Various Technique Adopted By Harley Davidson Management Essay

In this study, an overview of the assorted technique adopted by Harley Davidson to salvage the company from traveling out of concern despite holding a big market portion at the start of the seventies. Pull offing the supply concatenation was non a precedence of the parent company AMF which was more concerned about increasing productiveness to gain more net income. This attack nevertheless backfired ensuing in quality jobs of their bikes and AMF seting Harley Davidson up for sale. The early 80s recession could non hold arrived at a worse clip for the company thereby doing their market portion to cut down significantly, and ensuing in deficiency of purchasers willing to purchase a capital intensive company.

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These occurrences nevertheless, put Harley Davidson on the route to Just In Time ( JIT ) , and Supply Chain Management.

This study provides the penetration on Harley Davidson recognizing the demand to get down all over, assorted issues they encountered and the stairss taken to battle these issues.

The cardinal focal point is the acceptance of supply concatenation direction which can be seen as a key to a fabricating company ‘s endurance. As can be seen in the Harley Davidson instance survey, organisations now have to be involved with the provider base in order to increase productiveness, set up quality and to acquire a high Tax return On Capital Employed ( ROCE ) .

1.0 Introduction

Competitive advantage is the ground for most of the concern determinations made in the universe today. Globalization is one of the major causes for these developments in the universe of concern and organisations are progressively under force per unit area to remain competitory. Harley Davidson had to look inward to invent a scheme to remain in concern. They had to look at ways to better their procedure before they introduced it to their providers. A theoretical expression at some of the procedures they had to look into to remain in the game.

Production Agendas: The demand for production agenda is to extinguish fabricating a merchandise before it is required ( overrun ) . It is more of a production program. A statement of what is to be made, of what measure and when to be made. Production agendas should see the capacity of the production works and the demands placed on the organisation ‘s providers ( Harold Kerzner2009 ) .

Inventory Turns: Inventory is like binding hard currency down. Companies want to rapidly turn over extra stock list into gross revenues. The faster stock list turns over, the less money the organisation have tied up in stock list.

Inventory Turnover = Sales/Average Inventories. ( Tom Gorman 2003 )

Set-up Decrease: Focus in fabrication has drifted from maximising use of machine to looking for ways to cut down cost of stock list, addition quality, and client satisfaction. As was the instance in the Harley Davidson picture, batch size had to be reduced to efficaciously cut down put up clip. To expeditiously accomplish set up decrease, internal clip ( when machine is switched off ) has to be converted to external clip ( when machine is bring forthing ) . ( Southey P 2010 )

Merely In Time: Although Mr Kiichiro Toyoda invented Just In Time, it was Mr Taiichi Ohno that is responsible for its creative activity as is known today in the Toyota System. Merely In Time is the supply to each procedure what is needed, when it is needed and the measure it is needed ( David John Lu, Nihon Noritsu Kyokai 1989 ) .

Supply Chain Management: Involves the coordination of all the component ( physical, information and fiscal ) involved in the procedure of traveling goods from provider to maker to wholesaler to retailer to consumer and sometimes back once more in the instance of returns. The end of an efficient is the riddance of uncertainnesss in the supply concatenation, stock list decrease, quality merchandise, cut downing return instances and above all, doing net income for its organisation. ( www.supplychainmanagement.com ) .

2.0 MAIN BODY

Brief History of Harley Davidson

Harley Davidson, a fabrication company specialising in the production of bikes was founded in 1903. During the late 1960ss, the entries of Nipponese into the industry, prompted the company to sought hard currency to overhaul and diversify. American Machine and Foundry ( AMF ) whose chief assets were in industry of industrial merchandises, such as baccy processing and banking equipment, in an attempt to diversify its portfolio acquired Harley Davidson. At clip of purchase, all Harley ‘s operations were in Milwaukee, Wisconsin. After purchase, AMF started spread outing to New York and Pennsylvania. Their bikes production increased and quality farther suffered because motorcycles were been assembled in Pennsylvania by people who knew nil about motorcycles. This caused clash between Milwaukee-based employee who felt a sense of non belonging and their opposite numbers in York Pennsylvania. AMF started losing religion in Harley despite the big extract of capital into Harley, the bike subordinate was non reacting. Nipponese conquering of high-end bikes continued. At this junction, AMF decided to set Harley up for sale ( Rich Teelink, Lee Ozley 2000 ) .

