Chris Sugai owns Niner Bikes, a nine-year-old mountain bike company in Fort Collins, Colorado. With a price range from around $1,650 to $ 10, 000, the bikes he sells are not garden-variety two-wheelers. These bikes are for the serious rider who is really into mountain biking and the buzz and conversation that goes along with being a part of the Niner community. There must be many such enthusiasts out there, because business has increased impressively in recent years. In fact, in 2014 alone the company’s total sales increased from $15 million to a very impressive $17 million.

But with such growth comes new hassles, especially on the supply chain end of things. Sugai has been depending on a third-party logistics provider to store and deliver his bikes, bur he thinks it may be time to bring the operation in-house. With 34 employees, the company should be able to handle the change, even though it will cost about $85,000 to buy the software, scanners, forklifts, and more that will be needed. Sugai might have to hire a few more employees to make the transition possible, but that should be very manageable for a company that is growing at such a rapid pace, and the up-front investment would probably pay for itself in no time. It would definitely make life more complicated, though.

1. What are the advantages that Sugai will likely gain if he decides to bring inventory storage and bike delivery in-house?

2. What complications might arise if Sugai makes this change? What might he have to give up if he should chose the new approach?

3. On balance, do you think that converting to an in-house operation would be the way to go? Why or why not? Put together the best case you can to support your decision.

Answer rating: 100% (QA)

1 The main advantage that Sugai will gain if he decides to bring inventory storage and bike delivery ... View the full answer