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Medal of excellence:
Harley-Davidson wins by getting suppliers on board
Bron:
Auteur(s):
Purchasing, september 2000
B. Milligan
Harley-Davidson saw the light and learned to use supplier relationships to pull itself out of a
downward spiral. It was once a company that took a less thoughtful approach to choosing
suppliers and evaluating costs. Now it utilizes sophisticated strategies with its suppliers and
works with them to bring down costs.
It was once a company that kept suppliers at a distance. Now it brings them on site to help
in new product development. It was once a company where purchasing played secondfiddle and overworked engineers made crucial buying decisions. Now, purchasing and
engineering are intertwined in a streamlined relationship.
The company now has a new direction. ‘We are out of survival mode,’ says Jeff Bleustein,
chairman and CEO of the Wisconsin-based Harley-Davidson Motor Co. ‘We spent a lot of
time putting together our business process, our values, issues, mission statement, all those
things we believe in. We wanted to get everyone pointed in the same direction.’
The key to Harley-Davidson’s success, Bleustein says, is adopting beneficial relationships
with Harley-Davidson’s suppliers and taking a strategic approach to purchasing.
‘From that fundamental foundation, mutually beneficial relationships with suppliers gave
rise to how we function,’ Bleustein says. ‘That means we ware trying to have real close
affiliations, close relationships with each of these suppliers. It starts with understanding that
we want long term relationships.’
H-D purchasing statistics
1999 spend by function*
• Manufacturing
OEM
MRO
$ 783 million
$ 691 million
$ 92 million
• Parts & accessories
• General merchandise
Total 1999 spend
$ 211 million
$ 94 million
$ 1,088 million
figures do not include Buell Motorcycle Company
source: Harley-Davidson
The company’s persistence and doggedness here, which helped it turn around daunting
production problems and create remarkably effective supplier strategies, has earned it the
2000 Purchasing Magazine Medal of Professional Excellence.
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Why should it win the medal? Here’s a quick run-down of its achievements:
• Cost reduction
Harley-Davidson began in 1995 with a supply management strategy to drive cost out of
its goods and services purchases. Purchasing Magazine estimated that HarleyDavidson reduced costs of purchased goods and services about $ 37 million from 1996
through now. Based on its old model of managing inflation (by allowing annual increases
of 1.5%-2%) costs would have risen close to $ 40 million.
• Inventory strategy
Harley-Davidson handles its inventory on a just-in-time schedule. The company now
runs on six and a half days’ to 10 days’ worth of inventory. This is an improvement over
1995, when company ran on eight to 15 days’ worth of inventory.
• Quality improvement
Roughly 60% of Harley-Davidson’s supply base is now performing at 48 ppm defect
levels or better.
• Supplier involvement
On-site suppliers play a key role at Harley-Davidson, taking part in new product design
meetings and helping engineering teams find quality and costs. This supplier residency
program’s goal is to have 50 full-time seats filled, with 80 part-time residences. HarleyDavidson’s Supplier Advisory Council, meanwhile, seeks out issues of strategic
importance at Harley-Davidson. There are now 16 supplier delegates who serve on a
four-year rotation on the council.
• Supplier relationships
Harley-Davidson has cut its supply base in half since 1990, an effort that consciously
eliminated the suppliers who were not up to meeting the new objectives of cost, quality
and timing. Harley-Davidson now sports a win-win philosophy with its remaining
suppliers. Its goal is to help a small group of suppliers prosper, and help HarleyDavidson prosper. The company is now on track to move from in excess of 3,000 MRO
supplier relationships to a concentrated 80% to 90% buy with three suppliers. In the
area of supplier relationships regarding original equipment purchases, Harley-Davidson
now concentrates 80% of its purchase with a critical group of suppliers who willingly take
part in Harley-Davidson supplier strategies.
