: GLOBAL BICYCLE COMPANY – QUALITY MANUAL

QUALITY MANUAL

This is a document belonging to the

QUALITY MANAGEMENT SYSTEM OF GBC Inc.

All previous versions of this document are from now

on invalid and should be destroyed.

Rev. Drafted by: Checked by: Approved by:

4 Quality Manager N/A.

GLOBAL BICYCLE
Global COMPANY Inc
Tyre Industrial park 321
Raleigh (Connecticut) USA;
Certified
tel. 0333 - 312345 Manufacturer
Bicycle fax. 0333 – 312378
Company http: www.gbc.com

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Description of the Organization: The Global Bicycle Company Inc.

This company is engaged in assembling of a wide range of bicycles and *all
terrains.
Scope of the Management System:

Design, development and production of male, female bicycles and

all terrain

* all terrain is a vehicle with no roof, three or four wheels, and usually only one
seat, used for driving over rough, soft, or wet ground

The International Bicycle Company has 3 locations in the Netherlands

 The main plant and head office in Batavia;

 Production plant for ATB in Spakenburg;

 Production plant for children’s bicycles in De Wiel (not in the scope of the
management system).

At the main plant and head office in Batavia, 850 people are working. The
departments are:
 Senior Management;

 Human Resources;

 Finance & Corporate Control;

 Design and development;

 Production/Assembly of male and female bicycles

 Quality, Environment & Safety

History
The Global Bicycle Company was founded in 1923. It has been a family company
until 2008. Due to the economic crisis, the banks reduced the credit facilities for
the company which is mainly used for its stock management of spare-parts and
stock management of ready products. This has led to a situation that the family
could not carry the financial risks anymore. Douglas Wheeler, CEO decided that
the company needed financial support. As a result, 49% of the shares are sold to
an investment company - Avaricious Invest. The investment company is
represented in the Supervisory Board by Mr. Borat and Douglas Wheeler remains
as the CEO.

Since 2008 some major changes took place: The Global Bicycle Company (GBC)
stopped producing bicycle parts. They began to concentrate only on assembling
and spray painting bicycles. All parts (frames, saddles, tubing, etc.) are bought at
external providers. This resulted in reorganization of staff and for this reason, 50
employees from the parts production department lost their jobs. In the
negotiations with the worker unions, GBC could not come to an agreement. This
resulted in a 2 weeks strike. During this period no bicycles were produced nor
shipped. As such, they lost of one of the main customers.
Another significant change that resulted due to the financial crisis was that the

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company invested a considerable amount of funds on product Research &

Development (R&D). The R&D department engaged in developing a new concept
“electrical bicycle”.
The engine and other electronic components are purchased at a supplier in China.
The workers in the factory are additionally trained in working with these
electronic components. The first version of the electronic bicycle was lounged last
year. In a consumer magazine the GBC Electrical Bicycle was tested. The results
of the test were: Poor. The bicycle was unreliable; the battery lifetime was much
shorter than promised.
While preparing for your audit at the GBC, you found the above information.
During the audit you discussed this situation with the CEO - Mr. Douglas. He tells
you that the poor quality of the GBC Electrical Bicycle is a direct effect of the
unexpected workers strike.

Mr. Douglas continues to explain that it was just an incident in the past and now
the quality issues are over! He is very crossed about the fact that the consumer
magazine does not wants to test the new version of the electrical bicycle. He
explains that Version 2.0 is much more reliable, battery life is OK, but the sales
are not as good as expected. Douglas sees the bad test report of the first version
as the main reason for poor sales.

When you ask Mr. Douglas what his main Challenges are as at today, he tells you
that:

Long delivery time for parts produced and shipped from China is an issue. He
could hardly address this by ordering larger stocks as their stock credit allowance
is reduced by 75%. He cannot have large quantities in stock, so he has to order
new parts on a regular base.

Furthermore, Douglas is also worried about his human capital. The unions have
insisted that the employees with the most working experience should be allowed
to stay and continue to work when they had to down size the company. So
Douglas had to say goodbye to the newly employed workers who were much
younger but more qualified & much energetic. The present workers have
difficulties adapting to the new ways of working and also the technology coupled
to the electronic components in electric bicycles.

A third challenge is, is that the investing company wants to focus on the export
market. The GBC is now investigating what kind of legislation is applicable on
(electrical) bicycles in countries like the US and the Middle East.

Last challenge Douglas explains is that the GBC is also thinking about outsourcing
a part of the production/assembly activities to a big assembly firm. He thinks that
if the production/assembly of the electrical bicycles can be outsourced, the

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responsibilities towards product quality and safety will no longer be an issue for
the International Bicycle company. You do not fully agree on that with Douglas.

Management
On a daily basis, Douglas Wheeler is in charge of the company as the CEO.
Together with Gregg Scott (CFO and Quality Control), Roy Lane (Procurement),
Peter Hunt (production manager) Simon Scrooge (Sales manager) and Jeff West
(Human Resources) he is the management team.

Supervisory Board
The Supervisory Board has the following members:
The President Commissioner is Mr. Dimitri Borat (as representative of Avaricious
Invest). Members of the board are: Mrs. Elisabeth Wheeler, Mr. Douglas Wheeler
II and Mr. John Nar (also as representative of Avaricious Invest).The President
Commissioner is elected for a period of 5 years by the assembly of shareholders.
The Dutch legislation describes that “one third of the supervisory board members
should be appointed by the workers council, unless the other members of the
board unanimously declare that this is not acceptable”.

