The Supply Chain Matters blog updates readers on today announcement that upscale at-home fitness equipment provider Peloton will now build the company’s first U.S. manufacturing facility.
This blog has featured a few commentaries focused on a history of Peloton’s customer service and order fulfillment snafus driven mainly from lack of visibility among the designer’s extended global supply chain. A flurry of continuous reports of customer frustrations in delivery of orders and with customer support experiences reaching the attention of the company’s most senior management, as well as its investors, news media was more than happy to provide added visibility. While some companies found themselves in a position to be able to quickly pivot their supply chain capabilities to respond to added COVID-19 market demand, that was not the apparent case for this company.
Last week, in a global supply network news capsule, we updated readers on yet another social and general media disaster. The company’s CEO had to again apologize to consumers after the U.S. Consumer Product Safety Commission had requested the company to voluntarily recall its Tread+ treadmill model due to reports of accidents concerning this treadmill model. The federal agency had advised consumers with young children or pets to stop using the Tread+ model because of reports of dozen of injuries, and a least one death of a child, attributed to being pulled under the rear of the machine. The company initially rebuffed the federal agency’s call for a voluntary recall, calling the agency’s advisory inaccurate and misleading. Some of the company’s customer service agents reportedly were at one point advising consumers with young children or pets that no refunds would be issued and to sell their machines if they were that uncomfortable.
Today’s news is somewhat more positive.
According to today’s report by Business Broadcast Network CNBC, the fitness equipment provider will invest $400 million to construct one million square feet of manufacturing, office and amenities space on a 200-acre site in Troy Township Ohio.
The company reportedly expects to break ground later this summer with plans to have the site up and running by 2023. Upwards of 2,000 jobs are expected as a result of this facility. Noted is a quote from Co-Founder and CEO John Foley that having added domestic flexibility in running a global supply chain is going to allow the company’s management team to sleep better.
In January, amid continued high demand for the company’s equipment, the supply chain management team had to resort to air freighting and expedited ocean shipping of finished equipment from factories located in Asia at a reported cost of $100 million. Peloton further acquired fitness equipment manufacturer Precor for $420 million, gaining a U.S. manufacturing capability gaining manufacturing facilities in North Carolina and Washington state. CNBC notes that the company expects to make its Bike and Tread machines in these factories by the end of this year.
In the most recent quarter that ended in March, Peloton’s total revenues increased 141 percent to $1.26 billion.
With a future complex the size of a million square feet, one could believe that there are big bets being made on the future of at-home exercise equipment tutored by online instructors.
Just like the purchase of a new BMW automobile, customers will reportedly be able to in the future, visit the Ohio facility and observe equipment being produced. And for sure, the new manufacturing facility will have an on-site fitness center.
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