• Purchasing engineers
Harley-Davidson leads the pack when it comes to weaving purchasing into the product
development community. The so-called purchasing engineers are integral to design and
manufacturing teams and bring the suppliers into the process.
What sort of results does all this bring to the company?
By 1999, Harley-Davidson produced 177,187 motorcycles, a 17.5% increase over the
previous year. Harley-Davidson earnings are now growing faster than its revenue, showing
a compound annual growth rate of 37% by 1999. That’s a compound annual growth rate of
22% over the past five years.
By 1999, Harley-Davidson reached $ 166 million in capital expenditures. Harley-Davidson’s
motorcycle parts and accessories and general merchandise annual spend exceeds $ 1
billion.
In 1999, the company’s General Merchandise team saw increased revenue of 15.9%.
Consolidated revenues grew 18.8% to $ 2.45 billion, compared with $ 2.06 billion in 1998.
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Harley-Davidson has consistent revenue growth
3000
($ millions)
2500
2000
1500
1000
500
0
'86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99
Harley-Davidson is a success story. But it wasn’t always this way.
Difficult journey
The journey to today’s success was fraught with difficult lessons. The problems truly came
to light in the early 198Os, when Harley-Davidson’s engineering competency had been
allowed to atrophy. This problem became public when the company laid off a large number
of engineering personnel. Placed in survival mode, Harley-Davidson considered interfacing
with the customer as its primary concern, Engineering, which typically looks four or five
years into the future, simply wasn’t a priority. Neither were the parts and supplies that
department desperately depended on.
‘The benefits of spending aren’t appreciated for four or five years,’ says Earl Werner, vice
president of engineering for Harley-Davidson. ‘The company was in a kind of survival
mode, and spending was not a high priority.’
It would prove to be a strategic error, and Harley-Davidson was in a difficult spot. Inflation
was high. Unemployment was high. Interest rates were high.
Meanwhile, new products being offered by Harley-Davidson plummeted. And the company
faced an onslaught of staggering competition from Japan. Harley-Davidson was challenged
in its efforts to remain profitable and survive.
Berryman came on the scene in 1995 with plans for continuous improvement. He would
take over Harley-Davidson purchasing operations and adopt a strategy that would
essentially split it, dedicating half to product design and half to development as part of a
long-term strategy.
Berryman, vice president of materials/product cost, would oversee Harley-Davidson’s
Product Development center in Milwaukee. The center brings together design engineering,
manufacturing and suppliers. It acts as a pivotal center for supplier collaboration.
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Berryman would revitalize Harley-Davidson’s commitment to supply chain management. He
would help the company articulate its objectives through an important materials
management strategy. He would put purchasing operations up on a pedestal. His
leadership team would encourage suppliers to set up shop in Harley-Davidson’s plants and
help the company adopt a unique Internet-based strategy designed to make
communication with suppliers more efficient.
But first, he had to help Harley-Davidson pull itself out of that downward spiral.
Depleted capabilities
That’s what Werner believed when he joined the company in 1993. He found an
engineering department depleted of capabilities. It was a department that was performing
its own design and test work, but was unsupported by production departments and other
company disciplines. The small number of engineers who were there were juggling
suppliers, handling their own logistical needs, and taking care of routine personnel
functions. The efforts were taking their toll.
‘Engineers are just not experts in these areas,’ Werner says.
The department’s capabilities were diluted, and relationships with suppliers were sub-par
and unsophisticated.
‘Harley was set up as a platform,’ recalls Al Wagner, director of Dyna Motorcycle Platform
at Harley-Davidson. ‘There Was no cross-functional communication between product lines,
and product teams would duplicate errors.’
Werner recalls, for example, that if he wanted to develop a new fuel injection system for a
motorcycle, the engineering department would have to survey the supply base, identify a
supplier who could best make the parts, and then confirm that supplier had the needed
technical capabilities to support the design. The department did it all - poorly.
