3 Progress and performance
Net turnover increased with 6.3%. This turnover growth was largely due to higher sales of (sports) e-bikes and advanced sports bicycles, while demand for regular (non-e) bikes and simple sports bikes declined. Corrected for the sale of the parts & accessories activities in North America in the first half of the year, growth came in at 7.4% in 2016.
The added value (net turnover less material costs and inbound transport costs) came in at 30.0%. The absolute value was 0.6% higher at € 314.8 million. The changed sales mix and a different geographical distribution of turnover had an impact on the added value. The added value was also negatively impacted by higher dealer discounts and the fact that we did not fully charge on higher materials prices (due among other things to unfavourable currency exchange rates) to customers.
The decline in the number of bicycles sold and the effects of reorganisations resulted in a drop in staff costs. Staff costs as a percentage of turnover declined to 11.6%, from 12.5%. The operating costs also dropped; as a percentage of turnover, other operating costs fell to 11.7%, from 12.5%. The decline in other operating costs was partly due to a lower sales volume and was realised despite higher marketing and consultancy costs. The higher consultancy costs were largely related to organisational changes in the supply chain and external support for the refinement of the group strategy. In 2016, Accell Group invested in a more integrated management approach. As part of that drive, Accell Group strengthened the competencies at group level in areas such as Supply Chain, Marketing, HR and Finance.
The increase in turnover and (relative) decline in costs led to an increase in operating result (excluding one-off charges) of 5% to € 65.9 million. One-off charges in 2016 related to North America and resulted from the bankruptcies of two major sports chain and the effects of the sale of our parts & accessories activities, including the associated reorganisation and the buy-out of pension obligations. The combined one-off charges came in at € 5.5 million in 2016 (2015: € 4.0 million, as a result of the Taiwan incident).
Financial expenses came in on balance at € 8.3 million, a decline of 9%. The lower expenses were due to smaller exchange rate differences on positions in foreign currencies, a lower credit uptake in the second half of the year and slightly lower interest rates. Taxes came in 26% higher at € 20.4 million, due to a strong improvement of the results in Germany and the non-capitalisation of carry-forward losses in North America. As a result, the average tax rate increased to 38.7%, from 33.5%. Net profit came in at € 32.3 million in 2016, the same as in 2015.
Performance per segment
Net turnover in the bicycle segment came in 9.3% higher on the back of increased e-bike sales. Sales and turnover of sports e-MTBs of our brands Haibike, Ghost and Lapierre recorded particularly strong growth. Turnover in e-bikes was up 33%, while turnover in regular bicycles declined by 11%. Growing numbers of consumers are choosing an e-bike to replace non-electric bikes. The turnover contribution from e-bikes increased to 55% in 2016, from 45% in 2015. The average price per bicycle increased by 23% to € 536, from € 437 in 2015, on the back of the changing product mix. Due to the strong focus on sales of more expensive and high-quality bicycles, the total number of bicycles sold declined with 11% to 1,457,000 in 2016, from 1,642,000 in 2015.
The changed sales mix and a change in the geographical distribution, as well as more cut-price sales and the one-off charges in North America all had a negative impact on the segment result.
Parts & accessories
Net turnover in parts & accessories declined by around 2% in 2016, due entirely to the sale of the bicycle parts and accessories activities in North America. Corrected for this sale, turnover was higher, in 2016, with an increased proportion of turnover from Accell’s own XLC brand in Europe compared to 2015.
The segment result of these trading activities increased by 12% to €17.5 million on the back of good results in all European countries where we are active. The greater contribution from our own XLC brand (in Europe) to overall turnover also had a positive impact on the higher segment result, thanks to the more effective utilisation of procurement benefits.
Developments per region
Turnover in the Netherlands was slightly higher. Turnover in e-bikes, with the brands Koga, Batavus and Sparta, was up 5%. Turnover in parts and accessories was up 14% on the back of higher (replacement) demand for parts for e-bikes, such as batteries, displays and chargers. The demand for regular bicycles declined both in terms of numbers and in turnover. At this point, more than 90 e-bike brands are being marketed in the Netherlands via various channels. In the autumn of last year, we opened De Fietser (The Cyclist), the largest bicycle experience centre in Europe, in the Dutch town of Ede. The centre provides consumers with the opportunity to see and test all our bicycle brands and models. The centre also regularly organises activities to showcase the various uses of bicycles and enhance the bicycle experience.
In Germany, turnover was up 17% largely due to increased sales of Haibike’s e-MTBs and Ghost’s regular e-bikes. Turnover in parts was slightly higher than in 2015.
The North American market was stable, around 15% of bikes are now sold online. Adjusted for the sale of the activities in the field of parts & accessories, Accell turnover in North America came in 6% lower than in 2015. Turnover in sports bikes and e-bikes was higher, but this increase was not enough to fully compensate for the loss of two major sports chains as a result of bankruptcies. E-bikes are gaining in popularity in this market, too, and Accell Group is in a solid position for continued growth with its brands Haibike, Raleigh Electric, and IZIP. In the year under review, we initiated the implementation of omni-channel sales in the North American market. All brands are now available via specialist retailers and online.
In the rest of Europe, higher sales of e-MTBs was the main the driver of a 10% rise in turnover, compared with 2015. The popularity of the e-MTBs of our international brands Haibike, Lapierre and Ghost is growing in almost all European countries. Turnover in parts and accessories also increased in virtually all other countries in Europe.
Turnover in other countries outside Europe was limited and increased by around 15%, largely due to continued growth in Turkey. Turnover in other Asian countries and in Australia was roughly the same as in 2015.
New distribution centre for bicycle parts and accessories
In the spring of 2016, we opened our new distribution centre in Apeldoorn for the parts and accessories product range. The distribution centre has an intelligent storage and order picking system with a capacity of a maximum of 12,000 order lines per day. Accell Group is the first company in the bicycle industry to use such an advanced system.
In the automated order picking process, remote-controlled robots move across a metal grid. They collect the items in the order and deliver them to the order picker who prepares them for shipping. The system can operate 24 hours a day, 7 days a week, which is helping us to reduce delivery times. And it is also possible to combine shipments to reduce transport costs. The efficient system allows us to maintain smaller inventories, freeing up time so we can devote more attention to logistics services.
We see our strong development and design competencies as one of our major strengths in the fight to win over consumers. Surprising bicycle-related innovations – both small and large - are driving the success of our brands, especially our high-end brands. The safety of bicycles as products and the responsible use of bicycles in traffic and other environments also play a significant role in the design of our bicycle collections. The marketing, distribution and sale of bicycles and bicycle parts and accessories have very specific characteristics. It is that part of our value chain in particular that is changing quite rapidly.
