Purchasing, engineering and suppliers are working more closely together at Polaris Industries.

The buyers, engineers and suppliers are gathering in war rooms at the company's product development centers in Wyoming and Roseau, Minn., to disassemble an engine or an ATV such as the Sportsman 800, review its components and come up with new ways to build the part better, such as substituting alternative materials.

The collaboration isn't limited to the four walls of the war rooms. Those involved in these value analysis/engineering activities (VA/VE) are communicating with their colleagues at other Polaris facilities as well as with suppliers not present at the meeting using state-of- the-art technology tools such as Tandberg See & Share Conferencing software.

The product development centers, which opened in 2005, are built on the idea of centralizing purchasing and improving collaboration with engineering and suppliers. Purchasing professionals sourcing components for the company's ATVs, utility vehicles, Victory motorcycles and snowmobiles are based there.

Purchasing works side-by-side with engineering at the product development centers, which are equipped with the war rooms, laboratories and state-of-the-art testing capabilities. The facility in Wyoming also has more than 600 acres of secluded trails for test driving the vehicles. There are about 200 purchasing and engineering professionals working there.

Some suppliers (of engines, engine controls, wire harnesses, fasteners) are onsite at the facilities, and there may be more within the year. There are work areas in the building set aside specifically for suppliers visiting the facilities where they can easily access the Internet.

“Collaboration is a broad term that's used a lot,” says Rich Kobes, senior director of purchasing. “Ultimately what we're trying to do is work more in tandem with the product groups, with engineering, and with suppliers looking at how we can improve the products we build, with an eye toward part communization, value enhancement and better commodity management.”

Jeff Wolf, an engineer and program leader for the company's Victory motorcycle line, works with purchasing on both new product and VA/VE teams at the facility in Wyoming and can attest to this. “We're having upfront discussions with purchasing and suppliers in which they offer suggestions on ways to make parts more effective. They are affecting product design as much as we are.”

Until the opening of the product development centers, purchasing at Polaris was mainly organized along product groups. Purchasers were sourcing components for each of the company's divisions: ATV, utility vehicles, Victory motorcycle and snowmobiles. The groups found it challenging to coordinate strategy and leverage the company's purchasing power.

Since then, Kobes, who assumed his current post two years ago, has taken steps to make purchasing more strategic. Working under a corporate directive to reduce costs by 5% through productivity improvements called “drive for five”, he's reorganized purchasing based upon commodity management groups.

The company's biggest commodity or category groups include engines, transmissions and electrical/electronics. Its annual spend is $1 billion.

Another step to make purchasing more strategic: Polaris just opened a sourcing office in Shanghai. Already purchasing is managing some suppliers in Europe that provide components for vehicles built for use there.

The newly formed commodity teams are organized along such categories of spending as castings/machinings, drive trains, electrical, electronics, engines, and plastics/composites. The teams, which are cross functional, consist of a core group of purchasing professionals: a purchasing manager and Polaris Product Development (PDP) lead who works closely with engineering and suppliers. Usually a seasoned purchasing or engineering professional, the PDP has extensive experience with the commodity.

“He or she is the voice of purchasing in engineering,” says Dave Schneider, director UTV purchasing. The core groups pull in individuals from other functions such as manufacturing and quality when they're needed.

“The PDP lead comes to our engineering meetings and participates in all our discussions,” says Wolf, the Victory motorcycle program leader. In this case, the PDP lead is Mark McGeary. “Because he has a purchasing background and understands the market, he can take what we are looking for and hook us up with the best supplier in our supply chain,” says Wolf.

Commodity teams evaluate suppliers, perform market and industry analysis, formulate strategy and select an optimum number of suppliers for the category, developing a preferred supplier list.

The team selects suppliers based on such criteria as capability, capacity, financial stability, and “strategic fit” with Polaris. “Our intent is for the supply base to be the company's, not solely purchasing's,” says Dave Dickirson, director of powertrain purchasing. The preferred supplier list is posted on the purchasing operation's intranet site, Procurement Net.

In addition to the preferred supplier list, the company's business practices and purchasing policies are posted on the site, which was developed internally. On the site, there's also access to e-commerce, planning supplement (order release), part qualification request (PQR, which is similar to the auto industry's product part approval process or PPAP), request for quotation (RFQ), Strategies Toward Annual Reduction (STAR) program, and other purchasing systems.

In keeping with purchasing's moves to become more strategic, Polaris is entering into more long-term agreements and is working to consolidate spending with fewer suppliers. Ultimately the number of suppliers doing business within commodity groups depends upon strategy developed by the commodity teams. In its agreements, the company asks that suppliers routinely help with quality and cost improvements.

To consolidate spending, the commodity teams look to engineering for input on ways to standardize on some components that the company buys for the vehicles its builds.

Polaris Industries has centralized purchasing at its product development centers in Wyoming and Roseau, Minn. At the facilities, which are equipped with state-of-the-art test capabilities (above), purchasing is collaborating with engineering and suppliers on product development teams and VA/VE projects.

For their part, suppliers submit ideas to reduce costs through the STAR program on a password-protected Internet site. The purchasing operation uses data generated by the program as the basis for a cost reduction metric that tracks supplier performance. Other supplier performance metrics are: quality, delivery and business practice measures. The evaluation uses a 4.0 grade scale and is updated monthly. Based on the score, purchasing recognizes top performing suppliers at an annual supplier conference held in February, where CEO Thomas T. Tiller and general managers of each of the product groups outline strategy for the coming year for 100 of the company's suppliers. This year, purchasing will present excellence awards to nine suppliers.

In addition to working on value analysis/engineering projects and commodity teams, purchasing also collaborates with its colleagues in engineering and manufacturing on new product development activities through the Polaris Development Process (PDP).

“Some of the most successful projects we've participated in are the result of combined input from manufacturing, purchasing and engineering,” says Kobes. “It's truly a team effort. We're all under the same drive- for-five directive to reduce cost through productivity improvements which guides similar behavior patterns within the organization. That makes a world of difference.”

PDP is similar to the auto industry's advanced quality planning process and consists of several phases. It's a process used and ingrained throughout the entire company.

PDP works like this: At phase one, employees submit ideas on the company's PDP intranet site. These can be suggestions on ways to reduce cost or build an entirely new vehicle. Oftentimes, purchasing and suppliers get involved at this early phase. Everyone involved in the process has assigned tasks to complete at each phase.

The process has a series of gates that indicate benchmarks. Once the idea which needs to be thoroughly researched gets through the gate at phase one, engineers develop a prototype.

Within PDP, there are different levels of projects. The first may be something relatively simple as a few cost-reduction ideas put together. The second, medium-sized project maybe involves a facelift or implementation of new technology. The third level, or large project, could be a new engine or vehicle.

Phase three is production tooling and is perhaps the most purchasing intensive. Phase four is product launch. Phase five is post-mortem or final evaluation of the project's success.

Now, two years after moving into the product development center, it goes without saying that purchasing truly is a member of the Polaris product teams.