I don't know how many professional purchasing guys we have on this board, but it is extremely doubtful that 100% of the parts we may need will be available for 10 years. Why?
Because there is a minimum quantity on each line item in order to "make a run" of that particular part. For example, if you want one particular spring made, it would cost $2,000 to set up the tooling, dial in the program, make some test runs, check the parts, then begin make the run. In this case you can buy one spring for $2,000 or 3000 of them for $2300. That's how it works. Same thing with setting up molds, form tools, etc to drop hammer sheet metal, run injection molded parts, set up machining centers etc.
Even if Polaris "makes" the part in house, they still have to buy the raw materials and the same issue applies to those materials.
Now lets move on to inventory management, and money. If Victory is selling 100ea of XYZ part per year and they run out in year #8, are they going to buy/make another batch? Well, if the minimum run is 100 pieces, sure, but if it's 5,000 pieces, what do you thing they're going to do? Do you really think they will purchase 5,000 pieces when they know they can only sell 200 of them in the next 2 years? Of course not.
As we get closer to year #10 there will be more and more parts dropped due to insufficient demand to cover the minimum economical run.....and those parts where they only sell a few per year?....those will be toast shortly.
Tony
Because there is a minimum quantity on each line item in order to "make a run" of that particular part. For example, if you want one particular spring made, it would cost $2,000 to set up the tooling, dial in the program, make some test runs, check the parts, then begin make the run. In this case you can buy one spring for $2,000 or 3000 of them for $2300. That's how it works. Same thing with setting up molds, form tools, etc to drop hammer sheet metal, run injection molded parts, set up machining centers etc.
Even if Polaris "makes" the part in house, they still have to buy the raw materials and the same issue applies to those materials.
Now lets move on to inventory management, and money. If Victory is selling 100ea of XYZ part per year and they run out in year #8, are they going to buy/make another batch? Well, if the minimum run is 100 pieces, sure, but if it's 5,000 pieces, what do you thing they're going to do? Do you really think they will purchase 5,000 pieces when they know they can only sell 200 of them in the next 2 years? Of course not.
As we get closer to year #10 there will be more and more parts dropped due to insufficient demand to cover the minimum economical run.....and those parts where they only sell a few per year?....those will be toast shortly.
Tony