Overview of the Harley Davidson instance survey picture

Quality was a major issue and it had truly suffered and was out of control. Check point was put right before assembly line to inspect parts to be assembled. This was put to battle these quality jobs. Rightly so, it was damaging because at that point, the portion to be assembled had already be manufactured.

Vaugn Beals convinced AMF to sell Harley, which he and some associates subsequently bought. Despite the big debts he incurred, he believed he can turn the company about and do it competitory once more. The chief country of focal point were:

Production Scheduling: Firm and realistic production agenda was established so as to non overproduce. They besides opted for Just In Time ( JIT ) as against Manufacturing Resources Planning ( MRP ) , Optimized Production Technology ( OPT ) as method of agenda usage.

Some advantages of JIT

Properties

MRP

JIT

OPT

Decrease of stock lists

Medium

Good

Good

Focus on cut downing apparatus

Poor

Good

Medium

Focus on improve Quality

Poor

Good

Medium

Dependences

MRP

JIT

OPT

Very good consistent subject

Yes

Yes

No

Even and Consistent sum flow

No

Yes

No

Workers responsible for Production

No

Yes

Yes

Integrated Production and Engineering database

Yes

No

Yes

Southey P ( 2010 )

Inventory Turns: Harley Davidson ‘s fabrication people so took a expression at the stock list bends and found farther room for betterments. This is the cardinal index and measuring of stock list efficiency. They set a end of 12 bend per twelvemonth which remained changeless due to their deficiency of belief that concern can run without a big stock list. Ultimately, their stock list stock reduced from $ 24million to about $ 4million in a twosome of old ages after they discovered they could run without a big stock list.

Setup Time Reduction: Large batch sizes hide jobs and thereby take to low quality. This requires a batch of disposal to maintain path and hence cut down flexibleness ( Southey P 2010 ) . Decrease of batch sizes by Harley Davidson was a step to cut down cost and respond to client orders. Ultimately this led to cut down apparatus clip.

THESE 3 MAJOR FOCUS AREA, PUT HARLEY DAVIDSON ON THE ROAD TO JIT AND SUPPLY CHAIN MANAGEMENT

JUST-IN-TIME Fabrication: MAN ( MATERIALS AS NEEDED )

Focus shifted from a -PUSH-system ( production and expectancy of demand ) to a -PULL-system ( reacting to orders )

Statistical Operator Control: Involving the operator in the measuring and recording of informations so that this information can be used to do his procedure better.

Employee Engagement: Doug Tearney Final Inspector Harley Davidson feels every transmittal, engine built that goes on a Harley Davidson is like it is traveling on his bike. Involving employees in quality circles re-enforce their committedness to quality.

Supply CHAIN MANAGEMENT

With major alterations underway at Harley Davidson at this point, they decided to take their thoughts out to their providers. Suppliers were disbelieving on the acceptance of JIT. They felt it worked for Harley Davidson because they were doing motor rhythms. They did n’t believe it could work for them because they service different types of client. Customers that responded did so halfheartedly maintaining a JIT warehouse. The issue with this is that if there is quality job, there would be a JIT warehouse full of quality job.

Harley Davidson trimmed its supply base and ensured public presentation demand. It made certain providers providing for Harley Davidson produced in JIT mode, guarantee Statistical Operator Control and Employee Involvement. To guarantee its providers produced JIT, advanced programming was given to its providers to extinguish stock lists.

Benefits

Company

Improvements ACHIEVED

HOW IT WAS DONE

KSG ( piston maker )

From 2months stock list to day-to-day demand

Progress Scheduling from Harley Davidson

Helps in other parts that portion equipment

Cell creative activity

Less operators, less infinite needed, decrease in clip

Adoption of JIT

ULTRATOOLS

Decrease of parts motion to specific country and tool incorporation

Dedication of full cell to Harley Davidson

Lower production cost

Harley Davidson assisting in bettering their procedure

Harley Davidson

Increased productiveness, Re-established quality repute, High return on capital employed

JIT, Supply Chain Management

Although this type of JIT favours nearby providers, big providers with capital backup and more R & A ; D are frequently preferred as the instance was in Harley Davidson.