Innovation and design
Our development and design teams work for our brands and are constantly on the look-out for the latest developments in the field of design and innovation. This includes trends in design and colours, the use of new sustainable materials, the use of certain materials to reduce weight, improve handling and extend life. But also improved techniques for comfort, propulsion and safety, or digital options that add value for consumers in terms of functionality and cycling experience. We protect our own applied innovations as much as possible by taking out international patents and design protections. Accell Group currently has more than 50 patents and design protections in its patents portfolio.
Munich Design Center - A major draw for creative talents
In 2016, Haibike opened a new design centre in Munich. Susanne Puello of Haibike explains why: “We opted for Munich because it is one of Europe’s trendsetting design and media hotspots. We are also surrounded by a large pool of top talents and creative networks. So it’s a very inspiring spot and at the same time an excellent base for bike markets in Austria, Switzerland and Italy. Our top designers are working on the latest Haibike models in the Design Center. The design team have already launched the successful Haibike e-performance lines ‘XDURO’ and ‘SDURO’. Together with the engineers in the head office in Schweinfurt, they are already working on the bicycle of the future.”
No compromises on safety
All our products are made of high-quality materials. Every product meets the highest international safety standards, such as those laid down in ISO (World), ASTM (USA), EN (Europe) and the IEC standards for electric components. In 2016, we appointed a Technical Compliance Officer at group level to make sure these processes are embedded even more deeply in our organisation. Several times a year, we organise and facilitate internal know-how sessions for our product developers to exchange best practices related to quality and safety standards.
E-bike and e-performance
We focus our innovative strength primarily on e-bikes and sports bikes. E-bikes in particular have a great deal of development potential, due to the universal nature of this type of bicycle and the ever-improving and increasingly smart propulsion technology. This means the e-bike has the potential to generate added value in multiple segments and for a wide range of applications.
One example of this is the Speed Pedelec, an electric bike that provides pedal assistance up to a maximum of 45 km/h. It takes a serious amount of active peddling to achieve that top speed. The cruising speed is around 35-38 km/h. This speed makes the Speed Pedelec extremely useful for middle distances, which makes it a serious alternative to the car.
Another example is the e-performance (mountain)bike we have launched in the market for sporty and sports bikes. Our Haibike brand was the first in the world to introduce an e-performance bike, with a lot of success. The product met a clear demand from consumers and it has made Haibike the undisputed market leader in this e-bike sport segment. We continued to develop the bike in 2016. For instance, we teamed up with a supplier to apply the use of gravity casting to e-performance bikes. This technology, derived from the motorbike industry, makes it possible to produce aluminium frames complete with seamlessly integrated motors.
On the sports bikes front, we are constantly working on major improvements in fields such as aerodynamics, frames, front forks and suspension systems for racing bikes, time trial bikes, track bikes, MTBs and downhill bikes.
No-holds-barred triathlon bike
The Andean is a great example of the sheer craftsmanship of Diamondback’s design team. Their ambition was to build the ultimate triathlon bicycle. Wind tunnel test results revealed they have delivered a potential winner. The horizontal wing shape of the carbon frame pushes the airflow backwards in a straight line. The superior aerodynamics reduces resistance to a bare minimum. And on the advice of professional triathletes, the designers fitted a special holder for energy bars and drinks bottles right on the handlebar stem. After all, every second counts when you’re in a race.
In the year under review, we also worked on the further integration of components that were previously added to bikes as loose components, such as lighting, motors and batteries. The technical possibilities for the integration of these components in the bicycle are constantly improving and we are introducing this design principle in more and more of our models. The fact that virtually everyone has a smartphone these days creates all kinds of new opportunities that are converging in what we see as the bicycle of the future: the connected bike.
Protanium has been one of our strategic development partners in the field of new e-bike concepts and services since 2016. We teamed up with Protanium to develop the Deliver Ebike and a concept for this delivery service for one of our clients. The connected e-bike offers a cost-saving, sustainable and an innovative solution for the delivery of meals and parcels. Big brands such as Domino’s Pizza, Burger King and Delivery Hero have all acquired the bike. The electric bike is unrivalled over short distances. And in bigger cities it is faster than rival methods over longer distances, too. The parts have been deliberately selected or specifically designed and built to ensure that the Deliver Ebike can carry out its delivery tasks perfectly. And the use of parts from top brands ensures that the delivery bike is solid, safe and durable.
We are teaming up with suppliers and other partners to invest in the development of the connected bike. We launched various connected bike pilots in 2016 and some models, like the Sparta M8i, have already been launched on the market.
Connectivity goes beyond creating opportunities at the level of the bicycle as a product, as it also creates opportunities for new use-oriented mobility solutions and revenue models. To explore those opportunities, we are developing new mobility-as-a-service solutions, often together with partners. These might include concepts such as the lease bike for commuter travel, rental concepts in combination with cars, mobile bike shops and the delivery of a multitude of products in urban areas.
With a view to the growing mobility problems in urban areas, we are actively cooperating with local authorities, municipalities and mobility service providers to create new integrated solutions that help provide better access to cities, reduce traffic congestion and cut air pollution. By creating and offering all these innovative mobility solutions, we are responding to a shift in consumer demand away from ownership towards use.
Marketing, distribution and sales
We have a multi-brand strategy, because the bicycle market for consumers varies greatly from country to country in terms of type and style preference, price perception and distribution method. In every country, we combine one or more nationally strong brands with international (sports) brands, while constantly targeting optimisation of the brand positioning and complementarity between the brands, parts and accessories. Consciously supplying multiple brands and therefore a broad range of products with plenty of choice also puts us in an excellent position for the omni-channel approach. And our ability to provide parts and accessories at the same time, also via our own brand, makes that position even stronger.
Sparta, innovator for more than 100 years.
In 2017, Sparta celebrates its 100th anniversary. Sparta is one of the oldest and most beautiful bicycle brands in the Netherlands. Generations have grown up with products made by this trendsetting brand and innovations that have been picked up around the globe. Thanks to its focus on technology, Sparta became the largest motorbike manufacturer in the Netherlands in the middle of the last century. It subsequently expanded its activities to include bicycles, mopeds and scooters. The company’s passion for technology became an ever richer source for new inventions and this was followed by one breakthrough after another. Memorable products include the internationally renowned mum’s bike, the SpartaMet bicycle with auxiliary motor, the Sparta Pharos (the first e-bike in the Netherlands) and, last but not least, the ION drive technology that can be built into a bike’s frame. Sparta’s ION series led to the definitive breakthrough of the e-bike.
