The e-scooter startup Kumpan Electric got its components from Asia for a long time - until the problems piled up and the founder made a radical decision. In an interview, Patrik Tykesson explains why the company is now relying on local supply chains.
At the beginning of the production of your e-scooter you sourced components from all over the world - then you radically restructured your supply chain. Today 85 percent of the parts come from Germany. When did you decide: We can't go on like this anymore?
Patrik Tykesson: We noticed that early on. We really made that decision in 2015. In the years before that, however, dissatisfaction had grown and we questioned whether we couldn't set things up differently in some way. In August 2018, the first scooter rolled off the assembly line, the parts for which came mainly from Germany.
First of all, an international supply chain is nothing unusual. Why didn't that work for Kumpan?
One reason was the theft of ideas. We developed a lot ourselves back then, for example we were the first to use a color display for scooters. And half a year later, the first suppliers and manufacturers in Asia began to install color displays in their vehicles. It turned out: our supplier had sold our idea as his own. This has happened to us more often. The quality of individual components was also lacking from time to time. It's easier to control locally. But we were also bothered by the fact that the innovation cycles in international supply chains are very slow. If you source a component from the Far East, it may take months before you can adapt something. And as far as sustainability is concerned, we simply have completely different regulations in Europe than in Asia. There is a different basic understanding of sustainable manufacturing.
What does that mean?
Our processes should be as sustainable as possible. We always pay attention to a good balance between profitability and sustainability. An example: in the past we had chrome elements in our vehicles as design highlights. It wasn't until we brought production to Europe that we realized how bad this process is for the environment. We then decided to omit this element and now have a similar look, but with different, more environmentally friendly materials. You can do that much better with suppliers who have to meet the same standards and have the same mindset.
A supply chain cannot be rebuilt overnight. How did you find the right suppliers in Germany?
We first divided the vehicle into different assemblies, which means there were metals, plastics and electronics, for example. Our team then had clear responsibilities for these groups. We went, visited trade fairs, established contact with potential suppliers. The challenge was that our quantities were extremely small back then and we really had to motivate the suppliers to work with us. It's not just about whether the technology fits, but also whether you represent the same values. We then used a scale to decide which suppliers we would work with.
What was the biggest challenge back then?
We had to coordinate the transition at a time when we still sourced 80 percent of the components from the Far East, so we had to set up a new supply chain for 80 percent. That's a big challenge. We also found that there was simply a lack of expertise in certain areas in Europe. In the end, not a single component can't be missing - it's no use if 99 percent of your supply chain is working, but a single part is missing.
How long did this process take?
About two and a half years from the decision until we could build a new vehicle with the new supply chain. It is a permanent optimization process. We had to find out time and again that a supplier wasn't who he said he was. We had to develop them further or even replace them. We have had to build a network of suppliers over time to be flexible to ensure the supply chain never breaks. This is a major challenge, especially nowadays. Delivery problems, lack of raw materials, increasing quantities - the supply chain has to adapt again and again.
The international supply chain didn't work for you. Did your new chain live up to expectations and solve the problems?
In any case. We were always concerned that we wouldn't be able to achieve a good market price with local production. But that worked. And our four problems, which led to us wanting to restructure the supply chain, have also improved: We no longer have to fear ideas being stolen, the quality has improved, we can adapt the product more quickly - and we are also better aware of the sustainability aspects Handle.
In recent years there have been repeated disruptions in international supply chains. Was your supply chain better prepared for these riots?
Definitive. We see that other companies in similar businesses have huge problems. There are permanent production stops that make it difficult to deliver reliably. This shows very clearly that we made the right decision. We were able to react much more flexibly. An example: A component can be made of steel, stainless steel or aluminium. Now that the prices have risen or the supplier can't get the raw material at all, we can flexibly look at which other equivalent material is currently available and switch over. That would not have been possible before with our international supply chain. This is a huge advantage over the competition. But the problems have also left their mark on us: the tense general economic situation, the lack of chips and raw materials. However, unlike many others, we are not completely dependent on Asia. We also noticed that when one of our factories burned down two years ago. We were able to set up a new production facility within six weeks. If we had sourced our components from Asia, we would have had to wait six months for materials.
Has the local supply chain made Kumpan more resilient overall?
Yes, in any case. Above all, we noticed that the proximity is a great advantage. If we discover a quality problem, we can drive straight to our supplier, look each other in the eye, and sort out the problem. Sure, you can also make a video call - but if you sit across from each other, it's much easier.
Mit Patrik Tykesson sprach Charlotte Raskopf
The article first appeared on Capital.de