3.0 Discussion

In order to vie efficaciously in the planetary market, an organisation must hold a web of competent providers. In making and keeping such a web, and to better assorted capablenesss that are necessary for the purchasing organisation to run into its increasing competitory challenges, battle in provider development by the purchasing houses may be necessary ( Chidambaranathan, S, Muralidharan, C. Deshmukh, S, 2009 ) . Supply development can be thought of as a concern policy adopted by an organisation serious about quality. The organisation has to be committed to accomplishing internal quality criterions ( as seen in the Harley Davidson picture ) which meet the demands of its client, and to back up its providers in enabling them to run into those same demands ( John Beckford 2002 ) . Supplier development requires fiscal and human resource investings by both the organisation and provider, preparation of provider ‘s forces, puting in provider ‘s operations and ongoing public presentation appraisal ( Joel D Wisner, Keah-Choon Tan, G Keong Leong 2009 ) .

Aim of Customer and Supplier in this integrating

Customer

Supplier

Decrease in cost of industry

Decrease in cost of supply

Increased productiveness

Decrease in figure operators

Drastic bead in guarantee cost

Reduced infinite

Quality confidence

Less Inventory

Customer Satisfaction

Customer Satisfaction

Trust

Job Security

High Return on Capital Employed

High Return on Capital Employed

Role of Leadership: Organization leaders play a really of import function in the public presentation of its company. Leaderships need to understand the importance of working together with their providers to develop co-operative civilization alternatively of a competitory 1. Promotion of unfastened, constructive treatment of diverse positions and combination of the best thoughts to do a high quality determination. Suppliers would be willing to lend their best to function a company they have a sense of belonging ( Wong Alfred 2001 ) .

Performance Prosodies: Inventory bends were used to mensurate their public presentation. Their fit end of 12turns per twelvemonth started lifting when Harley Davidson realized there was no demand to maintain a big stock list. Copacino ( 2003 ) states how major companies like Dell which operates 64 to 100 stock list bends besides use it to mensurate their public presentation. Return on Capital Employed can besides be used to mensurate public presentation. ROCE = Profit/Capital employed.

4.0 Decision

The primary ground for a company ‘s being is to do net incomes. In these really competitory markets, companies now have to be universe category client so as to guarantee there is no hinderance in their production procedure. Need for pull offing their supply concatenation is really of import to guarantee JIT and client satisfaction. To decently pull off their supply concatenation, Internal success has to be gotten before thoughts can be taken to providers. ( Harley Davidson ) . For organisations to decently pull off their supply concatenation, they have to follow some rudimentss stairss highlighted below:

Optimizing supply base

Understanding Capabilities of their providers

Achieve procedure betterment to cut down cost

Sharing information like long term agendas and awaited new merchandise debut

Sole sourcing

Continually benchmarking provider

Bing a universe category client

Continual Improvement

Future TREND: Chris Eckert and Brian Hughes ( 2010 ) negotiations about work outing the supply concatenation jobs proactively utilizing a solution direction system ( SMS ) built on an adaptable root cause analysis plan. Using failures in present supply concatenation to minimise future failures. ( Extra Research Needed ) .

Mentions

Chidambaranathan, S, Muralidharan, C. Deshmukh, S, ( 2009 ) International Journal of Advanced Manufacturing TechnologyyDec2009, Vol. 43 Issue 11/12, p1081-1093.

Chris Eckert and Brian Hughes ( 2010 ) Industrial Engineer: IE Feb2010, Vol.42 Issue 2, p38-43, 6p

Copacino ( 2003 ) Harvard Business Review ; Jul2003, Vol. 81 Issue 7, p64-73, 10p, 10 biological warfare

David John Lu, Nihon Noritsu Kyokai ( 1989 ) . Kanban just-in-time at Toyota: direction begins at the workplace.rev.ed. pp. 65-66.

Harley Davidson- Pull offing the Supply Chain instance survey picture

Harold Kerzner ( 2009 ) Undertaking Management: A Systems Approach to Planning, Scheduling, and Controlling.10ed. pp. 458.

Joel D Wisner, Keah-Choon Tan, G Keong Leong ( 2009 ) Principles of Supply Chain Management.2ed. pp.91.

