How UPS helps Monster Moto sort out complex logistics issues with its move to Ruston, La.
Alexander Keechle, CEO of Monster Moto, and Rick Sukkar, COO, have parlayed a passion for minibikes, go-karts and the outdoors into one of the fastest-growing powersports companies in the country. Monster Moto leads its category in sales on Amazon, dropships from its own website, and sells through major retailers and dealers from California to the Northeast Corridor.
"That's when I realized there is an entrepreneurial culture rampant in a company like UPS with 400,000 employees." – Alex Keechle, Monster Moto CEO.
"We're really good at making, marketing and servicing minibikes," Keechle says. "But we are not good at supply chain and logistics."
That candor led Keechle to share his vision for the company with Joseph Elenez, the company's UPS account executive, early in 2015.
"Monster Moto wanted to reshore their assembly to the U.S., and I saw that they really needed help in several areas, including inbound logistics, distribution and more cost-effective packaging," says Elenez. "That's when I realized our Customer Solutions team could make a huge impact on their business. I brought in our team and you could say the magic started from there."
Flexibility key to moving faster
Prior to Keechle and Sukkar's meeting with Elenez, Monster Moto's minibikes and go-karts were manufactured in China and shipped fully assembled in containers via ocean freight. Lack of supply chain visibility was a serious issue.
"They would call their brokers but could not get the answers they needed to forecast delivery properly, which is critical to filling orders in a timely way," says Mark Modesti, who led the Customer Solutions team Elenez assembled to help Monster Moto.
Language and time barriers were obvious obstacles to doing business in China – drawbacks that were becoming costlier as the company rapidly increased in scale, speed and size, according to Keechle.
"If you tell our Chinese manufacturer that you want Product A, they will produce 25,000 of them exactly the same," he explains. "But if you tell them you want Product 1.01A, it will require more time to get the process right."
"We grew 75 percent year-over-year in 2014, and we've been on track for the same pace in 2015. So we need flexibility, creativity and innovation. We've got to be able to move faster."
Although Monster Moto will continue to have operations in China, they will be greatly reduced as assembly moves to the United States. Individual materials, as opposed to finished bikes, will be manufactured in China and then assembled here, similar to the auto industry model.
"When you look at the bill of materials and the labor component for assembly, we knew we had the chance to be a real competitor in the market," Keechle says.
But to stay competitive, he says, Monster Moto's logistics and inventory management would need an overhaul.
For example, a single ocean container will hold 219 completed minibikes, according to Keechle. "If they were unassembled and kitted with all engines in one container and frames in another, we can surely surpass 219. If all we achieve is a 50 percent increase to 330 units, our transportation cost will go down."
Of course, inventory management becomes increasingly difficult when dealing with component parts rather than assembled units that can be dropshipped. But Monster Moto benefits from the flexibility to meet market demand. Previously, the company would place orders with its Chinese manufacturer and wait 30 days for the containers to arrive.
"With parts on hand, we can switch things out a lot faster because the inventory is more interchangeable," Keechle says.
In a series of whiteboard sessions with Elenez and the UPS Customer Solutions team, UPS addressed logistics solutions for this new situation: moving parts from China to a new 100,000-square-foot assembly plant in Ruston, La., shipping finished bikes from Ruston to retailers and consumers, and warehousing finished bikes in the U.S.
"It was a real eye-opener for them to find out that UPS could help organize the Asia side, and help get inventory delivered on schedule as they shifted from a finished product model to an assembly model," says Modesti.
Bringing assembly back home
Selecting small-town Ruston for their assembly plant would seem like an odd choice, but the Monster Moto team couldn't be more excited about its potential for growth and development on domestic turf.
When choosing a location, Monster Moto met with officials from Texas, Louisiana, Florida and South Carolina. Louisiana's economic incentives won out. Another driving factor was LED FastStart, a Louisiana Economic Development program that will screen, recruit and train the assembly plant workforce. Nearby Louisiana Tech University also provides an outsourced engineering department and innovative labor pool.
"When Joseph Elenez came to meet us, it was to talk about shipping rates," Keechle says. "But he put his partner hat on and said, ‘I think I can help these guys, and here's how.' That was an Aha! moment for me. I realized that Joseph and Mark and the others on the UPS team were problem solvers who cared about us, and wanted to do the right thing for a small company because it's the right thing to do.
"That's when I realized there is an entrepreneurial culture rampant in a company like UPS with 400,000 employees."
Should your business consider a logistics overhaul? Contact your UPS account manager to see how UPS can help.
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Watch how UPS began helping transform Monster Moto's small-town business into a big-time supply chain.