Hello Knolly Friends!
I hope you are well and successfully managing the ongoing challenges that the COVID pandemic is throwing at us and the cycling industry in particular.
I wanted to let you know how Knolly Bikes is navigating the current climate and what we are doing to continue to serve riders and potential customers by sharing our challenges.
As many of you are aware, current lead times in the bike industry are over 600 days for most mainstream components. Raw materials purchasing for many of our OEM suppliers and specialty manufacturers is over 350-400 days which further complicates the situation. It is common in today’s climate that purchase orders have to be placed up to 24 months in advance with all vendors; Knolly's purchasing team has us well positioned for 2022 and 2023. We've begun placing 2024 orders, which frankly seems insane, but that’s the game that we're all playing now.
There’s a lot of double and triple sourcing going on by many brands to secure as much inventory as possible or to insure against a vendor who can't actually ship on time. This is one of the contributing factors for the extra long lead times that are plaguing the industry. We are trying to do our part by keeping our orders inline with our pre-COVID growth plans and not abusing our vendors with unrealistic expectations.
Despite our best efforts, we are seeing many situations that make day to day operations challenging:
Expected production finishing dates shifting due to vendor capacity issues: many vendors continue to be overloaded with production orders, have difficulties getting raw materials and they are operating at a reduced capacity due to COVID. However, it must be mentioned that many vendors are actively making efforts to address these issues as quickly as possible. But order dates can shift without notice and this can affect our lead times.
International logistics (ocean freight) is rife with delays on each end of the trip. There are a lot of news articles being posted about port delays and while the Vancouver port isn't the worst, it's still common for the container off loading process to take an extra week or two. Occasionally, a container shipment will get rerouted and skip a port because the port is too congested. We have seen this happen a few times where a ship gets rerouted from the Vancouver Port to Seattle, and this has caused 1-2 weeks of additional delays. Shipping is one of the largest contributors to rising bike prices over the past 12 months; the cost of both air and ocean freight is about 5 times what it was a year ago.
Incomplete orders and mismatched delivery timelines: At Knolly we sell frames and complete bikes, although most of our sales are now for complete bikes. However, we are frequently challenged by having "most of a bike" in stock, while still missing a few critical parts. The worst parts have been cassettes, front brake / shift levers for gravel bikes and of course, 12 speed chains. We are doing our best to ensure that we have a consistent supply of components coming in and are actually over-stocked on critical inventory items like rear shocks to ensure that we can at least move a frame. We ask for your support if one of our sales team members asks for some flexibility on your specific build, as we are dealing with inconsistent delivery on many products. It is common to have good inventory of a certain product for months and then be out of stock for many more months. Some parts vendors are doing a good job with stocking a consistent volume of product, while others are shipping us 6-12 months of supply at once!
- Vendor Facility Destruction: as if all of the above wasn’t already a big deal; a major bike frame painting facility in Dajia Taichung (in the heart of Taiwanese bike production) burned to the ground a few weeks ago. Many frames were destroyed in the fire. Luckily no Knolly product was damaged but we will probably see some delays for our painted products because of this incident. Much of Knolly frame production is Raw or Anodized in colour for this season and the fire won't affect their lead times much - probably only by a few weeks. We are still working on lead times for our painted frames: this facility wasn't the only Knolly paint supplier but it was a supplier to several Taiwanese frame producers (for global bike brands) and any impact in capacity will have repercussions across the supply chain. Apparently the paint facility owners are working double time to get at least one new line up and running over the next month, which is quite incredible. We will have updated information on timelines for our customers waiting for painted Warden and Fugitive frames, which are the Knolly models most affected by this situation.
Continued investment into our Business:
To help cope with these challenges and growth, Knolly has been making continued investments into our business. We have hired additional staff to help deal with increased levels of communication and inventory management and recently implemented a new inventory control / CRM / ERP system that vastly improves upon what we had been previously using. We are continuing to grow and our new staff hires and improved backend processes will help support that growth over the upcoming years.
We haven't stopped product development but it is occurring at a slower pace due to increased lead times. Since the start of the pandemic in 2020, we have had 4 new product releases: New Warden, New Chilcotin, Updated Fugitive V1.5 and the Tyaughton in both Steel and Titanium. We see this trend continuing into next year. The Endorphin is currently missing from our lineup and will be back in the near future; plus there are some other exciting projects in the works that are expected to launch in the next 18 months if it all goes to plan. The timelines for these new launches is still a moving target but we are working hard to continue evolving our product lineup with meaningful models that reflect the ultrahigh levels of engineering and quality that we're known for.
Thank you for your patience, loyalty and being a part of the Knolly community. We appreciate your ongoing support and look forward to growing our business with you.
Knolly CEO and Head Engineer