When children head off for a school field trip or when paramedics respond to a medical emergency, chances are a bus or ambulance from Allied Specialty Vehicles is involved.
ASV consists of 23 brands in the emergency, commercial and recreation segments of the specialty vehicle industry. Although its oldest company, Fleetwood RV, dates back to the 1950s, ASV itself was not formed until 2011. The company is part of American Industrial Partners, a private equity firm that invests in North American industrial businesses.
American Industrial Partners made its first acquisition in the specialty vehicle market in 2006, when it took control of Collins Industries. Over the next several years, American Industrial Partners continued buying up companies until it had a stable of specialty vehicle manufacturers and it made sense to create an overarching management group with ASV.
Between the 23 brands, ASV has 14 manufacturing facilities and 3.9 million square feet of manufacturing space across the United States. The brands include E-One, AEV, Horton Emergency Vehicles, Road Rescue, Leader Emergency Vehicles, Wheeled Coach, McCoy Miller, Marque, Capacity and Laymor. Collins Bus, Champion Bus Inc., Federal Coach, Goshen Coach, ElDorado National, Krystal, Fleetwood RV, Monaco, American Coach, Holiday Rambler and Goldshield Fiberglass are its other brands.
Securing parts and vehicle components for so many different brands requires a strongly coordinated effort, according to Mark Bevan, vice president of supply chain. For the first several years under American Industrial Partners, each brand handled its own procurement using in-house purchasing groups. The subsidiaries did not work together, despite sharing similar components and materials, such as aluminum, bought from the same suppliers.
Bevan joined the company three years ago with the mission to improve the supply chain. “It became clear to us that there was a lot of opportunity for us to look at where we’re buying common things and look at strategically sourcing them,” Bevan says.
The individual brands’ purchasing groups were consumed with making sure parts were stocked and coming in on time, Bevan explains, and did not have time to strategically source and develop the supply chain. To improve the process, ASV needed a separate group that could rethink procurement. Bevan identified the strongest members of the individual procurement groups – people who had existing relationships with suppliers and internal stakeholders and understood the local markets – and brought them together into a new centralized team. Bevan also supplemented the group with external hires with a strong supply chain background.
In creating that centralized team, Bevan sought people who were not only skilled at working with suppliers, but who were also subject matter experts with strong technical acumen. It’s easier to teach an engineer to be a sourcing person than it is for someone in sourcing to learn engineering, Bevan reasons. Half of the 11-person centralized group has engineering degrees and was trained to understand procurement from a technical and commercial viewpoint.
Having that expertise enables the sourcing person to engage productively with engineering teams at the business unit level during the product development phase ensuring that products are designed utilizing strategic suppliers with the best cost base and value proposition, Bevan says.
Now, instead of buying for only one of ASV’s manufacturers, the centralized procurement team is split among specific areas, with individual members concentrating on different commodities such as raw materials, electronics, plastics, moldings or other parts that are used by multiple business units. The centralized team determines which suppliers all brands can buy from and then negotiates prices, which leaves the brands’ procurement groups to focus on the day-to-day management of the supply chain.
In transitioning to the new buying process, ASV has cut its supply base and component costs significantly. By controlling the supply chain from the top, ASV is now able to source parts from low-cost regions such as Mexico and China, and improve its buying power to save money while forging closer relationships with suppliers. “We’ve been able to become a bigger portion of somebody’s top line revenues,” Bevan explains. “In other words a bigger, more important customer to those suppliers.” This delivers better service and lower costs.
In those cases where subsidiaries already had long-standing relationships with vendors in place, ASV still benchmarked suppliers to determine whether the companies were competitive. In some cases, those longtime vendors were not the most cost-effective option and ASV worked to negotiate better prices.
Aside from competitive costs, suppliers must demonstrate the ability to support ASV’s lean practices by offering just-in-time delivery. “We have to select suppliers that are capable of doing that,” Bevan says.
Continue To Change
Now that different brands are sharing suppliers, Bevan says the next goal is to value engineer and reduce the variance in vehicle design. The process could result in more common components between different subsidiaries.
But Bevan says ASV is conscious of not compromising the brands so that each subsidiary can continue to fill the needs of its market and customer base. ASV will still manufacture and design vehicles to the specifications and expectations of our customers. “If we can’t give them what they want and more, someone else will,” Bevan says.
Bevan wants to continue building on the progress he has made in his the first three years with ASV. “The next couple of years will be about being closer to our strategic vendors and working together to improve designs and reduce costs through better productivity throughout the supply chain,” he says.
In the medium term, Bevan believes ASV could conduct an initial public offering. “An efficient, well managed supply base is one element that is attractive to potential investors,” he says.