Technology is now developing faster than ever before. One recent example was Sparta connecting the e-bike to the internet. The Sparta design teams are also in the advanced stages of developing a rear-wheel engine with integrated hub, wirelessly rechargeable batteries, new lighting concepts and whatever comes next? A self-riding bicycle? Built-in route planner? Environment-sensitive sensors? The trendsetter in innovation is primed and ready for the next 100 years.
Market research and (e-)marketing
Accell Group regularly conducts market surveys at brand, segment and country level. This research is conducted both among consumers, via consumer panels and targeted surveys, and via our intensive contacts and consultations with specialist bicycle and sports retailers. We collect and analyse data at group level and we then share significant changes in consumer behaviour, preferences and trends right across the group. On individual brand level, we devise the most appropriate market strategy for each country in which that brand is sold, and translate that strategy into carefully tailored media campaigns. Accell Group’s marketing campaigns are increasingly aimed directly at consumers and follow the consumer through the various stages of their customer journey. Given that more and more consumers conduct their early explorations online these days, it is vital that our brands can also forge that relationship with consumers online. In 2016, we created the position of Group Director marketing. This director is responsible for the positioning of our individual brands and for the overall portfolio management per brand, segment and country. One key aspect of their role is the joint development and exchange of best practices across the group.
The connected bike is no longer pure science fiction. In 2017, no less than 10,000 Sparta e-bikes will be connected to the internet. We are also making great progress with our other brands. Product developers are working to make connections between the e-bike, smartphone apps and the internet. This opens a gateway to a host of potential future applications:
- Users can gain access to information on routes travelled, average speeds, local weather & traffic, health and performance data.
- Owners can track the bike’s location remotely and receive a notification if their bike is moved or falls over.
- The location of rental, loan or company bikes can be tracked remotely.
- Users can receive offers of personalised products and services (maintenance warnings for instance) on the basis of the bike’s use.
Big data analysis allows us to constantly gain new insights into ways to align our products even more closely to how bicycles are used.
Sponsoring remains an important marketing tool, especially for our international bicycle brands. Brands such as Koga, Lapierre, Ghost, Haibike, Diamondback and Raleigh are all highly visible at major international cycling events in Europe and North America. In addition, several of these brands sponsor professional teams that compete at the highest levels. With their performances, these teams not only act as ambassadors for the brands; they also promote cycling sports and inspire young people to take up sports. For our nationally active bicycle brands, we focus our sponsoring efforts on local initiatives.
Omni-channel in partnership with the retail trade
In line with our long term vision and ambition, our sales and distribution strategy is focused on consumers. What this means in effect is that we supply our products and services in a way that best meets the purchasing preferences of individual consumers. We will develop the omni-channel approach required to meet those preferences in close cooperation with our specialist retail network. We see a central role for our retail specialists in this and will therefore help them to set up this platform. This is a long-term evolution and we have already taken steps along this path in the past, and will continue to take new steps in the years ahead. All our brands, both in bicycles and in parts and accessories, already have their own online platforms. These focus primarily on promoting collections, providing information and increasing the ease of purchase. In addition, we are devoting considerable attention to continuously training for our retail specialists. After all, they need to know exactly how our products work and need to be up to date on every last detail. In the United Kingdom, for instance, we are already doing this via workshops and training courses. Last year, we opened a special showroom for this purpose at the Raleigh head office in Nottingham.
We currently have a multitude of local initiatives and experiments running within the group in the fields of distribution and customer contacts.
- In 2016, we opened the bicycle experience centre De Fietser (the Cyclist) in the Netherlands. The centre is located in the old Enka factory in the city of Ede and is completely energy-neutral. The experience centre provides us with a unique platform and an integrated online and offline showroom where all our brands converge, where bicycle experience takes centre stage and consumers can test and order all the latest products.
- For Raleigh, we started direct online bicycle sales in the United States in 2016, as the market and type of product we sell in the U.S. are particularly suited to that approach. And of course, we can use the experiences we gain there in other markets.
- Some of our top brands have online programmes for specialties and the assembly of custom-made bicycles, such as the Koga Signature and Lapierre Ultimate.
The Cyclist in Ede
In 2016, Accell Group opened the largest bicycle experience centre in Europe. Visitors can view, test and order the new Accell Group brands from specialist retailers. The 9,000-m2 centre has the largest indoor test track in the Netherlands - at no less than 500 metres – which consumers can use to test bikes and e-bikes. There is an e-bike square, a museum with classic models from Batavus and Sparta, modern highlights and lots of other great experiences for visitors. The Cyclist is a perfect fit with Accell Group’s strategy of focusing its operations on consumers and developing its omni-channel proposition. The centre comes complete with online support. Consumers can communicate with specialist retailers interactively and arrange orders. The centre has a website with an appointment planner and other functionalities, creating a seamless connection between offline and online experience. And we can analyse the information from the data flow to optimise customer contacts and relationships.
Leadership and setting an example
Simply by selling our products, we implicitly help to make mobility more sustainable and promote a healthy lifestyle. But we want to do more than that. Our ambition is to play an active role in the promotion and engagement in a wide range of social issues in the field of clean, healthy and safe mobility solutions in cities and outlying areas. This also helps to reduce traffic flows in and around cities, cut air pollution, encourages more exercise and improves (bicycle) traffic safety.
To fulfil that role, we are members of national and international organisations, industry bodies and initiatives that specifically promote health, safety and sustainable mobility. These include the WFSGI (World Federation of Sporting Goods Industry), the ECF (European Cyclists’ Federation), various country organisations such as the RAI Vereniging (NL) and Univelo (FR) and the European umbrella organisation CONEBI. We are actively involved in these organisations and have seats on the boards and in executives of a number of these organisations. You will find a complete overview of these in paragraph 7.2 Networks and stakeholder dialogue.
Economic benefits of cycling
- The economic benefit of cycling in Europe is more than 500 billion euros a year. That is around 1,000 euros per capita in Europe.
- Cycling saves more than 190 billion euros in healthcare costs.
- Cycling has social benefits, too, such as easier integration, access to mobility and improved employability. Estimated value of 60 billion euros per year.
We want to set an example and we therefore encourage our employees to use sustainable and healthy modes of transport for their daily commute. Our ambition is for more than 50% of our employees to travel to work together and/or using a sustainable mode of transport. We consider all individual travel by car or motorised vehicle non-sustainable.
The e-bike for employees
Ghost and Accell Hunland are making e-bikes available to their employees, who are taking turns to use them for their daily commute or in their spare time. The move encourages employees to cycle and at the same time gives them a chance to increases their product know-how outside work. Following Koga’s example, Ghost and Accell Hunland have also introduced charging stations for e-bikes, immediately outside the entrance to the building. The e-bike charging stations are powered by solar panels. These initiatives have been met with enthusiasm from employees, visiting clients and the local community.
