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Royal Enfield Finds Supply Chain an Obstacle in their Capacity Expansion Plan

As leading bike manufacturer, Royal Enfield doubles their production capacity to around 1,50,000, the company said that the biggest challenge they faced in expanding production capacity was managing the supply chain.

The company’s Chennai facility will now produce around 70,000 bikes per annum at full capacity; however customers who want to own an Enfield bike today will still have to wait around 7 months till it is delivered to them.

The company’s CEO, Dr. Venki Padmanabhan, said that they are focusing on expanding their capacity. They recently announced about their greenfield project that will increase production capacity to around 1,50,000 bikes.

However, the challenge was to raise supplies from dealers equally. Even with a 1,50,000 units production capacity, the company’s volumes are still low from the perspective of the vendor, and as a result the main issue is to see to it that vendors don’t mess up delivery, even under pressure of satisfying their customer’s needs first.

Dr. Padmanabhan also added that they are working to create a supplier part within their 50 acre plot allotted to them by the government. Following the entry of leading global two wheeler manufacturers like Triumph, Ducati and Harley Davidson, who are also eyeing this market, the luxury bike market in India is more competitive, a fact, which Royal Enfield is aware of.

While there are still no manufacturers providing products in the category of 350cc to 500cc bikes, the category below it is a big volume growth that is increasing rapidly as the engine capacity decreases.

The companies operating in this category, however, are nurturing their ambition of entering the category of 350cc to 500cc bikes as well. Dr. Padmanabhan thinks that as they operate in this category, they have an advantage with the upcoming new engine capacity. As demand increases, the cost will come down, which will allow the company to provide more valuable features in their bikes, perhaps even more than those offered by their rivals.

Royal Enfield aims to move up by offering bikes in the category of 60cc bikes and above, although they will not be entering the mass bike market. All this depends on the appropriate motor. Whether the company will develop their own engine or opt for a technical collaboration is not yet known, however Dr. Padmanabhan added that they will consider both the options.

The company, meanwhile, launched a new dealer outlet cum service centre, along with a training hub for their technicians in Chennai. They will also be releasing a new colour option for an Enfield, Desert Storm, a matt finish, sandy beige. Among their most macho bike is the bike available in an olive green hue; however this bike is only available for the military. It is not available to non-military bikers in India. The new Desert Storm will come the closest to it.

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