Source: Zag Daily

The consulting firm outlined how companies in the micromobility sector could boost their profitability by adopting a different approach to supply chain processes, with digital manufacturing and operations platforms helping to remove significant pain-points.

Traditionally, micromobility companies have collaborated individually with suppliers during different stages of the chain, such as manufacturing, logistics and after-sales support.

This model, says McKinsey, has significant in-built inefficiencies, and points to an alternative solution presented by digital manufacturing and operations platforms. In short, these are single-point platforms that bundle together the orders of several micromobility companies, and open up a large network of suppliers to customers, enabling companies to more easily match with the right supply partner, while still enjoying the benefits of the economies of scale.

According to McKinsey, the model is mutually beneficial for micromobility companies and those in the supply chain. Contract manufacturers are able to enjoy more consistent and higher order volumes, enabling greater, more efficient utilisation of production lines with lower associated unit and sales costs. Micromobility companies can, individually, have access to quality manufacturers even with lower volume and proven sales. This frees them up to concentrate on other key aspects of their company’s operations, such as R&D, branding and vehicle design.

McKinsey have analysed the typical costs for micromobility companies. “About a third of costs typically reside in manufacturing…As a result, reducing expenses associated with the prototyping, assembly, and fulfilment of micromobility vehicles is a primary mechanism to drive profitability.” The use of efficient digital platforms can help streamline production and so avoid the unnecessary expenses associated with smaller-scale manufacturing agreements.

An additional benefit highlighted by McKinsey is that, with several micromobility companies bundling their orders through digital platforms, it will be easier for regulators to establish technical standards.

Darius Scurtu, McKinsey Center for Future Mobility Expert and Engagement Manager, spoke to Zag Daily about the micromobility industry’s developing maturation. “Firms are now focused on profitability and operational efficiency rather than growth alone, first cities are looking at increasing fleet sizes and expanding services areas, and investors are targeting profitable and established operators.”