Of course, if you want to encourage bicycle use, you need to make sure that cyclists also have access to safe roads. The cycle path to our production facility in Tószeg in Hungary was extended by four kilometres back in 2015. Accell Hunland is still lobbying to have the final 2.3 kilometres of the path tarmacked, working in close cooperation with local authorities.
In 2016, 57% of our employees used sustainable modes of transport for their daily commute.
Supporting initiatives aimed at increasing exercise.
Accell Group aims to spend more than one million euro a year on local, regional and international initiatives that help to promote health and safety for consumers and encourage bicycle use across the world. We realised this target once again in 2016. In the year under review, we supported the U.S. initiative PeopleForBikes, both financially and by making our know-how and expertise available. We also supported non-profit organisations that promote the use of bicycles in developing countries, such as World Bike Relief.
Over a million euro per year for social initiatives
Encouraging awareness consumers and safety.
Providing consumers with good information is essential. We constantly strive to improve that information flow, both directly and via our retail network and both online and offline. Not just to enable consumers to make the right product choices, but also and primarily to facilitate the safe use of our products. We provide consumers with information on technical specifications, maintenance and safe and responsible use via the websites of our brands. Each product comes with an extensive manual in the language of the country in which it was sold. We provide intensive training for the retail sector and regularly provide retailers with the latest information, so they provide consumers with high-quality advice and support. In addition the information provided on our numerous websites, we are also active on social media such as Facebook, providing easy access to consumers, also for when they want to file a complaint. All our brands have complaints procedures to ensure any complaints are received and handled correctly, regardless of whether a complaint is received by email, via the consumer phone line, website, social media or via a retailer.
Winora Group DealerCenter
Winora has had a lot of success in Germany with the ‘DealerCenter’, an in-store sales system that provides digital access to the entire Winora range at specialist retailers. With or without the help of the instore specialist, the DealerCenter gives consumers immediate access to all product specifications, videos and delivery information. And ordering via the online shopping basket is simple and easy. Following the successful launch in 2015, the DealerCenter continued its advance in 2016 and around 900 specialist retailers in Germany now use the system.
Improving regulations bicycle use and environment.
We promote the interests of consumers and the bicycle industry. Together with a number of other parties, we advocate safe cycling conditions and improved cycling infrastructure on an international level. For instance, under the CONEBI umbrella we are discussing effective regulations for the Speed Pedelec. Together with the industry as a whole, last year we took the initiative to develop a new standard for bicycle helmets that is close to ordinary city bicycle helmets in terms of design, but also provides the added safety needed for the higher speeds of the Speed Pedelec. In the Netherlands, the new bicycle helmet has already been accepted as an alternative to motorbike helmets. We expect other countries to follow this example.
The Speed Pedelec example illustrates that existing regulations and legislation often lag innovations in the bicycle industry. That is another reason why Accell plays a leadership role in improving the alignment of innovation and regulations and legislation.
V-light enhances visibility Koga e-bikes
Last year Koga, one of our premium brands, introduced the V-light for e-bikes, a form of innovative lighting technology. V-light creates a safety zone around the bike by projecting two bright laser beams onto the road in a V-shape. Research shows that e-bikes with V-light are 2.4 times more visible in the dark for traffic coming from the rear. V-light will be integrated in the ION system for Koga e-bikes.
In line with our strategy, we aim to structure our organisation as efficiently as possible. In doing so, we specifically look at ways to design our production processes to make them as friendly as possible for both people and the environment. And we look for ways to provide our employees with the safest and most stimulating working environment possible.
When we refer to ‘operations’, we are referring primarily to our own production processes, which consist of the assembly and painting of bicycles. We currently have three large hubs in the Netherlands, Hungary and Turkey, plus a number of smaller production plants in countries that are important to us, such as France and Germany, primarily for the production of more specialist (high-end) bicycles.
We are constantly looking for the best way to structure our production platform in strategic and geographic terms. Time-to-market is a very important criterion in this search. Assembly close to the market increases our flexibility and enables us to respond more rapidly to consumer demand. We contract out parts of our assembly and paint work, as this offers attractive cost benefits without us having to compromise on quality, flexibility and the use of our own facilities. This is a continuous process that we continued to tighten in 2016. We are always on the look-out for new innovative assembly and paint methods to use in our production facilities, but also for smarter methods for storage and distribution, for instance.
Extra bike carrousel
Two years ago, we added a carrousel to the conventional production lines at our major bicycle production hub Accell Hunland in Hungary. Not only is this more ergonomical, it has also increased the efficiency of the operation. The carrousel is suitable for the production of all types of bicycles. It is very popular among employees thanks to the smooth controls and manoeuvrability of the bikes. With these positive experiences in mind, we have decided to invest in a second bicycle carrousel in 2017.
Increasing the sustainability of our processes
Sustainability plays an important role in our business operations. We want to be innovative in terms of making our processes more sustainable and we want to play a leading role both within and outside our sector. We encourage Accell Group companies to assess their operations critically, limit their impact on the environment and by doing so also frequently save costs. Many ideas and initiatives therefore come from the companies themselves.
Accell Group has a number of programmes to increase the sustainability of our processes. Research into the environmental impact of our own processes has revealed that energy consumption has the greatest impact on CO2 emissions. We have therefore earmarked a reduction of energy consumption as the most important effort in terms of increasing the sustainability of our production environment. We also have programmes aimed at reducing waste, increasing the sustainability of our packaging and the end-of-life recycling of materials and raw materials. In the year under review, we continued or enhanced current initiatives on these fronts. We also launched a number of new initiatives.
Smart bicycle storage
The Accell Bisiklet production facility in Turkey has teamed up with an external party to develop a new method for the storage and distribution of bicycles for the domestic market. Thanks to the installation of special bicycle racks, storage space can now be used three times more efficiently, which in turn made it possible for us to adapt our cooperation model. The end result is that costs are no longer linked to the number of square metres used, but to the number of bicycles stored and the turnover speed achieved. Thanks to this new system, we have managed to realise structural cost savings.
Efficiency in energy consumption
A reduction of CO2 emissions by reducing energy and (fuel) consumption is fully in line with our efficiency targets and something we see as a high priority. We aim to reduce our emissions by 1.5% annually.
The bulk of our energy consumption is for the assembly and painting of bicycles and for the lighting and heating in our production facilities, warehouses and offices. We also consume energy for the transport of parts and the distribution of our products.
