Pandemic Bike Shortage: Gearing Up For Better Supply Chain Visibility
Have you tried to buy a bike recently? I have. In my blog post “pandemic bike shortage” which was also published on Forbes I will tell you why the experience was not a great experience.
Like most other consumers, I have been conditioned to order something online quickly in the evening and receive it the next day at home. But this only works when you have steady supply of inventory and a functioning supply chain, two factors that have not always been present during the pandemic. Especially when it comes to products for which a large part of the manufacturing part takes place in Asia. Like the bike industry.
Why does Everybody want a bike during a pandemic?
It sounds contradictory, but the bicycle industry experienced an extremely good financial year in 2020, despite the pandemic.
While most industries fought sluggish sales during the lockdowns, the bike industry was overrun with requests from frustrated gym rats trying to stay fit, and even more frustrated parents (like me) trying to find something for the children to do.
I looked in bike shops only to hear, “This bike model is running out of stock” or “This bike model will be hopefully delivered within the next couple of weeks or months.” So, I turned to the internet, where I was able to place an order, only to find that I could not get any accurate information on the delivery date.
Why is there a supply / demand imbalance?
Back in the 1980s, with the goal of reducing costs and increasing efficiency, the bike industry started to shift their production to plants in Asian countries like Taiwan or China. As a result, over the years, the bicycle business in Europe and the U.S. has become a totally import-dependent business and the supply chain has become more and more complex. Due to this complexity problems arose within the supply chain even before the pandemic but have not been taken seriously until the supply chain collapsed and hit the bike supply chain very hard.
Companies who worked with mainly pre-orders to keep the stock numbers low, got strained by the lockdown and production stoppages in China and other Asian countries. It wasn’t until the pandemic curve flattened that the production was ramped up again.
A shortage of raw-materials like steel, high-grade aluminum etc. resulted in a huge delay in various components, and bikes which were planned for spring this year, were not ready by the summer peak season.
And then you must factor in the issues with available transportation capacity. The container imbalance and the reduction of capacity in liner shipping has seriously impacted shippers and freight forwarders. It is obvious the logistics industry cannot meet demand. Moreover, still if they can deliver, there are simply not enough empty containers and too few ships in service. Hence, products are often waiting to be shipped in the ports for weeks.
What have we learned?
During the pandemic the risks associated with global supply chains has been exposed due to plant shutdowns, port and border closures and long lead times.
And there are several areas that can be improved:
- Demand visibility – The companies in the best position during the pandemic, were those that predicted the change in demand for their products early, and placed orders for critical components before the competition. This requires visibility across the entire supply chain.
- Integrate Planning Processes – The high demand/supply imbalance of bikes should drive the industry towards integrated business planning processes that are more responsive and flexible in responding to changes of demand, supply and other situations that may arise.
- Diversity across your business network – To reduce risk it is important to have a
diverse set of suppliers in multiple regions and even on-shore. This allows you to have strategies in place to balance the risk across multiple geographies and companies.
It may still take some more few weeks for me to get my desired bike, but it will all be good at the end.
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