Monday, April 4, 2011

Harley Davidson Supply Chain Management

Harley-Davidson has been a leader in motorcycle manufacturing since 1903. As international competitors (such as Honda, Suzuki, Yamaha) entered the market, Harley-Davidson has been faced with creating a higher quality product at a low cost to a very specific customer segment. To accomplish this Harley-Davidson has had to tailor its supply strategy to meet differing customer demand in domestic and international markets. HD has adopted many of the policies introduced in "Strategic Sourcing" to provide their unique product at appropriate prices to their customers. Because many of their sales are international, HD must often tailor their supply chain management to fit the customer and market the product ultimately reaches. Perhaps more so than the Big 3 automakers, Harley-Davidson has had to balance supply chain competitiveness with delivering an American motorcycle with domestic parts and content.

Design & Engineering
Harley-Davidson has rejected the appeal of lighter motorcycles to design a motorcycle with a retro feel that looks similar to earlier models. HD engineers work directly with suppliers to ensure that these designs are compatible with the suppliers' capabilities.

Harley Davidson adopted the "just in time" method used in the Toyota Production System. Inventory spends just 8 to 10 hours on hand, making suppliers integral to the success of Harley Davidson. Additionally, many HD products are custom built so that any delay in sourcing can cause production delays or even halt custom orders.

The customer wants and expects an American product with domestic content. HD must find build long term relationships with domestic suppliers even though cheaper parts can be found abroad. HD only sources globally when it is "appropriate for the brand and product". HD must balance supply chain competitiveness with the customer's perception of HD as an American brand.

HD faces substantial tariffs in places like Brazil when importing its products. To deflect these costs HD ships component kits and delays final assembly until the parts have reached Brazil. This cuts import duties by over 85%.

Has HD been able to maintain its market share because competitors are unable to attract the unique customer segment HD targets or has it been a result of HD's revitalized sourcing strategy?

"Strategic Sourcing" by Mark Gottfredson, Rudy Puryear, and Stephen Phillips

1 comment:

  1. logistics has always been an important part of business and the right supply chain and transportation management system can really make a worlds of difference. I recently overhauled how I do things and it has seen great results


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