We worked on the reduction and the ‘greenification’ of our energy consumption on all these fronts in the year under review. The initiatives we rolled out as part of this programme in 2016 included:
- Switch to LED. Accell Group strongly promotes the switch to LED lighting from traditional forms of lighting. The benefits of LED use are twofold: an LED lamp uses only 15% of the power of a traditional or halogen bulb and LED lights have a longer life of around 30,000 hours. We continued or initiated the switch to LED at the majority of our companies in 2016, and others will follow in 2017. In addition, we use motion sensors in warehouses and offices to cut down on the unnecessary use of lights. We continued to make progress on this front in 2016.
- Energy awareness. We conduct regular energy audits at many of our companies. In 2016, we continued to expand the number of companies audited. We use the findings to identify both minor and major potential areas of improvement and then make the necessary changes. For instance, these findings enabled us to make considerable energy savings in our paint shops. We have now structured the production process in such a way as to ensure that machines and equipment are not switched on and consuming energy when not in use.
- Attention for transport. With respect to the distribution of bicycles from our production locations, we have join forces with our companies to make critical assessments of the choices made in the modes of transport selected. For instance, we prefer cleaner alternatives such as rail transports from a sustainability point of view, but other factors such as cost efficiency and practical matters also continue to play a role in our decision-making. In 2016, we also devoted extra attention to returns of damaged goods in this context. Limiting such returns saves both money and transport kilometres.
We monitor results of these initiatives in the annual measurements of our energy consumption and CO2 emissions.
In addition to bicycles, we also produce waste. Processing waste not only costs money, it also creates a burden on the environment. Our programme aims to maximise the separation of waste before disposal and to designate as much as possible for reuse or recycling. We aim to reduce the environmental impact of waste per bicycle plus packaging (expressed in CO2 equivalents) by 2% to 4% annually. The opportunities for this vary per country and per region.
The Accell companies themselves register waste flows. This contributes to greater awareness among management and employees of the quantities of waste produced and any changes in these quantities. In 2017, we will take this one step further and the companies will receive support from Go4Recycling, a European partner. This will enable us to submit (mandatory) reports to local and national governments. We will benchmark the results to ensure that we can identify best practices and enable our companies to learn from each other.
As part of this programme, Accell Group has launched various initiatives to reduce the amount of waste we produce and we will continue these initiatives in 2017:
- Filtered waste water. All paint residues are filtered out of the water from our paint shops in the production plants in the Netherlands. The water purification installation ensures that all the used water is returned to the environment in a clean state. We also minimise the environmental impact of our paint operations in our other large-scale production facilities in Hungary and Turkey, using methods tailored to the local production process. In Hungary, we do this by means of dry filtering, while in Turkey we use our own purification installation.
- Use of waste compactors. Various production locations within the group use plastic and cardboard compactors or outlined investment plans for same in 2016. These installations reduce the volume of waste considerably, which increases waste per container and results in fewer waste transports.
In 2016, the total environmental impact from waste increased by 127 tonnes of CO2 equivalents, to 1,045 tonnes of CO2 equivalents. A large proportion of this was due to the increase in hazardous waste. That increase was largely due to the disposal of waste from the past, at our Turkish production company Accell Bisiklet. The slight increase in waste including paper and cardboard was due to the fact that the data of our companies CSN (Cycle Service Nordic) and Comet have also been included in the data collection from 2016.
Making packaging more sustainable
The bicycle industry uses large amounts of packaging materials to protect its products. We do this ourselves for the packaging of end products, and suppliers do the same to package and ship parts. The aim of our programme is to replace packaging materials from fossil sources with renewable materials. In other words, less plastic and more packaging made of paper and organic materials. Our goal is to reduce the environmental impact of packaging materials, combined with the waste production (expressed in CO2 equivalents) by 2% to 4% per bicycle per year. We also strive to optimise our packaging and packaging process wherever possible.
Accell Group sees optimising, replacing and reducing packaging materials as a major priority, especially at our production locations. Smarter designs and the use of more uniform specifications meant we were able to reduce the number of different types and sizes of packaging at a number of locations:
- Use of cardboard and paper. Our high-end sports bicycle brand Ghost is a frontrunner within Accell Group when it comes to the sustainable packaging of bicycles. In 2016, Ghost switched almost entirely to paper and cardboard. The only thing for which Ghost is still seeking a replacement is a particular type of plastic foil the company uses.
- Limiting damage. In the year under review, the Accell Bisiklet production location in Turkey devoted considerable attention to limiting damage to bicycles during transport by optimising its packaging. In some instances, one good solution turned out to be leaving the assembly of fragile parts to dealers.
However, for many of our suppliers, especially in Asia, sustainable packaging is barely on the agenda. It should be noted that the primary function of packaging - protecting goods during transport - is often a more urgent issue. In the past year, for instance, we conducted a pilot with a supplier for the recycling of packaging. The process turned out to be too inefficient, so there was no follow-up to the pilot.
We share the outcome of the programme’s initiatives and pilots with all our companies. Total materials use is monitored closely and separated out into types of materials and environmental impact.
Recycling materials and components
- Aluminium. Most of a bicycle is made of various metals. Pure and high-grade (primary) aluminium is one of the most used materials because it safeguards the robustness and safety of the bicycle. Global demand for secondary aluminium is so great that it is easy to find a market for the aluminium from bicycles. We therefore believe that detailed research into use of secondary aluminium in bicycles would be at this point in time.
- Carbon. We use a lot of carbon in our professional racing bicycles. A frame made of carbon has a 60% greater environmental impact than an aluminium frame. Although our carbon bicycles are suitable for recycling, there is as yet virtually no commercial market for recycled carbon from bicycles. Our return carbon flow is therefore collected and processed by specialised processing plants.
- E-bike batteries. The recycling of batteries is another area of attention. We are working to set up national and international systems for the collection and responsible disposal of discarded e-bike batteries. Together with organisations in Germany (GRS), Belgium (Bebat) and the Netherlands (Stibat – where Accell Group has a seat on the board), we have already set up systems for the collection of bicycle batteries. The batteries are collected via specialist retailers, disassembled and the parts are shipped to raw materials manufacturers and the base metals industry. We encourage and actively inform our dealer network to facilitate the collection of batteries.
Lapierre Xelius SL 700: Racing bike of the Year (Belgium)
The Lapierre Xelius SL 700 won the title ‘Racing bike of the Year’ in Belgium. This title is awarded by Agora (federation for the technology industry) and VAB (a mobility organisation). A professional jury and consumer panel subjected the Xelius to a set of rigorous tests and judged the bike the best on the basis of quality, safety and innovation criteria.
