Polaris 2013 Annual Report Download - page 31

Contract carriers ship our products from our manufacturing and distribution facilities to our customers. We
maintain several leased wholegoods distribution centers where final setup and up-fitting is completed for
certain models before shipment to customers.
We maintain sales and administration facilities in Medina and Plymouth, Minnesota; Rigby, Idaho; Winnipeg,
Canada; Derrimut, Australia; Shanghai, China; Rolle, Switzerland; S˜ ao Paulo, Brazil; New Delhi, India; and in
most Western European countries. Our primary North American dealer PG&A distribution facilities are in
Vermillion, South Dakota, Wilmington, Ohio, and Rigby, Idaho. We have various other locations around the
world that distribute PG&A to our international dealers and distributors.
Production Scheduling
We produce and deliver our products throughout the year based on dealer, distributor and customer orders.
Beginning in 2008, we began testing a new dealer ordering process called Maximum Velocity Program (MVP),
where ORV orders are placed in approximately two-week intervals for the high volume dealers driven by retail
sales trends at the individual dealership. Smaller dealers utilize a similar MVP process, but on a less frequent
ordering cycle. Effective in 2010, the MVP process was being utilized by all North American ORV dealers.
For MVP dealers, ORV retail sales activity at the dealer level drives orders which are incorporated into each
product’s production scheduling. International distributor ORV orders are taken throughout the year. Orders
for each year’s production of snowmobiles are placed by the dealers and distributors in the spring. Non-
refundable deposits made by consumers to dealers in the spring for pre-ordered snowmobiles assist in
production planning. In 2012, we began utilizing our Retail Flow Management (RFM) ordering system for
Victory motorcycles, and now also use it as the ordering system for Indian motorcycles. The RFM system
allows dealers to order daily, create a segment stocking order, and eventually reduce order fulfillment times to
what we expect will be less than 18 days. Prior to RFM, Victory motorcycle dealers would place annual orders
in the summer. For non-MVP and RFM dealers and products, units are built to order each year, subject to
fluctuations in market conditions and supplier lead times. The anticipated volume of units to be produced is
substantially committed to by dealers and distributors prior to production.
Manufacture of snowmobiles commences in late winter of the previous season and continues through late
autumn or early winter of the current season. We manufacture ORVs, motorcycles and SV’s year round. We
have the ability to mix production of the various products on the existing manufacturing lines as demand
dictates.
Sales and Marketing
Our products are sold through a network of approximately 1,750 independent dealers in North America,
through 22 subsidiaries and approximately 85 distributors in over 100 countries outside of North America.
We sell our snowmobiles directly to dealers in the snowbelt regions of the United States and Canada. Many
dealers and distributors of our snowmobiles also distribute our ORVs. At the end of 2013, approximately 750
Polaris dealers were located in areas of the United States where snowmobiles are not regularly sold. Unlike
our primary competitors, which market their ORV products principally through their affiliated motorcycle
dealers, we also sell our ORVs through lawn and garden and farm implement dealers.
With the exception of France, the United Kingdom, Sweden, Norway, Australia, New Zealand, Germany,
Spain, China, India and Brazil, sales of our non-SV products in Europe and other offshore markets are
handled through independent distributors. In 2011 through 2013, we acquired GEM, Goupil and Aixam in the
SV division and Klim in the PG&A division, which each have their own dealer/distributor relationships
established. See Notes 1 and 12 of Notes to Consolidated Financial Statements for further discussion of
international operations.
Victory and Indian motorcycles are distributed directly through independently owned dealers and distributors,
except in Australia where we have three Company-owned retail stores. We have a high quality dealer network
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