‘What we did, we didn’t do well,’ admits Werner. ‘We failed to do well what the purchasing
people do well, and that’s consider all of the requirements for a successful relationship with
the suppliers.’
What happened next was predictable. Engineering picked the wrong suppliers for the job.
‘There are suppliers out there who are good in technical innovation, but not in other
requirements,’ Werner says. ‘And engineering created disasters for the company.’
‘We picked suppliers whose forte was technical innovation,’ Werner continues, ‘They were
low volume and didn’t have a high degree of competency on the commercial side. Or they
couldn’t meet the scheduled requirements for manufacturing.’
Supplier components came in late. Production was often jeopardized. As problems
increased, suppliers were chosen without the benefit of a portfolio analysis. They were
brought on board regardless of their capabilities.
Werner says Berryman offered a vision that would turn things around. It would start by
focussing on the engineering department’s problems.
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‘Our vision was to recreate our engineering capability and get the engineering guys out of
the supplier-selection basis,’ Werner says. ‘It (selecting suppliers) was not our forte; it was
not our strength.’
Berryman’s solution: To have a cadre of developmental purchasing people located in
Harley-Davidson’s engineering community. They would complement engineering and help
the department purchase the quality supplies it needed for the best prices. This would
unload the engineering department of a job that it as simply not good at accomplishing.
‘We did this out of necessity,’ Werner says. ‘It was the logical thing for engineering to do.’
Bleustein says this represented a first step for the new Harley-Davidson. It would be the
basis for a philosophical change. It would lead to a more streamlined operation.
‘We would involve the suppliers as much as possible in future products, new product
development, and get them working with us,’ Bleustein says. ‘We would reduce the number
of suppliers we were using, give them each more business so that they can grow, and allow
us to focus our attentions on a smaller group.’
Harley-Davidson designed and built the Product Development Center in 1997.
‘We designed it intentionally so we could locate the purchasing people to lead the supplier
interface at the front end of the product development process,’ Werner says. ‘It is very
important to have the supply base involved at the outset of new product. Having them
involved at the beginning is strategically critical to our success in the long term.’
Purchasing engineers
Berryman himself would have an office at the facility. From there, he would articulate his
grand plan: to weave purchasing into engineering. Through this relationship, the
longstanding supply-base problems would be met head on.
‘It is important that purchasing be fundamentally involved in this process (product
development),’ says Werner. ‘They manage the interface with the supply base. They would
determine what suppliers are capable of producing or meeting our requirements.’
The term ‘purchasing engineers’ was coined. These employees would work side by side
with engineering, providing that staff with a better feel for cost issues at the early stages of
a design project. Through this, engineering, a group that traditionally did not consider costs
a top priority, would begin to weigh costs when designing new products. The purchasing
engineers likewise would bring knowledge of Sourcing, alternative materials and
information on new technology.
‘In the old days, we just called them purchasing folks,’ says Werner. ‘But we needed good
engineers in purchasing so they could work off of each other, have a common language.’
‘Having engineers in purchasing is critical because they are responsible for translating the
technical requirements into a voice for the supplier,’ Werner continues.
Essentially, this strategy would create a marriage between Harley-Davidson’s production
team and its key suppliers. Purchasing would become involved in every aspect of the
development of new products. It was a far cry from the strategy of the 198Os.
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‘Within our culture, this would be such a change,’ says Liz Zilist, Harley-Davidson’s
Powertrain purchasing lead. ‘It would change how we interact with suppliers, engineering.’
‘Five years ago, a typical team would start with a number of engineers brainstorming or
working on designs,’ she continues. ‘To pull in purchasing folks today, it is so completely
different.’
The process now works through set phases, beginning at ‘phase zero’, the idea phase.
During this phase, styling department teams sketch out what they are trying to develop.
