Data crucial for efficient supply chain management in bicycle industry

Data crucial for efficient supply chain management in bicycle industry
Eurobike and Bike Europe will introduce the Global Bicycle Purchasing Index (GBPI) in cooperation with the market research institute IFH Köln in Germany. – Photo Shutterstock

ZEIST, the Netherlands - The last five years have shown that the bicycle industry is lacking key economic indicators on a global level. The peak in sales in 2020-2021, followed by a market adjustment in 2022 and combined with an extremely high level of orders, resulted in an exceptional surplus of inventory. The industry has still not overcome this fluctuation. An industry-dedicated Purchasing Managers Index could have avoided or at least softened this financial blow.

The Purchasing Managers Index (PMI), while a key economic indicator for the world’s largest economies and sectors, is unknown in the international e-bike and bicycle industry. Based on surveying purchasing managers, a PMI is a tool that assesses the industry's overall health and performance. It is the most important part of the market data and a part that the industry is currently missing. The quantity of information on bicycle and e-bike sales is improving quickly, but those remain historical figures. What’s missing is an indication of what’s happening at the beginning of the supply chain.

More working capital is required

The sourcing of bicycle parts, components and fully assembled units has faced significant challenges in the past decade. The difficulties reached their peak with the supply chain constraints of the last few years. Even before the pandemic, creating an efficient supply chain was a big challenge due to the long supply chain in combination with the expansion of the e-bike market. Sourcing e-bikes and e-bike components requires higher capital resources, and that marked the trend to shorten the supply chain and take back production to Europe.

Emotions or facts?

In the bicycle industry to date, procurement and product teams responsible for giving out order quantities in a company lack a lot of tools and indicators. Besides their own sales sheets, companies try to gather data sets from various sources, including what industry peers say. All this combined results in a market indication which is mainly made up of emotion. The most important question trade show visitors ask each other is, after all: What do you expect from the market? Usually, this question is asked to fellows only, and honestly, how many people do you talk to at a trade show who give you a straight answer to that question?

State of the industry

PMIs aim to quickly identify market trends and turning points. The number of decision-makers who participate in these surveys is always larger than the people product and purchase managers can talk to during an event. Therefore economists, analysts and purchasing managers look to PMIs as near-real-time measures of the state of an industry. In this regard, the advantage that the PMI enjoys over market sales data is the lag time of this information. The PMI can be used to anticipate these later statistics and to make timely and essential decisions about planned business expenditures without the need for chit-chat. PMI datasets are gathered from a panel of purchasing executives (or a suitable alternative) from several hundred companies within a sector.