John Beckford ( 2002 ) Quality.2ed.pp.245

Rich Teelink, Lee Ozley ( 2000 ) More than a Motorcycle: the leading journey at Harley-Davidson. pp.6-8.

Southey P. ( 2010 ) Supply Chain Management Lecture Notes. Sec2.pp.30,79.

Tom Gorman ( 2003 ) The Complete imbecile ‘s usher to MBA basics.2ed.pp.173.

Wong Alfred ( 2001 ) Total Quality Management, VOL. 12, NO. 7 & A ; 8, 2001, 913- 919

www.supplychainmanagement.com

List of plagiaristic paperss

A A A A

0 %

hypertext transfer protocol: //pib.nic.in/archieve/lreleng/lyr2000/rfeb2000/r02022000.html

Master papers text

Table of Contentss

Executive SUMMARY2

1.0 INTRODUCTION3

2.0. MAIN BODY4

3.0. DISCUSSION7

4.0 CONCLUSION8

Mentions… … … … … … … … … … … … … … … … … 9

1997 WORDS

Executive Summary

In this study, an overview of the assorted technique adopted by Harley Davidson to salvage the company from traveling out of concern despite holding a big market portion at the start of the seventies. Pull offing the supply concatenation was non a precedence of the parent company AMF which was more concerned about increasing productiveness to gain more net income. This attack nevertheless backfired ensuing in quality jobs of their bikes and AMF seting Harley Davidson up for sale. The early 80s recession could non hold arrived at a worse clip for the company thereby doing their market portion to cut down significantly, and ensuing in deficiency of purchasers willing to purchase a capital intensive company.

These occurrences nevertheless, put Harley Davidson on the route to Just In Time ( JIT ) , and Supply Chain Management.

This study provides the penetration on Harley Davidson recognizing the demand to get down all over, assorted issues they encountered and the stairss taken to battle these issues.

The cardinal focal point is the acceptance of supply concatenation direction which can be seen as a key to a fabricating company ‘s endurance. As can be seen in the Harley Davidson instance survey, organisations now have to be involved with the provider base in order to increase productiveness, set up quality and to acquire a high Tax return On Capital Employed ( ROCE ) .

1.0 Introduction

Competitive advantage is the ground for most of the concern determinations made in the universe today. Globalization is one of the major causes for these developments in the universe of concern and organisations are progressively under force per unit area to remain competitory. Harley Davidson had to look inward to invent a scheme to remain in concern. They had to look at ways to better their procedure before they introduced it to their providers. A theoretical expression at some of the procedures they had to look into to remain in the game.

Production Agendas: The demand for production agenda is to extinguish fabricating a merchandise before it is required ( overrun ) . It is more of a production program. A statement of what is to be made, of what measure and when to be made. Production agendas should see the capacity of the production works and the demands placed on the organisation ‘s providers ( Harold Kerzner2009 ) .

Inventory Turns: Inventory is like binding hard currency down. Companies want to rapidly turn over extra stock list into gross revenues. The faster stock list turns over, the less money the organisation have tied up in stock list.

Inventory Turnover = Sales/Average Inventories. ( Tom Gorman 2003 )

Set-up Decrease: Focus in fabrication has drifted from maximising use of machine to looking for ways to cut down cost of stock list, addition quality, and client satisfaction. As was the instance in the Harley Davidson picture, batch size had to be reduced to efficaciously cut down put up clip. To expeditiously accomplish set up decrease, internal clip ( when machine is switched off ) has to be converted to external clip ( when machine is bring forthing ) . ( Southey P 2010 )

Merely In Time: Although Mr Kiichiro Toyoda invented Just In Time, it was Mr Taiichi Ohno that is responsible for its creative activity as is known today in the Toyota System. Merely In Time is the supply to each procedure what is needed, when it is needed and the measure it is needed ( David John Lu, Nihon Noritsu Kyokai 1989 ) .

Supply Chain Management: Involves the coordination of all the component ( physical, information and fiscal ) involved in the procedure of traveling goods from provider to maker to wholesaler to retailer to consumer and sometimes back once more in the instance of returns. The end of an efficient is the riddance of uncertainnesss in the supply concatenation, stock list decrease, quality merchandise, cut downing return instances and above all, doing net income for its organisation. ( www.supplychainmanagement.com ) .

