Wednesday, November 04, 2020

2020: A Lesson in Motorcycle Supply Chain



2020 brought unexpected challenges and changes. Thanks to stay-at-home orders and social distancing, some industries boomed and others struggled. People began looking to new hobbies to fill their time safely, and the motorcycle industry saw an increase in popularity with new and experienced riders alike.

Searches on Cycle Trader's website have been way up this year compared to the same time in 2019. Dealers of different kinds of bikes, including motorcycles and dirt bikes, have seen a jump in sales this year, too. A quick look at the Cycle Trader website highlights major trends in the industry. Cruisers, sportbikes, touring, dirt bikes, and standard bikes make up the five most popular motorcycle types. States like Florida, California, Texas, and North Carolina represent the top states for motorcycle popularity.

It's exciting to see the riding community expand and grow from coast to coast!

But, riders looking for their first or next bike in 2020 sometimes struggled to find an option that met every point on their buying checklist. Some dealers lacked inventory and some manufacturers struggled to support demand. These challenges have something in common: supply chain.

In the motorcycle industry, the supply chain includes every component of building and distributing new bikes for purchase. At its most basic, motorcycle supply chain looks like this:
  1. A manufacturer has to source all raw materials, like steel, rubber, synthetics, and aluminum.
  2. The manufacturing facility takes those raw materials and, through specialized processes, builds bikes of different makes and models.
  3. Those bikes are then sent to dealers who sell them to individual consumers.
With modern technology, each stage includes real-time data. Manufacturers know the current prices of raw materials from different suppliers. Plants know the level of production needed to meet market demand. Sellers know how many bikes they need, and which makes and models will soon join their inventory.

Global shipping options and efforts to reduce production costs have changed motorcycle assembly and purchasing in significant ways, too.
  • OEMs (original equipment manufacturers) have plants around the world, including to China, Germany, India, and more.
  • Sourcing of raw materials includes multiple suppliers from any number of countries that may be outside of the plant location.
  • Buyers are global and have many brand choices available to them, not just in-country manufacturers.
Without outside disruption, modern supply chains embrace efficiency and adapt to changes in popularity quickly.

But, 2020 proved disruptive to every stage of the process:
  • Many brands saw different parts of their supply chain interrupted thanks to COVID-19.
  • Shipping of raw materials from one country to a manufacturing facility in another part of the world stopped.
  • Production on assembly lines screeched to a halt.
  • Shipments out to dealers and resellers became few and far between because existing inventory did not cover the boom in popularity.
  • OEMs lacked control over when production would start again, and dealers didn't always know when inventory would arrive.
The immediate impact of COVID-19 on the motorcycle industry was rough and stressful. But, OEMs showed amazing resilience and innovation and buyers' interest in motorcycles continues to grow. In some cases, production has resumed, addressing inventory shortages and fulfilling the orders placed by eager riders.

One dealer told ADVrider the coronavirus pandemic has “saved off road motorcycling.” Another insider said he expected a strong crop of new riders, thanks to all this year’s dirt bike sales. Another said that even the supply chain issues showed OEMs ways to save money and work more efficiently in the future.

So while 2020 may have included a few bumps, the road looks clearer ahead for motorcyclists looking for their first ride, an upgrade from their current bike, or an additional way to participate in the community.

Looking for more information or more detail about other motorcycle-related topics? Check out the new ADVrider magazine to read more [link]
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