Abstract

The case illustrates the operating strategy of Hubway, a bicycle sharing service operating in Boston.Overtheperiod of time, the company gained substantial market share and sales due tothe automated system and standardizedperformance in all areas.In doing so,it adopted the strategy of rebalancing and 85% replenishment strategy to maintain the cost and to balance the demand in the market at different stations.

Though such has remained effective, however, with theincreasingdemand atdifferent locations and difference in demand at different centers, the maintenance of cost through the rebalancing strategy has become a challenge. In such a situation, the management has to decide how to maintain the inventory at different centers.

For such an issue, it is recommendedthat the company should re-establish the85% Strategy, in doing so, it should develop a separate inventory level for the different location, using the inventory management data and other customer data so as to make the best use of the docks and the bikes and also manage the asset level in the organization

Keywords: Inventory management, capacity, Docks, Cost management, rebalancin.

Hubway bike sharing in Boston Harvard Case Solution & Analysis

Background

Business Model

Hubway is a bike sharing business operating in Boston.The company offers bicycles to travel for shortdistances or long distancesduring the day.In doing so, it has developed different subscriptionmodels to facilitate customers and to improvetransportation in the crowdedcity.

Since its inception, the company offers cost effective ride services to the population of Boston, mainly targeting the people between 20 to 30 years of age,officegoing and college students.In 2010, after thesuccessful inceptionof the Bicycle sharingbusiness, the company won the project from the municipal authorities to offerthe bikesharingservices in any region in collaboration with other market players, suchallowed thecompanionsto offer elevated services to other regions on behalf of other players (bicycle providers) to establishand maintain the service.

In 2011, Hubway became the first fullyautomated bicyclesharing service, in doing so, it opened up 61 stationswith 610 bicycles located in Boston and other neighborhoods.Since theproject has been attractive andefficient, it grew in size andby 2014, Hubway opened up 140stations with 1300 bikes.

Hubwayoperates through the automated credit card system, the users could either take a daily ticket or could take monthly and yearly subscriptions. Under theparticularmodel, the users may either take a short trip and park the bicycle on nearby Hubway stands or could take a whole day tripdepending on the package. It also offered a low income package to the riders so as to facilitate the bicycle business for all customers,making it a single product fit for anall-customer base.

In order tomanage the flux nada availability and rebalancing in the hub centers,the companyfrequently managed therebalancingusing 85% strategy,in which, the centers get procured with the bicycles at each hub, maintaining the bike availability and parking issue effectively. Thoughsuch has been effective, however, the issue of unequaldemand in different neighborhood createsan issue in rebalancing, as the flux has been more in thedense population area and office location than in any other location.

Apart from this, since docking systems have been solar charged, the effect of operating cost has been minimal on Hubway................

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