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Polaris Buyer Sheds Light on How To Become ATV Suppliers
2007/10/29
If you want to know how to become a qualified supplier to Polaris Industries Inc. of the United States, one of the world`s leading makers of all terrain vehicles (ATVs), snowmobiles, and utility vehicles (UTVs, or side-by-sides), Tony Wixo, director of Asia Pacific Sourcing, Polaris Industries Representative Office Shanghai, is the one to talk to.
 | | Tony Wixo, director of Asia Pacific Sourcing, Polaris Industries Representative Office Shanghai, gave a presentation during the Taiwan International Motorcycle Industry Show 2007. |
Wixo was invited by the Taiwan International Motorcycle Industry Show (Motorcycle Taiwan) 2007 to talk on "Opportunities to Supply Major ATV Manufacturers" to a big audience hoping to tap into Polaris` supply chain.
Polaris designs, manufactures and markets snowmobiles, ATVs, and motorcycles for recreational and utility uses. The company registered annual 2004 sales of US$1.8 billion and made purchases of about US$1 billion, including 25% from Asia. In January 2007, Polaris set up an Asia procurement office in Shanghai and tapped Wixo to head it.
Wixo, who was previously a product manager at Polaris, also shared his viewpoints about the ATV market and offered valuable suggestions to parts makers interested in becoming Polaris suppliers during an interview with journalist of Taiwan`s China Economics News Service (CENS), publisher of the TMG (Taiwan Motorcycle & Parts Guide) magazine.
What is a major ATV manufacturer? According to Wixo, it is one that has a well established and respected product line, brand name and loyalty, industry and consumer recognition, and distribution channels. Innovation, R&D, and respect and adherence to intellectual property rights, consumer safety, and environment regulations are the other trademarks of a major player in the industry.
Formula for Long-term Success
Wixo used the analogy of human health to describe what factors make a successful long-term supplier. These factors include "breathing"--for suppliers that means quality and delivery; "exercise"--cost and technology and collaboration; and "playing the game to win"--customer service and communication, relationships and respect; partnership, and adequate computer skills. "What is your competitive advantage?" the seminar speaker asked the audience.
 | | Polaris is one of the world`s top-three ATV manufacturers. |
Wixo also introduced the audience to his company. Polaris, he noted, has over 50 years of experience in the industry. It is a major manufacturer of a diversified mix of high-quality, high-performance motorized products for recreational and utility use and is traded on NYSE with the name of PII.
With manufacturing and distribution facilities located in Minnesota, Wisconsin, Iowa, and South Dakota, Polaris currently has a workforce of about 3,400 non-union workers. Currently, Polaris` national and international distribution system include nearly 2,000 dealers in North America and over 50 distributors and five subsidiaries in 126 nations.
In 2005, Polaris`s major product categories were parts, garments and accessories (accounting for 15% of the total), motorcycles (5%), snowmobiles (14%), and ATVs and UTVs (66%). According to Wixo, Polaris` ATV, UTV, snowmobile, and motorcycles all share the same global parts procurement system.
Polaris uses world-class technology, Wixo claimed. The invested US$35 million to set up brand new technology centers in Wyoming and Minnesota, which opened in April 2005, to maintain a technology leader in the industry and support future growth of the company in technology, powertrain and emissions.
Doing Business With Polaris
What you can expects from Polaris? According to Wixo, Polaris can offer suppliers several things, including planning forecasting (data for decision making), material authorization, firm planning horizons, opportunities for high performers to grow their business, and design collaboration.
 | | A breakdown of Polaris` sales by product line. |
And what does Polaris expects from its suppliers? Wixo said that his company requires its suppliers to collaborate with it on design expertise, to meet a 99.5% on-time delivery ratio, to maintain defects at under 100 parts per million, and to annually reduce costs by 2%. Most important, Wixo said, is "consistent and measurable performance."
Polaris introduced the Polaris Procurement Net (http://www.polarissuppliers.com) to provide a complete and real-time communication tool for purchasing. The system contains several key elements, including supplier report cards, planning schedules, procedures and policies, request for quote (RFQ), logistics planning, e-commerce, and downloads.
