Harley Davidson Case Study

Executive Summary

Harley-Davidson's management understood that there was much that the company coul could d do to enhan enhance ce inte intern rnal al opera operati ting ng effi effici cien ency cy;; one of thos thosee area areass was was in supp supply ly management across all of the company's company's production sites. After defining its needs through its Supplier Information Link (SiL'K) team and extending requests for proposals (RFPs), the company received eight responses and seriously considered three providers.

None of the providers was absolutely a perfect fit, but one came close. In assigning weight weightss to identi identifie fied d factor factors, s, it is clear clear that that Provid Provider1 er1 is the best choice choice for HarleyHarleyDavidson's needs. Background

Harley-Davi Harley-Davidson dson motorcycle motorcycless are as much legend as product. The company enjoys enjoys intens intensely ely loyal loyal custom customers ers,, and nearly nearly as loyal loyal employ employees ees..

The company company celebr celebrate ated d its its

centennial year in 2001, which in itself was nothing short of a miracle given all of the opportunities that the company had to go out of business. business. The company fell on hard times in the early 1980s and even flirted flirted with bankruptcy. Management did a turnaround in the mid1980s, however, resulting in in a financially sound sound public company today. One of the areas of turnaround was in relying on employees to help keep the company afloat - not in financial matters directly, but rather in ensuring that Harley return to its standard and reputation for qualit quality. y. Qualit Quality y had suffere suffered d so in the 1960s and 1970s that the common common saying saying about about Harley Harley-Dav -Davids idson on motorc motorcycl ycles es was that that a five-m five-mil ilee trip trip consis consisted ted of riding riding for one and pushing for four.

Harley-Davidson has now returned to its former days of quality, adding production efficiency along the way. It is the only surviving surviving domestic motorcycle producer since Indian, its primary primary competition competition,, closed in the early 1950s. It controls controls 54 percent of the domestic domestic

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market market in heavy motorcycles, motorcycles, and devoted devoted owners owners across the country sustain active owners clubs and hold weekend rallies.

In the mid- to late 1990s, Harley-Davidson's management turned its attention to internal efficiency. Though it had made great gains in that area, individual sites sites still operated more than only independently from from the company as a whole. Site independence was an issue that had been encouraged for years, providing motivation for the employees and management personnel of each site to behave entrepreneurially rather than faceless entities of the larger organization. The downside of that approach by the 1990s was that each site had developed "different methods for handling procurement, including the acquisition and/or development of different information systems for Purchasing" (Sole, Cotteleer and Austin, 2003; p. 3).

Harley Harley-Dav -Davids idson on was a late late entry entry into into Just-I Just-In-T n-Time ime (JIT) (JIT) manufa manufactu cturin ring, g, which which requires that the organization hold little inventory either in finished products or in component c omponent parts. parts. This late entry entry allowed Harley-Davi Harley-Davidson dson to avoid many of the mistakes mistakes that other companies made in earlier years (Kelley, 1999), but did not preclude the possibility of making new mistakes of its own.

Through much of the 1990s, Harley-Davidson used standard software packages easily customizable while still retaining ability to import and export directly with other packages (Hunter, 1996). This allowed it to interface easily with all suppliers without much regard for the systems systems used by diverse suppliers. suppliers. In 1998, one author reported reported that Harley-David Harley-Davidson, son, then a $1.8 billion company, company, was making its biggest technology technology commitment commitment to date. That year's IT budget and capital spending was "$50 million - slightly more than 2 percent of revenue revenue and above average in the manufacturi manufacturing ng sector. More than half half of that budget is dedicated to new development, funding an IP-based corporate network, a data warehouse project, and standardizing on Microsoft desktop and server software" (Caldwell, 1998; p. 63).



million" million" (Caldwell, (Caldwell, 1998; p. 63). This action, action, however, was wholly inconsisten inconsistentt with the woefully separate procurement systems existing at individual manufacturing sites. Problem Statement

The problem with all of this is that Harley-Davidson was unable to gain benefits of quantity pricing as a company overall. overall. Not only were the individual sites sites treated as separate entities, but their insistence on behaving that way prevented Harley-Davidson from gaining any benefit of quantity quantity pricing pricing or preplanning preplanning based on total sales forecasts. forecasts. The company needs a means of operating with greater internal efficiency. Alternatives and Score Matrix

The SiL'K team already had determined that Harley-Davidson was in need of a modified ERP; it also was adamant in the beginning that it was "not seeking a full ERP solution, that the scope was well defined and those suppliers shouldn't waste time pitching additional additional functionali functionality" ty" (Sole, Cotteleer Cotteleer and Austin, 2003; p. 9).

