Supply Chain Management (M25EKM)

Case Study- Harley Davidson

Summary Theories and concepts underpinning the case study, their strengths and weaknesses

(JIT) Harley Davidson Importance of Supply Chain Management in gaining and sustaining competitive advantage

Key learning points Conclusion and Recommendations References

Presentation Outline Dahiru Halilu

BackgroundSpecialization

• Heavyweight motorcycles Influx of Japanese

Honda MotorcyclesChallenges

• Poor Quality

• High Inventory

• low Inventory turnover

• Drop in Market Share

HD’s success

• Push to Pull System

• Quality Products

• Cell and JIT(MAN)

• Reduction on Inventory

• High Inventory Turnover

• Increase in Market

Share

(Kotha and Dutton, 1996)

Summary Dahiru Halilu

Hakan Ozkul

Michael Porter’s Value Chain Analysis

(McPhee and Wheeler, 2006)

Strengths• Identifiable and manageable units within the organisation.

• It creates units that can be strategically improved.

Weaknesses• Failed to link with external suppliers• The role of technology has evolved.

Porter’s Value Chain Hakan Ozkul

Peter Kraljic model Eric Huang

Leverage items Pistons

Bottleneck itemsLight bulbs, Bolt & Nuts

Non-critical items Stationery

Strategic Items Engines & Transmission

(Gelderman and Van Weele, 2003, p. 2)

Strengths• Helps purchasers classify risks and profit contribution

• Provides framework for selecting appropriate purchasing strategy

Weaknesses • Focuses on buying portfolios• Does not guide on the extend of collaboration

Kralgic Model Eric Huang

• JIT defines as pertaining of inventory system aims to keep the inventories low.

• Products should be delivered when needed regardless sooner or later.

(Lai, 2009)

Just In Time (JIT) Bahaa S Razia

• Reducing Inventory Cost

• Potential risks

Disadvantage

Advantage

• Employee involvement.

• Modified JIT.• Statistical Operator Control.

http://infotechdesign.net/itd/a-case-study-of-harley-davidsons-business-practices.html

Applying this concept was led to:

• Inventories eliminated.

• Waste reduced.• Turnover increased.

• Productivity increased.

Harley Davidson (JIT) Bahaa S Razia

Harley Davidson decided to apply “Material As Needed” :

Importance of SCM in Gaining Competitive Advantage

• Short Lead Time ( MAN, Cell

Production, Lean concepts)

• Inventories eliminated 75% (24m-

4m)

• Reduced Capital and Increased

Inventory Turnover by 80%

• Inventory Management (Reduced

WIP, JIT, Quality-less scrap)

• Inbound and Outbound logistic

(Material flows)

• Information Flow-Good scheduling

information to suppliers

Zeeshan Majeed Butt

(Kotha and Dutton, 1996)

• Strategic supplier selection and relationship is critical for success.

• Purchasing and Inventory management is key to increasing profit and gaining competitive advantage.

• Monopoly can lead to complacency and poor innovation

• Governments can support industrial growth through bail out plans-Self-liquidating Tariff by the president Reagan.

• Branding can be a way of building strong reputation.

Key learning points Godwin Awudi

• Despite HD’s SC reform success import tariff support was provided by the US gov.

• Supplier selection and relationship should be based on merit.

• Supplier development should be based on SMART goals

• Explore the markets into developing countries.

Godwin Awudi

Conclusion and Recommendations

• Eldridge, E. (2003). Investors fear Harley’s thunder grows faint. USA Today.

• Gelderman, A.J. and Van Weele Handling. (2003). Measurement Issues and Strategic Directions in Kraljic's Purchasing Portfolio Model. Journal of Purchasing and Supply Management, 9 (5–6) pp. 207–216

• Kotha S. and Dutton J. (1996). “Transformation at Harley-Davidson” Stern School of Business, New York University.

• Lai, K.H. & Cheng,T.E.C. (2009). Just-In-Time Logistics . England: Gower Publishing Limited.

• Marjolein, C.J. Canie and Cees J. Gelderman. (2005). Purchasing strategies in the Kraljic matrix—A power. Journal of Purchasing & Supply Management . 11 (1), 141-155.

• Porter, M. E., and van der Linde, C. (1995b). Toward a new conception of the environment-competitiveness relationship. Journal of Economic Perspectives, 9(4), 97-118.

• Lakeside Chapter H.O.G. (2013). Harley Davidson History. Available: http://www.lakesidechapterhog.org/harley-davidson-history/. Last accessed 26th Oct. 2013.

• http://infotechdesign.net/itd/a-case-study-of-harley-davidsons business-practices.html

McPhee, W & Wheeler, D (2006) ‘Making the case for the added value chain’ Strategy and Leadership 34 (4), 39-46

UPS Supply Chain Solutions. (2005). Harley-Davidson Revs Up Logistics to Keep Pace. Available: http://www.ups-scs.com/solutions/case_studies/cs_harley.pdf. Last accessed 28th Oct. 2013.

References