companies, GBI
maintains one leading accounting ledger for both companies, but also one accounting book
for the US company and another for the German company.
Material planning, finance, administration, HR and IT functions are consolidated at the
Dallas headquarters. The Dallas facility manufactures products for the US and export
markets and its warehouse manages product distribution for the central US and internet
etailers. Global Bike Inc. also has warehouses for shipping and export in both San Diego and
Miami. San Diego handles West Coast distribution and exports for Asia, while Miami handles
East Coast distribution and Latin America exports. Global Bike Germany GmbH has its
headquarters in Heidelberg Germany. The majority of research and development is housed
in the Heidelberg offices. Heidelberg is also the main manufacturing facility for Global Bike
in Europe. The Heidelberg warehouse handles all shipping for southern Europe.
Global Bike operates two production facilities (Dallas and Heidelberg) and has outsourced
the production of both off-road and touring frames and the ca
on composite wheels to
trusted partners who have specialty facilities to fa
icate the complex materials used.
Global Bike maintains very collaborative research and design relationships with these
specialty partners to ensure that innovations in both material and structural capabilities are
incorporated into the frames. Global Bike has established an extensive partner operation to
ensure process continuity between Global Bike and its partners to deliver best-in-class
products for its customers. Special attention has been paid to nurturing strong relationships
with suppliers and Global Bike is generally the largest customer of its main suppliers.
Given the highly specialized nature of Global Bike’s bicycles and the personalized needs of
iders, Global Bike sells its bikes exclusively through well-known and respected Independent
Bicycle Dealers (IBDs). These dealers employ staff members who are experts in off-road and
tour racing to help consumers choose the right bike and accessories for their individual
needs.
GBI has several vendors across the US and Germany. Identification and selection of
vendors, including negotiation of general conditions of purchase and contracts, for the US
facilities are organised centrally from the US head office. Similarly, Identification and
selection of vendors for the US facilities are organised centrally from the German head
office in Heidelberg. GBI has several customers across the US and Germany. All credit for the
US customers are managed by the US head office. Similarly, all credit for the German
customers are managed by the German head office in Heidelberg. GBI has multiple assets
and also tracks the financial consequences associated with the entire lifecycle of an asset,
from acquisition to disposal. All financial transactions related to the processes and costs
elated to all of these processes are used for the internal management of the firm in terms
of cost and revenue.
What’s Next?
GBI distributors and customers continue to desire the power to buy, sell, and research on
their own terms – not as dictated by GBI. GBI still experiences data issues that make simple
tasks such as tracking repeat customers difficult and needs all the data accessible in real
time to track the individual customer’s buying behaviour and personal preferences. GBI is
seeking to build close customer relationship by analysing customer information and permit
coherent view of customer and is now contemplating a help desk ticket management
software with fully integrated customer database to be connected to the ERP system. GBI’s
key requirement is to provide gateway for customers to interact electronically with the
company and in so doing create interaction points between the organization and the
customer.
In addition, GBI’s supply chain network remains very extensive due to numerous materials
and now beginning to suffer as discount retailers have started to supply bicycles to GBI’s
distributors, thereby encroaching on GBI’s market space. In response, GBI is now shifting to
a high-end product line that would generate better profit margins by engaging suppliers to
through joint design and collaborative planning, forecasting, and replenishment. To make
this new strategy work, however, GBI is beginning to investigate new supply chain
technologies and processes to drive the speed-to-market requirements of the new growth
strategy.

CASE STUDY - Global Bike Incorporated
GBI Background
Global Bike is a world class bicycle company serving the professional and “prosumer”
cyclists for touring and off-road racing. Global Bike Inc. is registered as a US company,
following US GAAP accounting standards. Due to several tax and export issues, Global Bike
Groups’s headquarters remains located in Dallas while its subsidiary company, Global Bike
Germany GmbH, which is based in Heidelberg is subject to IFRS accounting standards and
Answered Same Day Jun 18, 2021

Solution

Sandeep Kumar answered on Jun 21 2021
151 Votes
Q1: Just like the credit for the US customers in US is managed by the US head office. Likewise, the credit for the German customers is managed by the German head office in Heidelberg. GBI has multiple assets and also tracks the financial consequences associated with the entire lifecycle of an asset, from acquisition to disposal. All financial transactions related to the processes and costs related to all of these processes are used for the internal management of the firm in terms of cost and...
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