This will be an interesting season

It's no secret that there's a huge shortfall in supply right now. Tried buying an 11 speed chain lately? Or a tire? Various bike industry articles talk about how to secure online sales when there's no inventory available, and about tremendous sales growth for Shimano and MIPS (a helmet component). It was the best of times, it was the worst of times.

76% growth for Shimano sounds exciting, but managing that kind of growth in a mature company with 100% physical product is a Herculean job. We're not talking about app downloads here. Most companies in Shimano's situation (capital intensive, mature, with an established supply chain) would have a hard time managing 10% of that growth. The infrastructure required of making what Shimano makes wants to work beyond 90% of capacity day in and day out. A large part of the gap between 90 and 100% capacity has to do with switchovers (going from making one product to another) and maintenance downtime. You don't make it to Shimano's level of company performance with an extra 15% capacity in your pocket. Your suppliers don't either. I don't know much of anything about mining and smelting, but I imagine that none of the industries upstream in Shimano's supply chain (metals, bearings, plastics, carbon fiber) have an extra 15% capacity. Global shipping sure doesn't seem to have an extra 1% of capacity right now let alone 15% or 76%. 

I use Shimano as my example here but the same goes for any company. And this is why you get situations where Cervelo has a new bike model that's ready for the market except they can't get parts to build and ship them. I've heard that new orders for saddles, without which you have trouble shipping a bike to a dealer, have a 70 week lead time. One of our suppliers says he's ordering and paying for stuff that he won't see until 2022.

There is the problem of double counting demand, where you as a cyclist go into a shop and say "have you got this chain, I'd like to get one?" They don't so you go to the shop a few blocks over and ask the same. And so on with all of the shops in your area, none of which have the chain. So now 6 shops (I assume you live in DC or Boston for this) perceive a demand for chains. Multiply this by all the cyclists in your area needing chains (which sounds like it's going to be all of them soon), and you over count demand by the average number of shops that a cyclist goes to to try and find the chain to buy. But there's still no chains, and demand for more than can be supplied, double counting or no.

There's lots of chatter in the industry about the "inevitable" looming oversupply hangover on the other side of this. I generally agree that there will be oversupply, and managing decline is even worse than managing steep growth. How many brands make it to that point is a good question. Without product moving from one side of the counter to the other and going out the door, there's no cash flow. Without cash flow, there's no business. So my crystal ball is understandably reluctant to give a clear answer on that. 

With the QuickShip™ builds (which we just had to take a bunch of builds out of since I wrote this as component availability decreases by the minute) and encouraging a more curated product selection particularly in hubs, we're still putting stuff into the FedEx truck daily at pretty exciting rates. We'll ride that horse until it breaks. The long and short of this is that I'd encourage people to be prepared to prioritize "having something to use" over "having exactly precisely what I want" for the foreseeable future. We as cyclists can get pretty picky indeed, and that's not going to be an easy itch to scratch. I don't love having mismatched and weird tire combos on my bikes right now, but you know what I do like? Tires. I like having tires.