2.0 MAIN BODY

Brief History of Harley Davidson

Harley Davidson, a fabrication company specialising in the production of bikes was founded in 1903. During the late 1960ss, the entries of Nipponese into the industry, prompted the company to sought hard currency to overhaul and diversify. American Machine and Foundry ( AMF ) whose chief assets were in industry of industrial merchandises, such as baccy processing and banking equipment, in an attempt to diversify its portfolio acquired Harley Davidson. At clip of purchase, all Harley ‘s operations were in Milwaukee, Wisconsin. After purchase, AMF started spread outing to New York and Pennsylvania. Their bikes production increased and quality farther suffered because motorcycles were been assembled in Pennsylvania by people who knew nil about motorcycles. This caused clash between Milwaukee-based employee who felt a sense of non belonging and their opposite numbers in York Pennsylvania. AMF started losing religion in Harley despite the big extract of capital into Harley, the bike subordinate was non reacting. Nipponese conquering of high-end bikes continued. At this junction, AMF decided to set Harley up for sale ( Rich Teelink, Lee Ozley 2000 ) .

Overview of the Harley Davidson instance survey picture

Quality was a major issue and it had truly suffered and was out of control. Check point was put right before assembly line to inspect parts to be assembled. This was put to battle these quality jobs. Rightly so, it was damaging because at that point, the portion to be assembled had already be manufactured.

Vaugn Beals convinced AMF to sell Harley, which he and some associates subsequently bought. Despite the big debts he incurred, he believed he can turn the company about and do it competitory once more. The chief country of focal point were:

Production Scheduling: Firm and realistic production agenda was established so as to non overproduce. They besides opted for Just In Time ( JIT ) as against Manufacturing Resources Planning ( MRP ) , Optimized Production Technology ( OPT ) as method of agenda usage.

Some advantages of JIT

Properties

MRP

JIT

OPT

Decrease of stock lists

Medium

Good

Good

Focus on cut downing apparatus

Poor

Good

Medium

Focus on improve Quality

Poor

Good

Medium

Dependences

MRP

JIT

OPT

Very good consistent subject

Yes

Yes

No

Even and Consistent sum flow

No

Yes

No

Workers responsible for Production

No

Yes

Yes

Integrated Production and Engineering database

Yes

No

Yes

Southey P ( 2010 )

Inventory Turns: Harley Davidson ‘s fabrication people so took a expression at the stock list bends and found farther room for betterments. This is the cardinal index and measuring of stock list efficiency. They set a end of 12 bend per twelvemonth which remained changeless due to their deficiency of belief that concern can run without a big stock list. Ultimately, their stock list stock reduced from $ 24million to about $ 4million in a twosome of old ages after they discovered they could run without a big stock list.

Setup Time Reduction: Large batch sizes hide jobs and thereby take to low quality. This requires a batch of disposal to maintain path and hence cut down flexibleness ( Southey P 2010 ) . Decrease of batch sizes by Harley Davidson was a step to cut down cost and respond to client orders. Ultimately this led to cut down apparatus clip.

THESE 3 MAJOR FOCUS AREA, PUT HARLEY DAVIDSON ON THE ROAD TO JIT AND SUPPLY CHAIN MANAGEMENT

JUST-IN-TIME Fabrication: MAN ( MATERIALS AS NEEDED )

Focus shifted from a -PUSH-system ( production and expectancy of demand ) to a -PULL-system ( reacting to orders )

Statistical Operator Control: Involving the operator in the measuring and recording of informations so that this information can be used to do his procedure better.

Employee Engagement: Doug Tearney Final Inspector Harley Davidson feels every transmittal, engine built that goes on a Harley Davidson is like it is traveling on his bike. Involving employees in quality circles re-enforce their committedness to quality.

Supply CHAIN MANAGEMENT

With major alterations underway at Harley Davidson at this point, they decided to take their thoughts out to their providers. Suppliers were disbelieving on the acceptance of JIT. They felt it worked for Harley Davidson because they were doing motor rhythms. They did n’t believe it could work for them because they service different types of client. Customers that responded did so halfheartedly maintaining a JIT warehouse. The issue with this is that if there is quality job, there would be a JIT warehouse full of quality job.