The people of Accell Group
Accell Group is an international company with around 3,000 employees across 18 countries. We have strong roots in the local communities where our operations are located. Our people are the heart of our company and so of course we strive for a safe and pleasant working environment. Many of our people share a passion for bicycles, whether they design, produce or sell them. Our people take pride in our company and are highly engaged. This connection creates a strong, professional and open corporate culture. A corporate culture that has room for people with varied backgrounds, in terms of gender, education, nationality, age and sexual orientation. This creates a culture and a working environment that offers everyone space to develop.
We are enterprising by nature
Accell Group has a very flat organisation, which facilitates quick decision-making and makes sharing information easy. Larger markets such as the Netherlands, Germany and the United States are organised in country organisations. The country organisations and our companies bear high level of operational responsibility. This is in line with our corporate culture and embeds entrepreneurship within the group.
Our entrepreneurship is one of the reasons Accell Group stands out in the bicycle industry. We build on this strength when rolling out our strategy. At the same time, we are increasing strategic coordination from Accell Group, which is why we invested in strengthening our organisation at group level in 2016. We hired specialists in various fields to further strengthen important competencies in the field of supply chain, IT, HR and e-commerce. This will enables us to make the best use the strengths of the group.
In this same context, we also boosted our group competencies in marketing and human resources with the appointments of Wouter Jager as Group Director Branding & Marketing and Frank Keepers as Group Director Human Resources. One of the main tasks of the Group Director Human Resources is to determine the principles of a good HR policy and launch plans of action in close consultation with the management and the HR managers at our companies. In November 2016, HR managers from every corner of the organisation gathered in the Dutch town of Ede for their first ever group meeting.
We want to engage people for the longer term and so we also assess external staff turnover and productivity per employee, although neither of these are targets in themselves. Devoting attention to talent development, competitive employment terms and social aspects is important to our reputation as an employer. We do our utmost to create a working environment in which enjoyment, safety, health and personal growth are all priorities. And of course we also devote attention to the flexible and sustainable employability of our employees.
Seasonal production patterns are a special characteristic of our industry. This means we work with both permanent staff and a shell of a few hundred flex-workers. Experience is important to safeguard the continuity and quality of the production process. Using flex workers also enables us to compensate for (seasonal) peaks in the production process and to optimise our production costs efficiently. This does make it difficult to retain people, especially at our production plants, which results in relatively high staff turnover.
Open to opinions and interests
We believe it is important that employee advocacy is embedded effectively in the organisation. We strive for an open and transparent dialogue with the organisations that represent our employees. In the Netherlands, Germany and France, the employees at most of our companies are represented by their own works councils. Key subjects of discussion in 2016 included job evaluations, absenteeism, the employee engagement survey and employment conditions. We also maintained regular contacts with the trade unions at various levels within Accell Group in 2016. A total of 63% of our employees is employed under the terms of a collective labour agreement.
We have a number of programmes within Accell Group to safeguard and increase employee motivation. The main programme focuses on increasing employee satisfaction. In addition, we have programmes to improve health and safety and training and education opportunities. We continued or further developed ongoing initiatives and launched new initiatives on these fronts in the year under review.
Increasing employee satisfaction
Accell Group sees the role of employer as more than simply arranging processes, such as recruitment and remuneration. We want to increase employee satisfaction and we are developing various initiatives as part of this programme to achieve that goal. For instance, some of our companies offer their employees a form of profit-sharing. Employees are actively engaged in sponsorship activities and can nominate activities in their local communities, frequently linked to cycling. Sponsoring those activities increases the employees’ engagement and pride in our company and makes our brands visible in the local community. Staff parties or other events are regularly organised for and by our employees. We are convinced that a pleasant working environment, with attention for communal engagement boosts engagement with the company and its goals.
In 2016, we conducted a pilot with a uniform employee engagement survey, carried out by a specialist agency. The survey was carried out among employees at Ghost, Raleigh UK and Vartex. Together they represent 12% of the total Accell Group workforce. At more than 80%, the response rate was particularly high. The notable findings included:
The employees gave both their satisfaction and engagement with the company a score of 7.5; enthusiasm for their work was given a score of 6.9.
The results are an important yardstick for the evaluation of our human resources policy and for making any necessary changes. From 2017 onwards, we will conduct this survey across the group once every two years. This survey provides a clearer picture of the engagement and satisfaction of employees than the staff turnover measurements at the end of the year. We have therefore decided to replace the report on inflow and outflow of employees with an annual report on the employee engagement survey.
Improving health and safety
The health and safety of our employees is a major priority for Accell Group. We are very much aware of the safety and health risks associated with the work carried out in our production plants, warehouses and offices. We devote a great deal of attention to clear instructions for work on the work floor, especially for new employees and flex-workers. This is even more important in locations where multiple languages are spoken. We devote specific attention to the safe operation of machines and tools, lifting activities, conducting practical tests in extreme conditions, RSI and work pressure.
We strive for 100% safety.
All our locations comply with national legislation and regulations on this front. Every company has its own health and safety officer who monitors compliance with regulations and devotes attention to improving the health and safety culture within the company. We use assembly and paint techniques that are employee-friendly and trendsetting in the bicycle industry at all our companies with production facilities. Every company has specially trained first aid staff and where relevant specialists in fire safety and/or hazardous substances. Any accident that does occur is followed by an investigation into the causes and any additional measures required.
Self-awareness and a timely response
We believe it is important that employees are and remain employable in the long term. Accell Group believes that self-awareness among employees, attention for a healthy lifestyle and a timely response to changes in employees’ employability or work capacity are all important in this respect. In the year under review, we conducted a number of small-scale experiments related to providing preventative medical examinations.
Absenteeism was higher in 2016, due to a relatively small number of long-term non-work related cases. Absenteeism as a result of accidents fell by more than 3,000 hours to 0.08%. However, every accident is one too many, so this remains a major priority for Accell Group.
Improving training and education opportunities
Suitable training and education opportunities are very important for boosting personal development and making the best use of talented people. Managers and team leaders are responsible for identifying the training wishes and opportunities of individual employees. The aim of the programme is to embed the opportunities for the training and education of our employees in the organisation. We strive for an average of 10 hours of education per year per employee. We have embedded this target in the education budget at group level and within each of our companies. Education is therefore a fixed part of the annual budget discussions, and the education budget is compared to the education hours recorded in previous years.
In addition to formal training and education, Accell Group devotes a growing amount of attention to long-term planning and leadership development. In 2016, we launched a group-wide programme to identify talents within the organisation and provide them with extra career development support.
A broadly-based English language training process in Turkey helped to increase the average number of training hours by 2.3 hours to 11.9 hours per FTE in 2016. This meant that we achieved our target for the first time in the year under review.
