How Coronavirus is Disrupting the Bicycle Supply Chain

The Coronavirus is disrupting the bicycle supply chain for 2020. Giant announced manufacturing operations in China are not back to work and will require local government approval to start back up.

In addition, other bicycle producers are also temporarily halting production around the world as they struggle to get parts from China.

These are signs of how the Coronavirus outbreak is creating a domino effect in straining the bicycle supply chain.

Shortages of China-made parts have already begun to ripple through the bicycle supply chain. Southeast Asian and Taiwan manufacturers are temporarily idling assembly lines because of problems getting parts from China.

Everyone is continuing to monitor the supply chain and in close communication with Tier one suppliers to mitigate any risk to production. The bicycle industry is now in the Twilight Zone.

If it is going to last six or seven months, we will start substituting and moving production around. If it is going to be six weeks, it is too much trouble to change.

The outbreak has led the Chinese government to impose extended shutdowns of bicycle manufacturing throughout the country after the traditional break for the Lunar New Year Holiday in hopes of slowing the disease’s spread.

Some component makers restarted last week. It is not clear how many have and at what scale. General supply chain disruptions and worker quarantines make it difficult to anticipate when production will return to normal.

I do anticipate the outbreak to depress bicycle and bicycle component production by around 1 million bikes (globally).

Bicycle production factories will likely run out of frame tubing and therefore frames. Both are critical components for complete bicycles and E-Bikes and primarily sourced from China.

This is a day-by-day monitoring effort. If it goes on for more than six weeks. We have bigger problems.

Many assemblers are arranging for parts to be air freighted when available. Flights are VERY limited as the China government is restricting flights and cargo flights are being very carefully controlled.

So, what to do?

1. Connect with your key brands and inquire on the outlook for short- and long-term product availability

2. Investigate alternative sources for critical products

3. Prioritize brands, and products within your retail locations to capture opportunities by optimizing limited availability

4. Be proactive in Identifying substitutes (even at a higher cost)

5. Move inventory from one location to another as a precaution

6. Consider adjusting selling prices on high-velocity products with limited availability

7. Formulate a plan for rapid decision making to capture opportunities

Words by Bob Margevicius