Jayson Way, a purchasing engineer, says Harley-Davidson has learned that when
purchasing is not involved in the design process, the company tends to pinpoint parts that
can be provided by just one source. By getting purchasing - and multiple suppliers - into the
design fosters early competition. He saw this, for example, when the Wisconsin-based
Milsco Manufacturing Co. emerged as a winner during a design-phase discussion showing
how it could cut costs on a project significantly.
Milsco manufactures seats and saddle bags for Harley-Davidson. In 1997, the purchasing
engineers brought Milsco representatives in during the design phase of Harley-Davidson’s
nostalgic Heritage Springer motorcycle. In that design meeting, Milsco was given the power
to recommend different styles of seats for the motorcycle.
Milsco representatives brought to the design department a number of design sketches that
showed how it wanted to approach the project. The Harley-Davidson engineers, in turn,
picked one of their samples, making it a prototype for the original mock-up.
Throughout the entire process, the Milsco representatives were constantly aware that they
had as much to win or lose as Harley-Davidson did They took pride in the project.
‘Harley-Davidson referred to us as stakeholders, someone who can win or lose from a
successful or failed program!’ says Ron Priem, manager of industrial design for Milsco. ‘We
all share responsibility toward one another.’
Priem notes that Harley-Davidson is not Milsco’s only customer. It is simply the customer
that he most respects.
‘We have a number of other customers, but their (Harley-Davidson) relationship with
suppliers is much more than just commodity,’ Priem says.
Priem isn’t the only supplier who works on site at the facility. Eric Norppa, the senior
development engineer for Powertrain Systems at Delphi Automotive Systems, also has
worked full-time at the Product Development Center for four years. Norppa says HarleyDavidson helped foster the creation of an electronic fuel injection system that required a
rigorous five-year development process.
‘Communication is kept open,’ Norppa says. ‘By my being a resident on this site, I am
responsible for control strategies. The electrical group and purchasing can contact me
immediately and make decisions in an hour instead of weeks or months.’
The push to bring more suppliers on site is constant. In the Powertrain area alone, 15
suppliers now work at the center four days each week.
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‘It is a huge advantage for the supplier to talk face-to-face, get in on the prototype stage,’
says Brad DeSplinter, engineering team leader for Signicast Corp. Wisconsin-based
DeSplinter also works on site at Harley-Davidson.
‘We sit down with the engineers, look at the mock-ups on the same computer screen,’
DeSplinter continues. ‘Being together makes things dynamic. It makes quick decisions
possible.’
DeSplinter says this sort of collaboration went a long way toward helping Harley-Davidson
reduce its costs. All it took was that constant, close contact.
‘You can reduce costs immediately on the spot without going through the typical two to
three weeks worth of paperwork,’ he says.
Through Berryman’s dream,purchasing engineers would be used to enhance product
design. They would be given the responsibility for all aspects of a new product’s design.
This is a huge change from traditional design approaches, where engineers designed parts
and components into a product, and purchasing then sought sources of supply. During
design, little if any thought was given to cost, manufacturability, secure source of supply,
and other factors that can make or break a design when it receives a harsh reality check in
the marketplace.
Way credits the on-site supplier program with bringing one of Berryman’s dreams to
fruition: It helped beef up Harley-Davidson’s push to create new products.
He recalled, for example, the recent creation of a police motorcycle that would require 80
purchased parts. Constant input from the on-site suppliers greased the project’s wheels.
The project was completed in 18 months. ‘Under our old style, that would have taken twice
the time,’ he says.
‘There was communication in meetings to bring a quick-to-market product,’ Way says. ‘If
we did not have that type of communication, I would rather not have done that. Something
had to make this happen,’
The process would not always work smoothly.
Some purchasing engineers at Harley-Davidson say there was some doubt early on as
they were brought onto new product teams.
‘Early on, a lot of people were skeptical and there was distrust,’ says Eric Doman, senior
manager of operations of General Merchandise at Harley-Davidson. ‘I was brought in
through the electrical group and it took a longtime for them to develop confidence in me.’
