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Last year, to optimize supply chain management, Shimano decided to hand over its warehousing and distribution business to Swiss logistics giant Kuehne+ Nagel. However, this strategic realignment did not go as smoothly as expected, and instead a series of problems arose.
Kim Edwards, Shimano’s communications manager, said the newly launched warehouse operation quickly encountered “serious logistical challenges” after being handed over to Kuehne+ Nagel, resulting in significantly longer delivery times and a decline in service quality.
Impacted independent bicycle dealers
Problems first became apparent in Belgium(top 10 electric bike manufacturers in Belgium), the Netherlands(top 10 electric bike manufacturers in Netherlands) and Luxembourg, where delivery delays were frequent, forcing Shimano to take emergency measures to ease the pressure by transferring stock from another warehouse in France.
But sluggish logistics set off a chain reaction across Europe, especially for independent bike dealers (IBDs) that rely on Shimano parts.
IBDs have been left in the dark as to when their shipments will arrive, with delivery times stretching to more than six weeks as delays are experienced across Europe.
Speaking to the press, one IBD said, “In the meantime, we have to carry out repairs without being able to tell our customers when the bikes will be ready. It’s irritating for us and it’s irritating for our customers.”
As delivery times continue to lengthen, some IBDs say they are faced with the awkward situation of having to make repairs hampered by not being able to tell customers exactly when their bikes will be repaired. This uncertainty not only annoyed dealers, but also seriously affected customer satisfaction and trust.
One of the main reasons for this logistical dilemma was analyzed as a “mismatch” between IT systems; after the takeover of Kuehne+ Nagel, Shimano’s inventory was transferred to the Kuehne+ Nagel plant in Belgium, while the manufacturer’s day-to-day access to the plant was restricted, creating a barrier to the exchange of information. This has created an obstacle to the exchange of information between the two parties.
Shimano has responded positively to this dilemma. Edwards, communications manager, said the company has taken a series of measures, including moving goods from French warehouses and expanding transportation capacity, to ease delivery pressure.
At the same time, she also stressed that Shimano is maintaining close communication with Kuehne+ Nagel to jointly seek solutions to improve service levels.
“Delivery times vary by product and warehouse,” says Edwards. “We regularly share stock availability at both warehouses with our customers through our customer platform, newsletters and sales representatives.
The delivery times shown on the MyShimano website are currently as accurate as possible. Delivery times are adjusted weekly for each country.
“We expect order lead times to shorten rapidly. As soon as we have more information, we will share it with our customers. We are in close contact with Kuehne+ Nagel to find out what steps they will take to improve their service levels.
We are making every effort to achieve significant performance improvements as quickly as possible. We apologize for the delay and temporary inability to provide our usual full service. “
Decline in turnover
In April, the company reported another sharp drop in sales, with net sales down 22.6% in the first quarter of 2024, and expects annual sales in Europe to shrink by more than £170 million this year.
Last summer, the company launched a highly publicized crankset recall program, recalling Hollowtech II models, including two generations of popular Ultegra and Dura-Ace cranksets, totaling 760,000 cranksets and affecting more than 2.8 million cranksets worldwide.
Immediately thereafter, the company allegedly suffered a serious ransomware attack in which hackers threatened to release its confidential information. At the end of the year, there were reports of egregious slavery-like exploitation of workers at its Malaysian suppliers.
In early 2024, Shimano released its annual financial report stating that sales were down £93 million due to a crank inspection program, and that overall sales were down 30% year-on-year.
However, it is worth noting that despite significant financial losses and continued reductions in bike sales, Shimano still made a profit of £322 million in 2023.
Bleak outlook predicted
Shimano expects a number of challenges in 2024, with geopolitical risks such as a worsening situation in Ukraine and heightened tensions in the Middle East potentially leading to disruptions in global supply chains and higher commodity prices, which could put downward pressure on the global economy.
Meanwhile, monetary policies in major countries and regions such as Europe and the United States have begun to ease, and the European economy is expected to recover moderately, while the U.S. economy may be affected by the presidential election in 2024.
China’s economic recovery is likely to remain weak due to continued stagnation in the real estate market, while Japan’s economy is expected to recover moderately with rising wages and supportive government economic policies.
The unstable international situation and changes in government monetary policies may also have an impact on the economies of various countries. For the full fiscal year, Shimano expects product shipments of 325 billion yen (€1.97 billion), down from 364.7 billion yen (€2.2 billion) to 2023.
The biggest loss will be in Europe, where total sales are expected to fall from 186.6 billion yen (€1.1 billion) in 2023 to 153 billion yen (€925 million) this year.
Read more: top 10 e-bike battery manufacturers in the world, top 5 electric bike manufacturers in Luxembourg.
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