Founded in 1954 with the invention of the snow mobile, Polaris is a leader in the powersports industry. In its first year of using aPriori real-time product cost management (PCM) software and services, Polaris saved more than $800,000 (£500,000) on product costs and identified cost avoidance savings of several million dollars. Over the three years, Polaris has reduced its annual tooling costs by 50 per cent, and introduced 50 new product initiatives per year using aPriori technology to meet cost targets
With a global business HQ in Minneapolis, Minnesota, the company has grown from the first snow mobile it developed to offer many different products. It now designs, engineers, manufactures and markets innovative, high quality off-road vehicles (ORVs), including all-terrain vehicles (ATVs), side-by-side vehicles, snowmobiles, motorcycles, on-road electric/hybrid powered vehicles, accessories and parts. With 2,500 dealers, the company produces annual revenues exceeding $2 billion, with annual 2011 sales of $2.7 billion.
Dave Longren, VP and chief technology officer at Polaris says: “The business challenges that we face as a company are related to innovation, and making sure that we’ve got the right features, benefits and costs to be able to support our customers. Before we started using aPriori, visibility of cost was basically non-existent. We needed to get visibility of our cost earlier in the design cycle so that we could make the right trade-offs with regard to features, benefits and part costs to allow us to get to the cost targets that we needed to get to, and to hit the right value proposition.”
Polaris is looking to grow all the time, with a high volume of new products always in the pipeline. It makes Polaris a very exciting place to work, but this level of innovation also presents some interesting challenges.
Chris Hurd, project engineer for Polaris explains: “Cost, historically, is something very difficult to work with, and you have a number of different aspects to consider. For example, the supply of costing, and the need to factor in the cost of engineering and design, are very difficult to work with because it is all so dynamic. Commodities change price, designs alter, so historically it was very difficult for us to tie those two elements together.”
Another issue Polaris faced was timing. Working with suppliers is a process with many variables. One supplier may have a simple process and be able to turn around costs from designs in just two weeks. But other part costs might take up to six or nine months to develop. Clearly it is also practically impossible to predict or program future commodity costs. For example, if commodity prices rise or sourcing strategies have to change, what then happens to Polaris’s costs and sourcing strategy? If volume assumptions have to be changed based on business cases, how will costs be affected?
Longren explains how the company had attempted to meet these challenges before adopting aPriori: “We had used a cost tool in the past. It was very complex software that we had one person running, and quite frankly they didn’t run it very well. It was very hard and we never got the benefits. So we knew that it was really important for us to have something that the technical teams could understand, integrate with our software and use to see real-time results.”
When Polaris first came across aPriori following its earlier experiences with cost tools, it understandably had some concerns. How much time would it take to use it? Would it be difficult to use? However once Polaris got used to aPriori’s approach, it found out that it was really very easy and intuitive. One of the immediate benefits that the company experienced was the ability to get real-time numbers when working on analysis. Polaris teams could make design changes in real-time and have a good understanding of what they could expect costs to be before going to suppliers, allowing cycle times to be reduced.
Hurd says: “It was like magic going on in the background. The software figures out what’s going on, so it’s looking at part weights, volumes, geometries – and it’s able to find out the cost of products in a matter of seconds or minutes.”
aPriori software now allows Polaris to analyse the unit costs, sensitivity to volumes and sensitivity to different manufacturing processes that impact either unit costs or tooling costs, so that its teams are able to understand the total cost of developing products for individual markets. aPriori has also fitted in well with the overall business values of Polaris. The manufacturer’s culture is about openness and innovation, encouraging free-flowing thinking. It didn’t want bureaucratic systems, and instead needed to give its teams the freedom and ability to invent.
With aPriori, it now has a seamless tool that works with a range of differently skilled teams, enabling Polaris to change its engineering culture to be cost sensitive and driven by innovation.
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