Harley Davidson trimmed its supply base and ensured public presentation demand. It made certain providers providing for Harley Davidson produced in JIT mode, guarantee Statistical Operator Control and Employee Involvement. To guarantee its providers produced JIT, advanced programming was given to its providers to extinguish stock lists.

Benefits

Company

Improvements ACHIEVED

HOW IT WAS DONE

KSG ( piston maker )

From 2months stock list to day-to-day demand

Progress Scheduling from Harley Davidson

Helps in other parts that portion equipment

Cell creative activity

Less operators, less infinite needed, decrease in clip

Adoption of JIT

ULTRATOOLS

Decrease of parts motion to specific country and tool incorporation

Dedication of full cell to Harley Davidson

Lower production cost

Harley Davidson assisting in bettering their procedure

Harley Davidson

Increased productiveness, Re-established quality repute, High return on capital employed

JIT, Supply Chain Management

Although this type of JIT favours nearby providers, big providers with capital backup and more R & A ; D are frequently preferred as the instance was in Harley Davidson.

3.0 Discussion

In order to vie efficaciously in the planetary market, an organisation must hold a web of competent providers. In making and keeping such a web, and to better assorted capablenesss that are necessary for the purchasing organisation to run into its increasing competitory challenges, battle in provider development by the purchasing houses may be necessary ( Chidambaranathan, S, Muralidharan, C. Deshmukh, S, 2009 ) . Supply development can be thought of as a concern policy adopted by an organisation serious about quality. The organisation has to be committed to accomplishing internal quality criterions ( as seen in the Harley Davidson picture ) which meet the demands of its client, and to back up its providers in enabling them to run into those same demands ( John Beckford 2002 ) . Supplier development requires fiscal and human resource investings by both the organisation and provider, preparation of provider ‘s forces, puting in provider ‘s operations and ongoing public presentation appraisal ( Joel D Wisner, Keah-Choon Tan, G Keong Leong 2009 ) .

Aim of Customer and Supplier in this integrating

Customer

Supplier

Decrease in cost of industry

Decrease in cost of supply

Increased productiveness

Decrease in figure operators

Drastic bead in guarantee cost

Reduced infinite

Quality confidence

Less Inventory

Customer Satisfaction

Customer Satisfaction

Trust

Job Security

High Return on Capital Employed

High Return on Capital Employed

Role of Leadership: Organization leaders play a really of import function in the public presentation of its company. Leaderships need to understand the importance of working together with their providers to develop co-operative civilization alternatively of a competitory 1. Promotion of unfastened, constructive treatment of diverse positions and combination of the best thoughts to do a high quality determination. Suppliers would be willing to lend their best to function a company they have a sense of belonging ( Wong Alfred 2001 ) .

Performance Prosodies: Inventory bends were used to mensurate their public presentation. Their fit end of 12turns per twelvemonth started lifting when Harley Davidson realized there was no demand to maintain a big stock list. Copacino ( 2003 ) states how major companies like Dell which operates 64 to 100 stock list bends besides use it to mensurate their public presentation. Return on Capital Employed can besides be used to mensurate public presentation. ROCE = Profit/Capital employed.

4.0 Decision

The primary ground for a company ‘s being is to do net incomes. In these really competitory markets, companies now have to be universe category client so as to guarantee there is no hinderance in their production procedure. Need for pull offing their supply concatenation is really of import to guarantee JIT and client satisfaction. To decently pull off their supply concatenation, Internal success has to be gotten before thoughts can be taken to providers. ( Harley Davidson ) . For organisations to decently pull off their supply concatenation, they have to follow some rudimentss stairss highlighted below:

Optimizing supply base

Understanding Capabilities of their providers

Achieve procedure betterment to cut down cost

Sharing information like long term agendas and awaited new merchandise debut

Sole sourcing

Continually benchmarking provider

Bing a universe category client

Continual Improvement

Future TREND: Chris Eckert and Brian Hughes ( 2010 ) negotiations about work outing the supply concatenation jobs proactively utilizing a solution direction system ( SMS ) built on an adaptable root cause analysis plan. Using failures in present supply concatenation to minimise future failures. ( Extra Research Needed ) .