Today’s highly critical and better-informed consumers are looking for choice, availability and quick delivery. This has resulted in different demands on the supply chain. Increasing the efficiency of our supply chain is therefore a priority within our strategy. Given the scale of the company and its frequently long-term relationships with its suppliers, Accell Group is in an excellent position to design its supply chain to meet the demands of consumers and create synergy benefits at the same time.
Bicycles are complex products because of the many materials, components and semi-finished products used. And that complexity is not diminishing, because today’s bicycles consist of an ever-growing number of components, which results in longer delivery times. This is certainly true for e-bikes, a segment in which the integration of parts and connectivity is creating more advanced frames and the use of more electronics. Changing consumer demand combined with this growing complexity requires more and closer cooperation within the chain. The changes in demand across the year also add to the complexity of the supply chain.
The bicycle market has traditionally been subject to seasonal patterns, with new collections every year and peak sales in the northern hemisphere between the end of February and early August. Weather influences can lead to erratic shifts in demand. Seasonal patterns play less of a role in the high-end (electric) bicycle segment, because consumers’ decisions to buy these kinds of bicycles are spread throughout the year.
We work closely with suppliers and sub-suppliers in Europe and Asia for the procurement of components and semi-finished products. We purchase for both ready-made bicycles and bicycle production and for bicycle parts and accessories. This often involves the same suppliers. Availability and speed of delivery are even more relevant in the bicycle parts and accessories segment than in the bicycle segment. Unlike bicycles, there is no order book for parts and accessories but an order system that is available 24/7.
Model and management
In 2016, a team of our own people teamed up with a number of external consultants to draw up our operational model and a blueprint for Accell Group’s supply chain. We also made progress in structuring our new supply chain organisation. We set up a new structure at group level, with the main changes related to strengthening our management in the fields of procurement, planning and logistics across the group. The Chief Supply Chain Officer heads a professional team that includes senior experts, planners and buyers, located in a new part of our head offices in Heerenveen. In 2016, the team began implementing the new supply chain model and the structure of the processes for this new model. We are focusing on optimisation and cooperation, but centralisation is not a primary target in itself. The team at the holding company has a key role to play in setting up and monitoring a number of group standards, such as purchasing terms and supplier criteria, making better use of synergy potential and support for the buyers at our companies.
In the year under review, we also assessed how our choice for an omni-channel approach affects the priorities we set in terms of our supply chain. Within the supply chain, we have prioritised improvements to the reliability of deliveries, the reduction of ‘out of stock’ responses and shorter delivery times. We are following three tracks to realise these priorities.
The primary track is rapidly picking up the new operating method and increasing the transparency in the chain. The second track involves preventing disruptions at our suppliers from bringing our production to a standstill, for instance the production of ready-made bicycles and frames. The effects of this approach will not be visible in the short term, but it will embed quality and reliability of deliveries more securely. The third track involves identifying and assessing any opportunities to shorten the chain from Asia to Europe, so our suppliers are producing closer to our markets. After all, time-to-market is a powerful weapon, especially in the case of an omni-channel strategy.
Ghost SL AMR LC 10: Red Dot Design Award
This new generation AMR offers very efficient performance and a very distinctive design. The sleek lines of the frame give the Ghost SL AMR LC 10 a look that hides a great deal of technological know-how. The carbon frame with its distinctive hexagonal tubes provides highly accurate handling on the trails, while the Light Carbon Technology provides added stiffness and a lower frame weight. The jury rewarded this performance with a Red Dot Design Award.
We are also focusing our efforts on the realisation of structural cost savings in procurement and a reduction in working capital. These things often go hand in hand, but sometimes we will also make choices based on these priorities.
This approach will enable us to increase our flexibility as an organisation, respond to changes in demand and boost our competitive position.
Supply chain management affects various operating activities. One of the initiatives we launched in 2016 is category management with respect to bicycles. In the design stages of our bicycle collections, the supply chain organisation now applies category management more structurally to the procurement of materials and parts. More specific choices are made per category, on the basis of criteria such as price, quality, sustainability and consumer preferences. Making more choices for each category enables us to utilise our purchasing power as a group more effectively. At the same time, we increase delivery reliability, reduce the number of suppliers and simplify our logistical processes. This ensures more certainty and speed, especially when it comes to parts that consumers do not see as distinctive anyway.
Category management creates more purchasing power, delivery reliability, reduces the number of suppliers and simplifies logistical processes.
Cooperation in the chain
Greater openness and transparency in the chain are important aspects when it comes to developing our omni-channel approach. Suppliers and sub-suppliers are increasingly aware that tighter cooperation in the chain is required if they are to continue to make progress towards reducing the number of ‘out of stock’ responses and shorter delivery times. What this means in effect is that we are shifting systems across the chain from ‘production to order’ to forecast-based by creating more reciprocal transparency by connecting each other’s systems, by exchanging data and sharing (production) planning. In 2016, we took stock of the possibilities of intensifying cooperation in the chain on this front. We entered into a dialogue with various large suppliers, frequently suppliers we have worked with for many years, to look at how we can structure that cooperation. And we organised workshops around this theme with a number of our top suppliers. Based on the results, we assessed how we can arrive at product realisation more quickly together and by doing so respond more effectively to the demand from end-consumers.
At the same time, we are also very active in the field of chain responsibility. As a major player in the bicycle industry, we are in a position to encourage parties in the supply chain to respect human rights, adhere to good employment practices and protect the environment. This is also an important topic of conversation in our cooperation with suppliers.
To this end, we have drawn up our own code of conduct for suppliers, and ask all our suppliers to sign this code. We consider certain aspects of corporate social responsibility as pre-competitive and wherever possible we seek cooperation with sector peers and organisations. Here too, we do not hesitate to take the leadership role.
Increasing our impact by joining forces in the chain.
Audit of suppliers
Together with the WFSGI (World Federation of the Sporting Goods Industry) and other leading bicycle brands, suppliers and retailers, in 2012 Accell Group took the initiative to increase the sustainability of the supply chain. This approach is known as the ‘Responsible Sport Initiative’ (RSI). The WFSGI code of conduct forms the basis for the content of this audit.
In 2016, Accell Group had seven audits conducted at suppliers. We did not realise our target of 15 audits. The preparations took longer than expected, which meant that a number of the planned audits were moved to early 2017. The key findings of the audits that were conducted is that our suppliers need to devote more attention to emergency exits, fire prevention and first aid and that the storage and management of chemicals needs to be improved. In addition, they need to devote additional attention to the effective administration of personnel data, permits and working hours, including the supervision of maximum working times. We are working on improvements on the basis of the Corrective Action Plan, together with other companies and the suppliers in question.
