Members of the London Brompton Cycling Club © Photo by Richard Baker / In Pictures via Getty Images
Members of the London Brompton Cycling Club © Photo by Richard Baker / In Pictures via Getty Images

Brompton pursues dual sourcing as supply chain snags cut profits

11 January 2023

The UK’s largest bicycle manufacturer Brompton has moved to diversify its supply chain after disruption contributed to a drop in profits.

Brompton turned to dual sourcing after profits dropped by almost a quarter to £7.32m for the year ending March 2022, down on £9.65m in the previous year, in part due to rising operational and production costs. This was despite turnover rising 40% in 2022 to £106.9m, compared to £76m in 2021. 

In its annual report, filed with Companies House, Brompton said its purchasing team had begun placing orders further in advance to secure production slots and ensure enough bikes were available to meet demand.

In addition, the company said it was pursuing a “dual-sourcing strategy” to prevent over-reliance on certain suppliers and locations.

“In response to increased lead times, the purchasing team have responded by placing orders further in advance to secure production slots to ensure sufficient product availability to meet forecasted demand,” said the company.

“We have also pursued a dual-sourcing strategy to prevent over-reliance in particular suppliers and regions.”

Brompton pointed to unpredictability of demand, the geopolitical climate, and rising costs for parts and labour.

The company also said transport costs had increased because it had been forced to use air freight to overcome economic factors and supply chain delays.

It said these costs had been “partially” passed on to consumers, but due to “low consumer confidence caused by the economy and the cost of living crisis, this cannot fully cover the cost increases”.

“Rising costs have been further combatted by ongoing improvements in efficiency across operations through company-wide waste reduction initiatives and steering groups,” said the company.

“The group increased its stock levels to mitigate potential stockouts caused by supplier shortages and long lead times.”

Brompton saw profits and capacity jump quickly during the pandemic but it suffered in 2022 as titanium, which it uses in its newest T-Line bicycle to cut weight, became scarcer following the war in Ukraine. 

Will Butler-Adams, CEO of Brompton, told the Financial Times: “That restriction in supply out of Russia and Ukraine means that more people are going to China, the price of titanium is going up. So yes, that is a risk.”

Additionally, the manufacturer sources a significant volume of parts out of Taiwan, which has seen tensions with China rise over the past year.

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