Date: Tuesday, July 6th, 2021
Mina Nada, CEO and co-founder of Zoomo, said his company could have expanded more quickly last year if not for supply chain issues caused by the COVID-19 pandemic.
Zoomo was affected by shortages in everything from bike components to semiconductor chips to electric batteries during the pandemic.
Sydney-based Zoomo manufactures e-bikes, offering to sell or lease models on monthly subscriptions for recreational use but also heavily geared toward commercial use for delivery workers and couriers in the gig economy.
“It’s just been a lot of volatility across our business. I think that it took a few months for us to figure out what is the trend and what is the noise,” Nada said. “It’s definitely been a fun time to be running procurement and supply chain at Zoomo right now.”
While many small and medium-size enterprises (SMEs) like Zoomo are recovering from the financial crisis caused by the pandemic, they continue to be hampered by global supply chain issues, such as the rising cost of shipping containers and the backups at the ports of Los Angeles and Long Beach.
Around 64% of 2.4 million SMEs surveyed in May by KfW Research are still struggling with the consequences of the coronavirus pandemic, according to a recent study.
Supply chain disruptions continue to hamper recovery for many small businesses, especially in manufacturing. More than 17% of SMEs reported supply chain disruptions and production issues, with manufacturing companies (75% of SMEs reporting disruptions) being the most severely impacted, according to KfW Research.
“Supply chain disruptions reflect not just the restrictions on cross-border trade in goods and services, but tighter pandemic containment measures adopted in many other countries. Parts of Asia in particular — important partners in global supply and value chains — were hit by a new and intense coronavirus wave in the past weeks,” Fritzi Köhler-Geib, chief economist of KfW, said in a statement.
Ned Lilly, CEO of xTuple, a manufacturing and distribution software company, said the past year has been challenging for manufacturers of all sizes, particularly smaller companies dependent on global suppliers.
Norfolk, Virginia-based xTuple provides enterprise resource planning software called xTuple ERP, which includes accounting and inventory management, as well as supply chain and sales systems. xTuple’s clients are small to medium-size manufacturers across a wide range of industries.
Lilly said manufacturers can prepare for disruptions by “gathering data from start to finish” about the companies’ supply chain.
“What are my raw material costs? How long does it take suppliers one, two and three to get these things to me? What does that cost me? What are my production costs? What are my labor costs? How quickly are these things moving through the factory? It’s that visibility into every point in the process that helps you make the right decisions,” Lilly told FreightWaves.
He said one reason many SME manufacturers struggle is they become reliant on the same suppliers that thousands of other companies depend on.
“Just the concept of having multiple suppliers for a particular item or component is sort of a novel idea to most smaller companies,” Lilly said.
Zoomo was co-founded by Nada and Michael Johnson in 2017. Zoomo is one of a handful of companies that have sprung up around food delivery platforms like Uber Eats, GrubHub, DoorDash, Postmates and Instacart — renting out e-bikes to delivery drivers.
Zoomo offers e-bikes on several subscription plans, ranging from $20 each week for regular commuters to up to $85 per week for commercial cargo e-bikes. The company has a global fleet of more than 10,000 e-bikes with customers and service centers in Sydney, Melbourne and Brisbane Australia; London and Liverpool, United Kingdom; and San Francisco, Los Angeles, New York and Philadelphia.
Zoomo works with a manufacturer in Taiwan to produce its e-bikes, which are then shipped all over the world, Nada said.
“During COVID, bikes became a very popular way of moving around — e-bikes and just regular bikes, everybody was buying them,” Nada said.
The demand made acquiring bike components — such as parts for cranksets, brakes, shifters, cassettes and cables — even harder by creating “a huge contest for demand versus supply just on the mechanical components,” Nada said.
Nada said higher ocean container shipping rates are currently causing “the biggest slowdown in our business.”
On June 15, the Freightos Baltic Index daily assessment for Asia-East Coast reached an all-time high of $10,104 per forty-foot equivalent unit. As of Thursday, it was at $9,781 per FEU assessment, up 198% year on year.
“Just dealing with the slowdown in global shipping, being able to get onto a container and then getting it out of the port has been a challenge,” Nada said. “For now we’re absorbing the cost of shipping containers. This means higher costs and longer lead times. It’s an industrywide problem, not just an issue Zoomo is facing.”
Nada said some of the biggest lessons the past year has taught him are to manage risk more carefully, make bigger purchase orders further ahead of time and to have more inventory on hand.
“We’ve gotten much better at forecasting into the future; we’ve had to take more risks to place bigger purchase orders that go further out in order to secure supply,” Nada said. “Now what we’re doing is planning for 2022 and really starting to release orders for 2022 to line up the supply chain.”