Peloton is shifting gears in an effort to lower its costs and has devised a plan to use Apple’s suppliers and other external firms to create its fitness items rather than relying on its own factories to do so. This will allow Peloton to reduce its reliance on its own factories.
It has been difficult for Peloton to keep costs down while a major firm like Apple or Amazon is said to be interested in investing in the company. The company is reportedly turning to companies that have worked with Apple on assembly items in its latest effort to save costs.
According to Bloomberg, the company plans to cease production at facilities it acquired in 2019 in favor of exclusively depending on third parties, rather than dividing manufacturing between its own sites and partners. Instead, Tonic Fitness Technology’s facilities will be serviced completely by its existing partner, Rexon.
Chief supply chain officer Andrew Rendich of Peloton says, “We are going back to nothing but partnering manufacturing.” When capacity and demand call for an increase or decrease, we can do so with ease.
Rendich believed that a single external supply chain may reduce costs while also improving product quality because it requires fewer resources than two separate external supply chains.
In addition to its own manufacturing operations, Peloton is also collaborating with companies that are part of Apple’s supply chain. Quanta Computer already provides the touch displays for its exercise equipment; Pegatron Corp. is providing the rowing machine’s display and controls.
Peloton’s latest attempt to enhance its reputation is a shift in tactics. After rumors surfaced that the company was a possible takeover target, the exercise equipment manufacturer took action to stabilize its finances.
There were significant changes in February, including a new CEO and the layoff of 2,800 people, as well as significant cuts in hardware costs in April, along with increases in subscription fees.