But the confidence would come. And this new design paradigm would help change
dramatically the roles of both purchasing pros and suppliers. For purchasers, who must be
more technically astute than in the past, one responsibility is to look deeply into the
technological offerings of suppliers in an effort to identify and apply new technologies to
new products.
Harley-Davidson would not be the only one to benefit from this relationship. As Bleustein
puts it, the process was designed to help suppliers grow, too.
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Under the new plan, Bleustein says Harley-Davidson would send teams of manufacturing
engineers to suppliers to help them make improvements to their factories. They would
teach them about just-in-time practices and suggest ways to lower costs.’
But Bleustein is careful to note that Harley-Davidson learned to expect things in return.
‘In turn, we expect them to be open to change and find better ways to work,’ Bleustein
says. ‘We expect them to consciously work at lowering costs on our projects.’
‘As for suppliers who don’t want to go in that direction, we find ways to part company with
them,’ Bleustein continues. ‘For a supplier to be with us in the long haul, they are going to
have to be competitive.’
Harley-Davidson today
The newly developing Harley-Davidson would begin to create supplier strategies that
continue to this day. And they are getting results.
The traditional approach to suppliers no longer exists. To get what it needs from its
suppliers, Harley-Davidson now holds them to the following tenants:
• Cost
Suppliers are expected to achieve real-time improvement in their costs. This initiative
asks suppliers to think more strategically around cost and show how they are able to
bring innovation through technology. They are expected to hit the targets established by
Harley-Davidson.
• Quality
Under the Harley-Davidson mantra, suppliers are expected to meet ‘twice the level of
quality’. They are asked to develop a strategic plan for how they will achieve this. They
are expected to take a larger view of their quality processes and make strides in quality
improvement. This plan is written down and provided to Harley-Davidson along with an
outline of who is responsible for bringing it to fruition.
• Timing
The suppliers are expected to take ‘half the time’ to develop and deliver new products.
They are expected to develop tools for faster development and come up with plans that
are more supportive to Harley-Davidson’s design and development efforts.
‘This is the leading-edge change mechanism we refer to daily, the way we manage and go
forward with our business,’ says Berryman.
To underscore all of this, Harley-Davidson supplies a master supplier agreement that is
shared with all suppliers. It is jointly developed by a Supplier Advisory Council and HarleyDavidson. This clarifies the roles and responsibilities that Harley-Davidson and its suppliers
share.
Suppliers are now graded on a parts-per-million basis. Harley-Davidson has a target of 48
parts per million on quality that they are expected to achieve. The company sends the
suppliers a monthly report showing how they are performing when it comes to quality and
delivery performance.
If a supplier receives a bad report card, Harley-Davidson takes action.
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‘If the supplier is not doing well, we send resources to help them,’ says Leroy Zimdars,
director of supply chain management for Harley-Davidson. ‘People try to solve the problem.
Or we learn that we are part of the problem. We try to understand what is going on.’
If the supplier shows a pattern where they are not improving, they are placed on conditional
status and given a period of time in which to show improvement. This time period can be
anywhere from three to six months. If they make improvements during this time, they can
either be placed on extended conditional status or unacceptable status. If they are placed
on unacceptable status, Harley-Davidson searches for a new supplier.
‘We have extended extreme efforts to help them improve and get them back to a quality
level that they need to be at,’ Zimdars says. ‘But if a supplier is on unacceptable status, we
don’t see much hope for them. At that point we don’t award new business to them.’
And how are the suppliers now doing?
With roughly 60% of its supply base now performing at 48 parts-per-million quality levels or
better, Harley-Davidson has come a long way. Thirty-six suppliers are performing at zero
parts-per-million quality levels. By comparison, in 1995, the parts-per-million figures were
generally around 10,000.
Harley-Davidson now adheres to the Purchased Part Approval Process, a standard for
information on reports in the industry. This approved report process refers to design
capability studies. Harley-Davidson adopted the process in 1998, asking its supply base to
submit parts according to PPAP.
