Harley Davidson Case Study A Critical Analysis Management Essay

This analysis has its focal point on a brief history of H-D, which includes the fabrication issues and the jobs it had, the assorted strategic alterations made by H-D in the fabrication procedure to accomplish its ends. The execution of JIT and its consequence on the works and the merchandise, the Supplier development, Supplier relationship and the attempts towards Supply Chain Management.

It besides includes the Risks, costs and benefits of Supplier development, the Key larning which we take off from the instance survey and in conclusion it concludes with the hereafter trends in SCM.

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A brief History:

In 1970 ‘s heavy weight bike market was in the custodies of H-D. The Corporate parent AMF wanted to take advantage of this market laterality by production of more motorcycles at a faster rate.In the procedure they lost the focal point on Quality and Supply Chain Management. In 1974 the quality of the merchandise was at its underside. Harley-Davidson needed a despairing alteration to get the better of these issues, in 1981, a group of local direction was put together to reconstruct the company.

Cardinal theories, Strategic alterations and Execution at H-D:

1. Inventory, Inventory Turns and Cash Flow: A ruin in gross revenues due to the quality jobs increased their stock list degree to $ 24 million. H-D worked on Inventory Management.

Inventory Turns

“ The figure of times a company rolls over its stock list per twelvemonth is defined as its Inventory Turns ” .

Calculation: common method to cipher the stock list turns is to split the gross revenues of the company for a twelvemonth with the mean stock list maintained per twelvemonth. For illustration, if the mean gross revenues is $ 10, 000, 00 per twelvemonth and the mean stock list maintained for a twelvemonth is say $ 80,000 than the stock list turns for that peculiar company is 12.5.

( Ref. Supply concatenation metrics.com )

Inventory Turns is a important factor as an addition in it, gives more free hard currency to company. Free hard currency can be used for other benefits alternatively of obstruction in “ Inventory Stock ” . ( Ref.Marie Leone CFO.com, Supply concatenation metrics.com )

At H-D an stock list bends of 4.5/year was increased up to a degree of 28.Consequently the stock list came down to $ 4 million.

2. Shift of fabricating scheme from Push to Pull and JIT:

PUSH and PULL

PUSH is fabricating scheme to bring forth a merchandise irrespective of the demand or demand. It so PUSH ‘s the following procedure it may be the gross revenues of the merchandise. PUSH consequences in unneeded stock list and over stock as the production and demand are non coincident.

PULL is the thin fabrication in which a merchandise is produced on demand. Demand Pull ‘s production procedure. Unnecessary production is therefore avoided which saves clip and cost, and leads to lesser stock list as fabrication is tuned with demand and market tendencies.

( Ref.leanmanufacturingconcepts.com )

“ Thin Thinking is an articulation of the nucleus rules behind the Toyota Production System ( TPS ) , acknowledged to be the most efficient in the universe today ” . ( Manufacturing Operationss and Supply Chain Management the LEAN attack David Taylor and David Brunt )

Merely in Time Manufacturing ( JIT )

Merely in Time Manufacturing

Merely in Time ( JIT ) fabrication is a Nipponese direction doctrine applied in fabricating which involves holding the right points of the right quality and measure in the right topographic point and at the right clip.

The proper usage of JIT fabrication has resulted in additions in quality, productiveness and efficiency, improved communicating and lessenings in costs and wastes.

Goals of JIT:

Finding client demands and reacting to it: Production is tuned harmonizing to the client demands.

Cost effectual quality criterions: quality should and must be the topmost precedence, but it should be cost effectual.

Work for a minimal wastes: Elimination of wastes which are of no usage for the production.

Trust development in relationships with the providers:

Supplier relationship is of extreme importance specially in the instance of individual sourcing, it is a strength of company to hold strong provider dealingss, both in footings of stuffs, stock list and bringings on clip.

Plant planing for extreme efficiency and easy fabrication: Plant design must ease the production procedure with least labour engagement. It must guarantee to utilize the full works potency.

Endeavoring difficult for betterments on a continual footing:

This makes organisation competitory and committed to the demands of the costumiers, as client demands are ever volatile.