Harley's Harley's Architectur Architecturee

Integration group reviewed all possibilities possibilities to ensure compatibility with with existing systems. Of the eight potential suppliers responding to Harley-Davidson's RFP, the company narrowed down its choices to three. Provider1

Provider1's "representatives asked appropriate questions, they clearly acknowledged Harley-Davidson's values, and seemed comfortable with the casual but competent HarleyDavidson style" (Sole, Cotteleer and Austin, 2003; p. 11). Provider1 addressed every issue issue raised in Harley-Davidson's RFQ, and tailored its solutions perfectly to the requirements set out by Harley-Davidson.

Provider1 did not offer the highest form of functionality, and did not offer "'webenablement' directly but its team proposed integrating a partner solution" (Sole, Cotteleer and Austi Austin, n, 2003; p. 11)

On the other hand, Provide Provider1 r1 was comfor comfortab table le with the change



Provider2

Provider2 was a major ERP supplier in the industry and also was an early leader in the selection process. Provider2 offered a higher functionality functionality score. score. Its team also was quite formal and in that sense did not "fit" with Harley-Davidson, and it also maintained a heavy "consu "consulta ltant" nt" attitu attitude. de.

Furthe Further, r, Provid Provider2 er2 did not "emphas "emphasize ize methods methods or proces processes ses for

assessing organizational needs and preparing people for change" (Sole, Cotteleer and Austin, 2003; p. 11).

Provider3

Provider3 also was a major ERP supplier and recently had worked with HarleyDavids Davidson on in anothe anotherr area.

Provid Provider3 er3's 's team was unprofess unprofession ional al to the point point of being

disrespect disrespectful, ful, but it did score high on functionali functionality. ty. Even so, the Sil'K team believed that Provider3 could offer "potential political and economic advantages" (Sole, Cotteleer and Austin, 2003; p. 11).

Score Matrix I t em

Weight

Provider 1

Provider 2

Provider 3

Rating

Score

Rating

Score

Rating

Score

Functionality

0.25

3.00

0. 75

5.00

1.25

4.00

1.00

Capability

0.15

5.00

0. 7 5

3.00

0.45

1.00

0.15

Culture fit

0.15

5.00

0. 75

2.00

0.30

1.00

0.15

Response completeness

0.20

5.00

1 . 00

5.00

1.00

1.00

0.20

Change management

0.25

5.00

1 . 25

1.00

0.25

1.00

0.25

Totals

1.00

4.50

3.25

1.75



Implementation and Conclusion

The most important aspect in evaluating the providers is the functionality and the related training. However, from the beginning, Harley-Davidson's management had stressed that proposals should not strive for greater functionality than the company asked for, but then it graded the finalists on functionality. This was a mixed signal point of confusion, but other points were not.

Even so, assigning weights to selection points and ratings to each provider returns Provider1 as the most appropriate choice for Harley-Davidson.



References Caldwell, Caldwell, Bruce Bruce (1998, December December 7). 7). Harley-Davi Harley-Davidson dson Revs Up Up IT Horsepower. Horsepower. (Company (Company Operations). InternetWeek , p. 63. Hunter, Hunter, Tim (1996, January January 11). Software Software suite suite yields yields ear-fri ear-friendly endly motorc motorcycle. ycle. Machine Design, 68, p. 90. Kelley, Kelley, Katherine Katherine A. (1999, Septem September). ber). Handling Handling chips in hog heaven. heaven. (Harley-Da (Harley-Davidson vidson's 's Plan 2003). Modern Machine Shop, 72, p. 146. Sole, Deborah, Deborah, Mark Mark J. Cotteleer Cotteleer and Robert Robert D. Austin Austin (2003, January January 22). 22). Case 9-600-006: 9-600-006: (Bosto ton, n, MA: MA: Harley Harley Davids Davidson on Motor Motor Company Company:: Enterpr Enterprise ise Softwa Software re Select Selection ion. (Bos Harvard Business School Publishing).

Harley Davidson Case Study

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