In the second part of a series on Monster Moto, see how UPS can help small businesses keep pace with rapid growth.
When minibike and go-kart maker Monster Moto saw skyrocketing product demand, it opened the door for an entirely new set of business opportunities. However, their current processes weren't necessarily equipped to handle the challenges associated with booming growth.
"Whiteboard sessions help a customer better know the unknown. A session like this lets leaders make decisions based on newfound knowledge." – Rayford Collins
When the company started out, it was shipping fully assembled bikes in containers via ocean freight from China to the States after orders were placed. But after 52 percent year-over-year growth in 2015 and a projected 64 percent spike for 2016, Monster Moto wanted more immediate and direct control of product assembly. They needed to find a way to keep up with inbound logistics, inventory and filling orders in a timely way. What's more, rapid growth and the daily demands of business left its two owners, CEO Alexander Keechle and COO Rick Sukkar, little time to focus on the company's long-term strategy.
With the goals of refining supply chain processes and bringing more visibility and oversight to operations, they decided to bring assembly back to the U.S.
"We needed more flexibility and wanted to move faster," says Keechle. "We thought that if we could repurpose here and there, and use that money to assemble our bikes in the U.S., maybe we could create an iconic American brand."
After bringing their business back to Ruston, La., Keechle and Sukkar tapped into UPS's supply chain expertise to help them build a company equipped to assemble products back in the U.S.
Back to the drawing (white) board
Brainstorming through a whiteboard session can be cathartic – especially when sales are flourishing. After teaming with UPS, the business owners and a team of dedicated supply chain experts from UPS sat in a room and literally drew the company's current logistics process on a whiteboard and discussed step by step how the process can be revamped.
A series of those whiteboard sessions with members of the UPS Customer Solutions Group paid off for Monster Moto. Because parts like frames and engines come from various suppliers in China, Monster Moto has been able to save money. Shipping fully assembled bikes was far more expensive than shipping individual parts.
In addition to that major enhancement, the UPS Customer Solutions team recommended other creative solutions. For example, by downloading UPS shipping data and "heat mapping," Monster Moto can now forecast regional inventory needs so that 80 percent of its shipping will be Zone 1, says Sukkar. (UPS® Ground shipping is based on distance, package size and weight, with Zone 1 shipments being roughly 450 miles from point of origin, and the most cost-effective). "The blended cost is dramatically lower compared to shipping one or two units across four zones." As a result, the company ships trailer loads of minibikes across the country, where they are kept in regional hubs until sold locally.
Seeing the bigger supply chain picture
In addition to pinpointing major shipping enhancements, a whiteboard session can help improve transit time and cash flow issues, according to Rayford Collins, member of the UPS Customer Solutions team.
For Monster Moto, the true "aha!" moment occurred when Keechle and Sukkar realized the financial impact the whiteboard session recommendations would have on their business. "You could see their eyes light up and their tone of voice and body language change," Collins says.
"A lot of companies look at inventory carrying cost because it's a large item on their balance sheet, but they'll look past smaller issues that, taken together, can add up to significant savings." He points to transit time as one example. "They may use ocean freight or rail, which seems economical but extends time in transit – and carrying cost."
Another issue is cash flow, a topic especially important to smaller companies in any line of business. When a product is sold, collecting the cash may not happen until the goods are delivered. "A faster transportation mode can have a positive impact on the order-to-cash cycle, boosting cash flow enough to offset the incremental increase in transportation cost," Collins says. He suggests mapping the supply chain and analyzing total cost, including the impact of faster deliveries and the effect that has on accounts receivable.
"Whiteboard sessions help a customer better know the unknown. A session like this lets leaders make decisions based on newfound knowledge," says Collins. He adds that as long as there's a willingness to share the information needed to make solid recommendations, small- or medium-sized companies will benefit from having outside experts review the big picture.
For more on Monster Moto, the whiteboard session and what lies ahead for this growing company, watch this video.