E-bikes are manufactured across Asia—the frames in China and other crucial parts in Japan—while assembly takes place in Taiwan. When the coronavirus first hit Asia, production lines ceased operations.
Meanwhile in the western world, it was business as usual. Bike orders continued to boom and simultaneously the biggest backlog in e-bike history formed. Demand overtook supply, and the business needed to adapt to manage it.
For us, the answer was tapping into our rich network of suppliers to identify both opportunities and gaps, and pinpoint how to come together to overcome the backlog. The key was understanding the power of the product, and not letting down customers who were ready to experience the benefits of e-bikes.
In one instance, a grocery delivery customer needed bikes urgently and we were simply out of stock. Our response was to contact our competitors and source bikes for that specific customer to show them we were dedicated to their success.
As the adage goes, when it rains it pours. As we were navigating the supply chain complexities of COVID-19, a new issue arose: a lack of shipping containers.
The global shipping container shortage, first caused by COVID-19 and then exacerbated by the Chinese New Year in February 2021, meant that we, like many other businesses, struggled to get our stock and parts shipped.
Adding to this, shipping container costs are up to 500% higher than usual, causing disruption to business momentum. While high shipping costs are unlikely to remain long-term, as a growing business we need to brace ourselves for a tough freight landscape. We see freight costs being passed down across the supply chain to us in the form of a component price increase, which will eventually trickle down to the consumer.
In uncertain times, these kinds of supply chain conundrums can impose tricky risk-rewards, but we were confident that we could ride the trend and work with our customers closely to manage demand and lock in supply as much ahead of time as possible.
By acknowledging the necessary costs and continuing business momentum we were able to remain on time and flexible, two critical components in our business.
The ubiquitous rise of technology has also facilitated the simultaneous and equally ubiquitous rise in microchips. This global demand is causing major headaches.
In early 2021, the average lead time on a microchipstretched to 15 weeksas a result of high demand and low capacity. As e-bikes are literally computing power on wheels, this microchip shortage impacts manufacturing timelines and bike availability.
We can summarize the key to navigating supply chain challenges in one word—planning. We can't control supply scarcity. But we can forecast into the future. For the microchip shortage specifically, this has included committing to our suppliers in advance through early orders to allow them to secure material.
Additionally, we continue to openly discuss back-up plans with our suppliers, such as opting for an alternative component that is more readily available.
The global supply chain can be finicky, but it has allowed us to build resilience, plan for the best and prepare for the worst.