( Ref.Just in Time Manufacturing, T.C.E Cheng and S Podolsky ; Curtin University of Technology, Australia ; Institute for Manufacturing University of Cambridge )

Changes and Quality development at H-D:

H-D shifted from PUSH ( expecting demand ) to PULL ( reacting to orders ) .

Set up times were reduced drastically, it made smaller lifesize feasible.H-D moved towards ‘Just in Time ‘ fabrication and ‘Supply Chain Management ‘ .

It invested in group job work outing plan, like Quality Circle and made a policy to react to any of the job issues within two hebdomads.

Employee engagement at H-D made them even more commited.An Example: “ To me every transmittal and engine bolted is traveling to my bike ” , Doug Tearney, Final Inspector Harley-Davidson.

Supplier Selection and Development:

Supplier Choice:

JIT accent on individual sourcing.Single Sourcing is a sourcing scheme in which the company purchasing is dependent on a individual company for about all of the peculiar point or service.

Implicative qualitative facets used for supplier rating:

Design, development and procedure capacity.

How capable the direction is?

Fiscal know-how ‘s and construction of cost.

Environmental Regulation Compliance.

Longer-Term Relationship Potential.

( Ref. Introduction to Operations and Supply Chain Management, Cecil C. Bozarth and Robert B. Handfield )

Supplier development:

“ Supplier development can be defined as any activity that a purchaser undertakes to better provider ‘s public presentation and/or capablenesss to run into the purchaser ‘s short-run, long-run supply demands ” .

Or in other words, “ Supplier development can be slackly defined as the procedure of working collaboratively with providers to better or spread out their capablenesss ” .

( Ref. hypertext transfer protocol: //www.nist.gov/mep/manufacturers/supplier-development.cfm )

A provider development plan must take for bettering the public presentation of a provider ; and assisting them to acquire what they need to be successful in supply concatenation.

Important maps of provider development plans:

Supplying information about merchandises, expected gross revenues growing, etc. Suppliers need to go extensions of their clients.

Training in the application of thin and quality tools.

If providers had more information about the full supply concatenation and had a true thin transmutation underway, they would go more profitable and supply a better quality and lower-cost merchandise, on-time.

( Ref. hypertext transfer protocol: //lean-supply-chain.blogspot.com/2006/10/what-is-supplier-development.html )

( Ref.Avoid the Pitfalls in Supplier Development Robert B. Handfield, Daniel R Krause, Thomas V.Scannell and Robert M. Monczka )

Supplier Management at H-D:

Supplier Optimization:

H-D cuts its supplier base from 320 to 120 and established public presentation demands. Suppliers must hold MAN, JIT, Statistical Operator Control and Employee Involvement.

Supplier jobs and Solutions:

H-D required JIT at Supplier terminal, but providers had jobs with it as they deal with different types of clients. They ended up with Just in Time warehouses, which leads to quality jobs.

For JIT at supplier terminal, proper progress programming was given by H-D.Piston provider KSG adapted to H-D demands. It changed from bring forthing to two months stock list, to bring forthing as per the demand.

KSG did the full procedure from bowing to packaging in merely a infinite of 35ft with two-three operators, with incredible throughput clip. Previously the same work was done with 15 operators scattered all over the works.

Ultra Tool the metal stomping company, a provider of H-D, had great success with MAN plan. At Ultra tool for a figure of operations on a portion it required portion motion. A cell was designed at Ultra Tool that reduces the portion motion to merely 10 feets.The parts were taken to a peculiar country in this cell and it included tooling every bit good. It made the procedure reasonably promptly.

Commonalty of intent:

Harley improved the procedures at Ultra Tool ; in return it had no monetary value rise from this provider for 3-4 old ages. ( an illustration of common benefit to Customer and Supplier ) .

Hazards, cost and benefits of Supplier Development:

Supplier development involves the cost which is incurred by the Customer company and no immideate returns are seeable for it.This depend upon the demand and the value of the merchandise that the financess are allocated for the preparations and development of providers

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