Harley-Davidson’s goal here is to have 100% PPAP before the first production event. The
company formed a three-year plan to bring this to fruition, but also understood it could not
possibly bring its supplier base to 100% participation during this time. Last year, it
reformatted the goal to having 60% participation by 2000. At present, about 64% are
achieving the requirements.
When it comes to logistics, Harley-Davidson’s distribution center operations costs as a
percent of sales are down 59% form where they were in 1995. The company’s order fill
rates were about 85% in 1995. Today, the company has more than 30,000 stock keeping
units and an order fill rate of 99.6%.
Doug Hevner, director of purchasing operations, says the just-in-time schedule is taken
very seriously. Supplier On-time Performance is keenly observed. At last measure, 87% of
the company’s supplies were delivered on time, just-in-time for production lines. Suppliers
who provide more of less supplies than ordered are given a penalty mark on their supplier
report card.
‘If you ship me 99 and I asked for 100, you get a ding,’ says Hevner. ‘Or if you ship 101,
you get a ding on the next order because you overshipped.’
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Garry Berryman’s purchasing vision
Garry Berryman, Harley-Davidson’s vice president of materials/product cost on:
Reverse auctions:
‘We won’t do reverse auctions. They are too impersonal and say that suppliers are a commodity
and not an intellectual. We are not buying into that. What we are buying is (suppliers’) intellectual
know-how.’
Supplier relationships:
‘None of this stuff is new. Relationships with suppliers aren’t new. You just have to understand the
importance of it.’
Supplier report cards:
‘We exercise every opportunity to work with the supplier… Their health and prosperity would grow
as well as ours. But it is a tough-love environment.’
On Japanese manufacturing:
‘The keiretsu had fractures, nepotism, a safety net, and a level of security that is unnatural in a
competitive environment. We took it to the next level, with relationships that are every bit as
powerful.’
Harley-Davidson’s future:
‘We are a growing business that is growth-oriented. We have to have a relationship with Our
suppliers. It is important, and we must begin to come into a future that is different from the past.’
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One way to reach suppliers: the Internet
As it looks to the future, Harley-Davidson is turning to the Internet as it tries to further streamline its
relationships with its suppliers.
In August, the company launched SiL’K, an interactive Internet-based supply chain management
strategy, SiL’K stands for supply information link.
The Harley-Davidson Supplier Information Network, whichh will provide renewed focus on the Top
70 Suppliers, will be based on SiL’K’s interactive Web portal. It will give the suppliers the ability to
conduct online financial transactions and reduce the amount of time they spend chasing invoices.
The SiL’K project is designed to maximize the company’s supply chain management strategies
from a process and technology standpoint. It could bring a large portion of the company’s supply
chain management onto the World Wide Web.
The plan involves a supplier linked by a window - or electronic portal - to critical business
transaction information it might at Harley-Davidson. This includes data on supplier delivery
performance, quality performance and status of financial transactions.
Suppliers are able to dial in and extract information.
‘They can look at specific information on a schedule and compare their own commitment and ability
to meet that schedule,’ says Doug Hevner, director of purchasing operations.
Through SiL’K, suppliers will have access to Harley-Davidson’s quality expectations, delivery
requirements and other important data. This move will effectively bring Harley-Davidson away from
the use of costly EDI systems. In the past, Garth Jaehnig, materials manager for Harley-Davidson,
says the company sent out EDI performance measures to its suppliers on a monthly basis. But the
Internet is making this process obsolete.
‘Originally we used EDI format. But when it came to EDI transmissions, smaller suppliers did not
want to have that degree of cost,’ says Hevner. ‘They said they want their documents to go through
the Internet. All they need is a PC to get the same information.’
