Executive Brief for Polaris Industries Inc.

Executive Brief for Polaris Industries Inc.

With increasing pressure as American economic slowdown, Polaris industries consider to redesign to its supply chain in order to cut cost. One key decision they need to make is whether to locate its new plant in Mexico or China, or stick with inshoring. After deep consideration, I would recommend Polaris open their new plant in Mexico.

After two to three years, near-shoring will be showing cheapest cost. Mexico have similar advantage with China, which is skilled low cost labor. The wage growth rate of Mexico is more stable. However, Mexico as a new location can contribute to lower cost due to shorter distance. The biggest market of Side-by-Sides is southern United States. Compared to China as a new location, with manufacturing in Mexico, Polaris pay less on transportation and not need to pay any tariff due to NAFTA; Most importantly, a shorter and stable lead time as Mexico next to United stated. Moreover, controlling and communication will be easier due to cultural familiarity.

However, there are also some risks associated with near shoring. In practice, trucking companies show a variation on transportation. Collaboration could be lagging between manager and design engineers and technical staff. It may hurt the image and strong culture of “made in United States”. Laying off employees show lacking of social responsibility.