Polaris also requires its suppliers to provide certain documents, Wixo said, including a supplier profile, quality system self-assessment (SQSSA), non-disclosure agreement, and master supplier agreement.
The supplier profile should specify the supplier`s product line, production mode (OEM or aftermarket), sales revenue, plant location, size, and available capacity. It should also include information on the supplier`s product quality (including documented quality system, quality department staff levels, QS/TS certification, etc.); Engineering (engineering staff, number of CAD stations, and technology recently introduced); and CTPAT (Customs-Trade Partnership Against Terrorism) certification.
In the SQSSA, Wixo said, several elements are required including Production Part Approval Process (PPAP) experience; certification by an industry recognized registrar (QS or TS); existing inspection plans begin conducted on-site or off-site; process control (are control plans, work instructions, statistical process control, or SPC, used today?); purchasing control (are supplier audits, supplier measurements etc. in place?); laboratory capabilities (on-site or outsourced? Calibration?); and documented archive process.
Contract elements include governing law (of your home country), non-disclosure of confidential information (patents, trademarks, and copyrights); warranty (specifics of warranty-time, responsibility, etc.); service parts requirements (10 years); and terms of sales.
About cost positions and annual reduction, Wixo said that suppliers` cost position should come first, noting that the lowest purchase cost is not necessarily the lowest cost; and second, the cost position must be globally competitive. Year-over-year cost reductions, he said, require efficiencies, cost management, and leverage with volume.
The contract elements about material/logistics planning include material planning requirements (MRP)-based year-round production; forecast, planning schedules, and order changes; 99.5% on-time delivery (if you stop Polaris` production line you have to pay downtime charges); and terms of sales (exports/imports and inventory near customer).
"Polaris` culture is a competitive advantage," Wixo said, "And our suppliers share this passion," Wixo said.
Increasing Asia Outsourcing
In an interview with CENS, Wixo noted that Polaris and Victory expect to boost their procurement from Asia to 40% of the global total over next few years, generating new business opportunities for qualified suppliers in the region.
 | | Wixo urges companies to pay attention to the rapidly developing UTV (side by side) market.
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"Quality and delivery are the prerequisites for Polaris suppliers," Wixo said. "And the former is based on standards. Polaris will only develop business with companies that have these two advantages."
According to Wixo, Polaris procures about 15% of its supplies from Taiwan, including complete ATVs, casting parts, continuous variable transmission (CVT) systems, engine parts, air-filtration items, lightings, wheel rims, and rubber tires. "Polaris` purchases from Taiwan are expected to increase rapidly in the next few years, especially in the areas of engine parts, aluminum-forged key parts (currently supplied by some companies in the U.S.), and lighting, generating a lot of opportunities for companies on the island."
Wixo said that Taiwanese companies have several advantages, such as strong management and more aggressive business approach. "Polaris is more cautious with Chinese suppliers," he said. "Basically, Taiwanese companies do not have many problems and Polaris has a smooth working relationship with their technical staffs already."
"For Polaris, the locations of our suppliers is irrelevant," Wixo said. "What matters is the corporate foundation, including good management, a strategy consistent with ours, and understanding of how to do business with us."
How can companies tap into Polaris` supply chain? Wixo said that the most efficient way is to directly contact him, because Polaris constantly pushes new products every year, and each new model takes about one to two years of development and intensive collaborations with parts suppliers. "Polaris also encourages suppliers to introduce new items that can further strengthen the competitiveness of new products."
Participation in major international powersports trade shows is another way to develop business opportunities with Polaris, Wixo said.
Market Trends
About the market, Wixo suggested that qualified suppliers carefully watch the UTV (side by side) market development, which was slow in the past but now has strong growth momentum. "Polaris is going to push more and more new and competitive UTV products to expand into various higher speed application markets, such as the Ranger Racer.
Wixo also pointed out some ATV market trends. First, he said that the European ATV market is expected to continue growing. Second, he warned that the ATV market is vulnerable to higher gas prices, economic health, climate abnormalities, consumer safety concerns, and emission regulations.
Third, Wixo said, major ATV makers are expected to push special-edition models (often with more luxurious equipment) to lower inventories more quickly and debut new products to expand market share and boost margins.
(by Quincy Liang)
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