Leroy Zimdars, director of supply chain management for Harley-Davidson, says the company will
use this for bi-monthly Internet meetings with its suppliers. He says Harley-Davidson hopes to use
this to cut out some 15% to 30% waste that it sees in the supply chain. It can do this, he says, by
using the Internet to rope in suppliers past tier one.
‘Waste exists in any supply chain,’ Zimdars says. ‘There is waste in everything from redundancy to
operations. We have operations where the supplier is doing things he wouldn’t need to do if he
understood what the process is looking for.’
‘Our priority is to bring them together on the Web site, collaborate on issues that we need to
address and work on,’ he continues. ‘We can store information on the site that is available for all
chain members to look at and comment on.’
But Hevner says Harley-Davidson has been cautious in its effort to adapt an Internet-based buying
strategy.
‘We made a conscious decision to review that very slowly and look at the opportunities that exist
and the detractors that go in that direction,’ Hevner says. ‘We believe that the jury is still out on that
process, and we want to make sure the impact it will have on our relationships is a positive one.’
Hevner explains that Harley-Davidson’s relationship with its suppliers is causing it to take a
tentative approach to the Internet.
‘I just don’t think our suppliers are pressuring us to go that way,’ Hevner says. ‘I was recently at a
supplier conference in Kansas City, and I questioned the suppliers if we should be looking at this.
Out of 92 suppliers there, only three raised their hands.’
‘We need to make sure that voice-to-voice, eye-to-eye contact with suppliers continues,’ Hevner
says. ‘The Internet is one thing that takes away from that one-on-one contact, and we would just
prefer to tread slowly there. We let our suppliers know that we are looking at it.’
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Supplier strategies foster involvement, communication
Harley-Davidson’s supplier strategies are designed to increase simple communication and seek out
mutually agreed solutions where there once where none.
Through its Top 70 supplier program, Harley-Davidson concentrates 80% of its purchase in a
critical group of suppliers. The members in the Top 70 program represent 80% of HarleyDavidson’s annual buy of supplies.
The Top 70 process was launched in 1996. Through this, on an annual basis, the top leadership
from Harley-Davidson meet to talk about issues that are important to both companies.
‘We ask, what is our outlook for the future? What obstacles do we see coming that we need to
face?’ says Leroy Zimdars, director of supply chain management for Harley-Davidson.
They discuss strategic initiatives, try to improve on the cost of new products and search for ways to
improve quality. Zimdars says the most important thing is for both sides to develop a long-term view
of how to address these issues.
Another key management program is Harley-Davidson’s Supplier Advisory Council. Those elected
to the council seek out issues of strategic importance at Harley-Davidson.
Harley-Davidson is also making inroads through its Concurrent Product and Process Delivery
methodology system. Through this four-year-old program, four teams represent four platforms of
Harley-Davidson products.
Communication with suppliers is now key. That communication, and its expected results, are
spelled out in Harley-Davidson’s Materials Management Strategy. The strategy, which was
developed during the last few years, provides a detailed approach on how materials management
is conducted and articulated. lt is designed to clearly describe Harley-Davidson’s expectations to its
suppliers.
The strategy is designed to help Harley-Davidson achieve planned objectives for 2003. These
include:
Growing motorcycle demand at prices the company’s traditional customers can afford.
Growing motor parts and motor accessories sales volume for new and used vehicle customers at a
minimum average growth rate of 15%.
H-D’s materials management strategy for suppliers
Harley-Davidson is building a strong and committed supply base that is
seamlessly integrated with the company.
Relationship
requirements
• Industry leadership
• Mutually beneficial
and independent
• Entrepreneurial
• Early supplier
involvement
Develop
‘mature’
supplier
relationships
Shared
accountability
Involvement
• Top management
operations review
• On-site
representation
• Business planning
meetings
… supported
and
facilitated
by…
•
•
•
•
Frequent,
consistent and … to develop
appropriate level commitment
to…
involvement
Quality
Cost
Timing
Technology
Recognized
and shared
accountability
Source: Harley-Davidson