Winora Radius: Red Dot Design Award & IF Design Award
Easy to handle, compact and strong: the Winora Radius was designed specifically for city use. This bike, with its 20” tires, twistable and foldable parts and a handle integrated in the top part of the frame, is both very easy to use and can be stored in the smallest of spaces. Winner of both a Red Dot Design Award and an IF Design Award.
Audits for chemical substances
Within Accell Group, we constantly conduct audits for chemical substances delivered by our suppliers. These substances are used to paint parts such as the frame and front fork, and they are also used in plastic components such as saddles and handlebar grips. We do not use chromed frames and we use 100% water-based paints in our own paint shops and those of third parties. Whenever possible, we use alternative substances without hazardous components.
We operate in compliance with REACH (Registration, Evaluation, Authorisation and Restriction of Chemical substances) and aim to use only registered substances in the right conditions and with the right protective measures in place. We have our own test laboratory to check whether components and parts comply with legislation. We also ask our suppliers to sign a REACH compliance statement.
In 2016, our REACH lab tested a total of 94 complete products, consisting of 312 components, on which the lab conducted a total of 182 analyses. These new and existing products were selected based on risk estimates. The lab found (often small) deviations in 51% of the cases, and it was generally possible to resolve these issues quickly in consultation with the supplier involved. In three cases, a part failed the test completely. Purchasing of the parts in question was halted entirely and was only resumed after the manufacturer had made significant improvements.
The net debt amounts to € 147.3 million at year-end 2016; this is a decline of 26% compared to a year earlier, largely due to the lower working capital. EBITDA was 3% higher at € 70.7 million. This resulted in a net debt / EBITDA ratio of 2.1, a clear improvement compared to year-end 2015. The interest cover also improved as a result of the lower credit uptake in the second half of 2016 and slightly lower interest rates. Due to the increase in shareholders’ equity solvency had increased to 45.4% at year-end, from 41.8% a year earlier.
Net working capital came in at € 306 million, a decline of 9%. Working capital as a percentage of turnover improved to 29.2%, from 34.2% in 2015. Inventories were down by 5% and came in at € 322 million. Accounts receivable were higher at € 138 million, compared with € 135 million at year-end 2015. Accounts payables came in at € 153 million, up 13% compared to the previous year. The positive development of the working capital was the result of the first effects of the more centralised supply chain management.
The cash flow from operating activities was € 75.5 million in 2016 (2015: negative cash flow of € 19.2 million). The improved cash flow was primarily due to more efficient working capital management. Investments in fixed assets were up € 0.8 million, which was largely due to investments in the experience centres in Ede (NL) and Dijon (FR). The free cash flow improved considerably and came in at € 61.3 million in 2016, largely as a result of the reduced working capital requirements.
The capital employed declined by 7% to € 494.1 million (2015: € 532.3 million). The return on capital employed (ROCE) stood at 12.2% at year-end 2016, compared with 11.0% a year earlier.
Cycling will remain highly popular in the years to come for mobility, recreational and sports purposes. Accell Group expects to maintain its lead with its high-quality products and expects to be able to continue to add innovations to make cycling for various purposes even more attractive.
In line with the refined strategy, in 2017 Accell Group will continue to shape and implement integrated management in fields such as supply chain, human resources, marketing and ICT, and ensure that operational processes are structured more efficiently and that the company makes more effective use of synergy potential. We will also work on new initiatives in the context of our consumer-centric approach, the introduction of “mobility-as-a-service” concepts in cooperation with partners and the continued improvement of the sustainability of our operations. In 2017, Accell Group will also continue to actively seek potential increases in scale through acquisitions that are a good fit with the strategy and the (brand) portfolio of the group, that are complementary and add value to the group in the near term on the return and synergy fronts.
Based on the above and barring unforeseen circumstances, Accell Group expects to see a rise in turnover and operational results in 2017.
‘Starting production before we receive the order’
The German family-owned business Schwalbe (Ralf Bohle GmbH) is one of the largest producers of bicycle tires in the world and has been one of Accell Group’s key suppliers for many years. Frank Bohle, President and CEO of Schwalbe, talks about the reduction of delivery times and the progress Schwalbe is making in the recycling of raw materials.
What kind of products does Schwalbe deliver to Accell Group?
“Schwalbe specialises in tires and inner tubes for all types of bicycles: city and touring bikes, racing bikes, mountain bikes and e-bikes, plus the more recently added wheelchair tires. Our product range includes an extensive range of models and varieties in terms of sizes, colours and valves. If you include all of these varieties, we supply around 50% of our total of 2,700 products to Accell Group’s bicycle brands and wholesale companies. Accell Group is also one of the main distributors of our products in the parts and accessories market.”
How do you and Accell Group maintain control of the delivery of so many different products?
“For many products, we are talking about small deliveries and we can often make those from current stocks. However, we also have products that Accell Group orders tens of thousands of at the same time. Over the past few years, we have intensified our cooperation to improve our ability to anticipate those kinds of orders. We regularly discuss optimisations to the supply chain and how we can contribute to that process. These talks are at the purchasing and sales staff level, but we also talk to each other at management level. Timely access to planning and forecasts now enables us to start production even before we receive the orders. That has helped us to cut delivery times by half.
Furthermore, we have recently started production at a newly-opened factory in Vietnam. Our production facilities in both Indonesia and Vietnam are now also operating with an extensive warehouse. These warehouses allow us to buffer stocks, which our customers can call upon at short notice so we can guarantee a needs-based product supply.”
What about sustainability in the bicycle industry?
“A number of players – and I certainly include Accell Group in that group – are taking the lead in terms of continued improvements to sustainability in the bicycle industry. And the rest are following suit. The companies associated with the World Federation of the Sporting Goods Industry are launching numerous helpful initiatives to monitor suppliers, increase the sustainability of production processes and eliminate chemical substances that could be a health hazard.”
How does Schwalbe contribute to increasing the sustainability of the bicycle industry?
“One of the main raw materials for the production of our inner tubes is butyl rubber. Together with the Science Research Center EPEA in Hamburg, we have developed a method for using recycled butyl rubber in our products, without compromising the quality. Today, 20 percent of our new inner tubes are made of recycled materials. The recycling programme has environment benefits on two fronts: in comparison with the production of the same quantity of new butyl, recycling uses just one fifth of the energy and recycling old inner tubes creates less waste. In Germany, we have teamed up with bicycle retailers to launch a programme to collect old inner tubes. And the end result is that the entire chain, including consumers, is actively involved in this cradle-to-cradle inspired programme.”