Peloton is to stop in-house bike production as part of turnaround
Peloton to Stop In-House Bike Production as Part of TurnaroundDavid Paul Morris—Bloomberg/Getty Imageseloton Interactive Inc. will stop building its bikes and treadmills at its own factories and rely solely on partners for manufacturing, marking one of the most dramatic steps yet to simplify its operations and reduce costs.
Now, the company will cease operating its Tonic facilities and move all of its bike and treadmill manufacturing to Rexon, Chief Supply Chain Officer Andrew Rendich told Bloomberg News in an interview. “We are going back to nothing but partnered manufacturing,” he said. “It allows us to ramp up and ramp down based on capacity and demand.
The company previously canceled a plan to build its equipment in Ohio, but now it’s walking away from in-house production altogether. As part of the new arrangement, Peloton is expanding its partnership with Rexon while also maintaining other outside partners and adding new ones.Peloton plans to keep working with Quanta Computer Inc. to manufacture a key piece of its equipment: touch screens. It’s also adding Pegatron Corp., which like Quanta is a major Apple Inc.
Rendich said that having dual supply chains — one internal and one external — required more resources to do well and that simplification is necessary to drive down costs and improve product quality. He said he currently manages two separate operations teams that will now combine into one.
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