How BRP mastered supply chain game, stoking record revenue
Piecemeal approach to production a key for powersport vechicle maker
Many companies decided to cut production when supply chains slowed to a crawl around a year ago, but Bombardier Recreational Products Inc. took a different approach, said José Boisjoli, chief executive of the Valcourt, Que.based powersport vehicle manufacturer.
BRP offered its dealers a choice: either the company could reduce production or ramp it up, but with one caveat. The catch was that BRP would ship dealers an incomplete product, missing a part, due to supply chain issues. Once BRP received the missing piece, they would then ship it to dealers, who would retrofit the part at their store.
The dealers chose the latter. “I think this was a very good strategic decision,” Boisjoli said. “This is why we had a good Q2.”
The company announced its highest quarterly revenue ever on Wednesday, at a time that many companies have yet to fully recover from the pandemic, and as a result, are reporting significant losses.
The Ski-doo and Sea-doo maker raised its guidance on Wednesday after reporting a second-quarter profit of $237.7 million and a 28-per-cent increase in sales compared with a year ago, news that sent the company's shares up more than 10 per cent.
“We delivered record second-quarter results while continuing to advance on our strategic initiatives,” Boisjoli said in a statement attached to the company's earnings release.
BRP said its profit amounted to $2.94 per diluted share for the quarter ended July 31 compared with a profit of $212.9 million or $2.46 per diluted share a year earlier.
Revenue reached $2.4 billion, up 28 per cent from a year ago. It was the most revenue the company has ever recorded in a single quarter in its history.
Though not a perfect solution, the decision put product into consumers' hands faster. Retrofitting the part at the factory would have taken much longer, Boisjoli said. The move also helped the company contain the supply shock because it “spread the workload between us and the 3,000 dealers around the world. There (were) a lot more hands to retrofit the vehicles,” he said.
Still, Boisjoli admitted the move was logistically complicated.
“We had to develop the tools. But it's feasible, we're doing it, and we're in good control,” he said.
In August, BRP faced a momentary loss of control when a cyberattack stalled operations for six days. The attack highlighted the ever-present danger faced by companies large and small in a digitized world.
The hack resulted in information on employees and suppliers being leaked onto the dark web, though client information was unaffected, the company said in a press release. BRP further said it would provide credit monitoring services to all of its employees as a “precautionary measure.”
Sai Huda, cybersecurity expert and author of Next Level Cybersecurity: Detect the Signals, Stop the Hack, said larger businesses such as BRP are well-equipped to weather cyberattacks. “The bigger guys have lots of security. They'll survive an attack. They'll get a black eye, lose some money, get some negative publicity, they'll lose some customers, but they're big enough to survive it and move on,” he said.
But it's a different story for small- to medium-sized businesses, which Huda serves with his cybersecurity company Cybercatch Inc. A cyberattack could put SMBS out of business, he said.
“With large organizations, it's more complex, more magnified,” Huda said. “The larger organizations
The larger organizations need more ... in-depth controls because the complexity is greater.
need more ... in-depth controls because the complexity is greater. In other words, you have more people, more endpoints, more locations. You have more data, and it's larger in size.”
The investigation into the BRP cyberattack continues. A spokesperson for the company said there is no further information to share.
BRP resumed operations on Aug. 15 and later reported glowing Q2 results for fiscal year 2023, despite the attack.
Boisjoli attributes the company's success to date to the diversified, “healthy” product line BRP has developed over the course of its 20-year history. Though companies will always hit ups and downs, diversification is the “recipe” that helps keep things stable, he said.
In the meantime, supply chain issues have eased and Asia, a key manufacturer of semiconductors, is opening up following COVID -19 lockdowns.
However, BRP is still paying more for parts in order to keep production moving smoothly, continuing to prioritize business continuity over a perfect product.
“It is the right thing to do,” Boisjoli said.