Mr. Dimitri Borat and Mr. John Nar did not accept the above legislation as
applicable for the IBC. As part of the share transition deal with Avaricious Invest,

Mr. Wheeler II and Mrs. Wheeler accepted this requirement. For this reason no
representative from the workers council is participating in the Supervisory Board.
The roll of the Supervisory Board is to supervise the policy of the Management
Team and the overall performance from the Global Bicycle Company. The
Supervisory Board has the authority to fire, to appoint, or to postpone the
director (CEO) and his or her replacements.

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The Organization Chart

GBC Inc.
Board of Directors

CEO

Finance & Quality,

Human Sales Assembly Research & Corporate Environment &
Resource Development Control Safety
s
HR Manager Sales Manager Production R&D Manager Financial Manager QES Manager
Manager

HR Order Entry Small part Design &

Procurement Quality
Administration (Back office) assembly 1 Engineerin
Control
g

Training & Sales Pre- Safety &

Archive Fin.
Instruction (Front Office) Productio Environment
Control
n

Customer Paint Laboratory Salary

Service shop Admin.

Special ITC
Projects Final Assembly (help desk)

Warehouse &
Dispatch

Technical
Services

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Process Chart Global Bicycle Company

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Location of the Global Bicycle Company

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Operations

Location

The facility in Batavia at the Gazelle Drove is still located at the same site where
the company was founded in 1864. The plant at that time had revolutionary
techniques like a steam engine and an early version of a conveyor belt.
Unfortunately, in 1944 with an incorrectly executed bombardment, the factory
was lost. At that time the production
was already low because machinery
was confiscated by the Germans. With
funding from the Marshal fund and
own family financial resources a new
factory was rebuilt at the same
location after the Second World War.
The new plant was completed in 1947,
after which on September 1, 1948 the
first new bicycles were produced.
The base concept of the buildings from
1947 is unchanged. The design of the
plant can be described as extremely modern: a lot of attention was paid to fire
safety, working conditions and aesthetics.

Because of the depression in the bicycle industry, competition from low-wage

countries, and the idea of the President Commissioner/Managing Director that the
electric bike wouldn’t fly and the tightened financial requirements of banks today
have resulted in a plant today can be described as outdated. Most machines date
back to the 1970s, several large presses are from the 50s. The current owner is
seriously aware of this situation and is trying to make the business survive
without having the resources to make large-scale financial investments.

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Production/Product Assembly

The production process of GBC looks broadly as follows (see the process diagram
I-2.0).

1. Daily, the Production Manager consults with the Sales Manager and the
Manager of Logistics regarding sales, inventory and production planning. Based
on these meetings a decision is made regarding next day’s production. The sales
manager has the right of veto in this process.

2. On the basis of this daily meeting, it is decided what production is going to be.
The Production Manager passes this on to the planner. The scheduler makes sure
that the warehouse gets the parts ready for the production of the next day.

3. The morning shift (6:00 to 15:00) begins with a planning meeting and is told
what colors and designs will be produced. The warehouse has prepared all the
necessary materials on trolleys and placed those at the respective production
stations.

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The base frames (which are outsourced) are hooked up, (see photo). Here the
employees can see which model is assembled, and what parts are needed.
Employees can alternately work on different models.

The base frames go for a spray booth, where they are powder coated. This is
done by creating an electrical voltage on the frame that attracts the powder
coating. Hereinafter, the frames are dried in an oven at 180o C.

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Gradually the production bikes are assembled by skilled employees. In peak

periods, approximately 2 to 3 temporary production workers are employed. They
always work under the supervision of a qualified and skilled GBC employee.

At the end of the production process a final inspection is executed based on

sampling. During the final inspection, the bike is checked for functionality,
completeness and damage.

After final release by the Head of then QA Department, the bikes are packed and
prepared for shipment.

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Production resources

In production the following major means of production are available:

• Conveyor system: a system that moves the frames through the manufacturing
process. The installation runs on 3 x 220 V and has an output of 45 kW (three
engines support).

• Paint spraying installation. Powder coating, also known as powder coatings, is

an electrostatic painting process. The main difference between conventional liquid
paints and powder coating is that with this process no solvent is needed to keep
the binder and the filler in a liquid suspension. With compressed air negatively
charged powder is sprayed onto a positively charged frame. Due to the
electrostatic principle, the powder remains attached to the sprayed object
temporarily, after which it is heated in a furnace. In this process the coating will
have the chance to flow out, after which it hardens. The powder may be a
thermoplastic or a thermosetting polymer. It is usually used to create a finish that
is tougher than conventional paint. Powder coating is mostly used for coating
metals, such as our bicycles.

• Metal Stan equipment to make flat

metal parts. Because of the large
differentiation of models GBC
punches several parts themselves;
it is too costly and time consuming
to outsource this process. Metal
strips are placed into the machine
and with a number of different
molds the metal parts are produced.

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 For the purpose of the die-cutting machine, there is a metal-cutting

machine which is used to cut metal plates in
strips. The employee places a plate in the
machine, after having adjusted to the desired
width, and then cuts the required strips.
Given the monotonous nature of this work it is
often outsourced to temporary workers.

 3 Compressors. Much of the tools operate

pneumatic. To this end, use is made of 500
liters compressors with a yield of 570 lpm.
The compressors are connected to the 3 x 220
V net.

 For the purpose of the finishing of the frame,

the horizontal axis and behind the crank hub
welded are to the frame (before the components are to be power coated).
For that process, an autogenously welding
process with Acetylene gases is used. For this
work, the employees are equipped with the
proper PPE and training. These activities are
regularly outsourced to contract staff.

 Finally, GBC features 2 diesel trucks of 1.5 tons

lifting capacity each. The fork-lift truck can be
used in the warehouse and in shipment. Hired
staff is required to have a valid forklift license to drive with them.

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