This analysis has its concentrate on a brief history of H-D, which includes the production issues and the issues it had, the many strategic changes made by H-D in the manufacturing process to attain its goals. The execution of JIT and its own influence on the place and the product, the Supplier development, Supplier romantic relationship and the initiatives towards Supply String Management.
It also includes the potential risks, costs and benefits associated with Supplier development, the Key learning which we take away from the research study and last but not least it concludes with the future tendencies in SCM.
In 1970's heavy weight motorcycle market is at the hands of H-D. The Corporate parent AMF wanted to take good thing about the forex market dominance by development of more bikes at a faster rate. In the process they lost the focus on Quality and offer Chain Management. In 1974 the grade of the product was at its bottom. Harley-Davidson needed a desperate change to get over these issues, in 1981, several local management was come up with to rebuilt the company.
1. Inventory, Inventory Turns and Cash Flow: A downfall in sales because of the quality problems increased their inventory level to $24 million. H-D worked on Inventory Management.
"The number of times a company rolls over its inventory per year is thought as its Inventory Turns".
Calculation: common method to analyze the inventory converts is to split the sales of the business for per annum with the average inventory retained per year. For instance, if the average sales is $10, 000, 00 per year and the average inventory retained for a year is say $80, 000 than the inventory converts for that one company is 12. 5.
(Ref. Supply string metrics. com)
Inventory Converts is a crucial factor as an increase in it, provides more free cash to company. Free cash can be used for other benefits instead of blockage in "Inventory Stock". (Ref. Marie Leone CFO. com, Resource chain metrics. com)
At H-D an inventory changes of 4. 5/calendar year was increased up to a degree of 28. Consequently the inventory came right down to $4 million.
2. Move of manufacturing strategy from Drive to Draw and JIT:
PUSH is making strategy to produce a product irrespective of the necessity or demand. It then PUSH's another process it can be the sales of the merchandise. PUSH results unnecessary inventory and over stock as the development and demand aren't concurrent.
PULL is the low fat manufacturing in which a product is produced on demand. Demand Pull's creation process. Unnecessary creation is thus prevented which saves time and cost, and contributes to smaller inventory as creation is tuned with demand and market developments.
(Ref. leanmanufacturingconcepts. com)
"Trim Thinking can be an articulation of the central ideas behind the Toyota Production System (TPS), acknowledged to be the most effective nowadays". (Processing Operations and Supply String Management the LEAN approach David Taylor and David Brunt)
Just in Time (JIT) manufacturing is a Japanese management beliefs applied in processing which involves getting the right items of the right quality and variety in the right place and at the right time.
The proper use of JIT developing has led to raises in quality, productivity and efficiency, improved communication and lessens in costs and wastes.
Goals of JIT:
Finding customer needs and responding to it: Creation is tuned in line with the customer needs.
Cost effective quality criteria: quality should and must be the topmost goal, but it ought to be cost effective.
Work for the very least wastes: Eradication of wastes which are of no use for the development.
Trust development in romantic relationships with the suppliers:
Supplier romance is very important specially in the case of single sourcing, this can be a power of company to have strong supplier relations, both in terms of materials, inventory and deliveries on time.
Plant designing for utmost efficiency and easy making: Flower design must alleviate the creation process with least labour engagement. It must ensure to use the full plant probable.
Striving hard for advancements on a continual basis:
This makes organization competitive and committed to the needs of the costumers, as customer demands are always volatile.
(Ref. Just with time Creation, T. C. E Cheng and S Podolsky; Curtin University or college of Technology, Australia; Institute for Manufacturing School of Cambridge)
Changes and Quality development at H-D:
H-D shifted from Press (anticipating demand) to Draw (giving an answer to requests).
Set up times were reduced greatly, it made smaller life-size feasible. H-D transferred towards 'Just in Time' developing and 'Supply Chain Management'.
It invested in group problem fixing program, like Quality Group and made an insurance plan to react to any of the condition issues inside a fortnight.
Employee involvement at H-D made them even more commited. An Example: "If you ask me every transmitting and engine bolted will my motorcycle", Doug Tearney, Final Inspector Harley-Davidson.
JIT focus on single sourcing. One Sourcing is a sourcing strategy where the company buying will depend on an individual company for nearly every one of the particular item or service.
Suggestive qualitative aspects used for dealer evaluation:
Design, development and process capacity.
How ready the management is?
Financial know-how's and structure of cost.
Environmental Regulation Compliance.
Longer-Term Relationship Probable.
(Ref. Intro to Operations and offer Chain Management, Cecil C. Bozarth and Robert B. Handfield)
"Distributor development can be defined as any activity that a buyer undertakes to boost supplier's performance and/or functions to meet the buyer's short-term, long-term source needs".
Or quite simply, "Supplier development can be loosely thought as the process of working collaboratively with suppliers to boost or expand their functions".
(Ref. http://www. nist. gov/mep/manufacturers/supplier-development. cfm)
A supplier development program must aim for bettering the performance of your supplier; and assisting these to get what they need to achieve success in supply string.
Important functions of provider development programs:
Providing information about products, expected sales development, etc. Suppliers need to become extensions of their customers.
Training in the use of slim and quality tools.
If suppliers acquired more information about the complete supply chain and had a true lean transformation underway, they would are more profitable and offer a better quality and lower-cost product, on-time.
(Ref. http://lean-supply-chain. blogspot. com/2006/10/what-is-supplier-development. html)
(Ref. Enough time Pitfalls in Distributor Development Robert B. Handfield, Daniel R Krause, Thomas V. Scannell and Robert M. Monczka)
Supplier Management at H-D:
H-D reduces its supplier bottom part from 320 to 120 and established performance requirements. Suppliers will need to have MAN, JIT, Statistical Operator Control and Worker Involvement.
Supplier problems and Alternatives:
H-D required JIT at Provider end, but suppliers experienced issues with it as they offer with different types of customers. They were left with Just in Time warehouses, which leads to quality problems.
For JIT at distributor end, proper advance scheduling was presented with by H-D. Piston distributor KSG adapted to H-D requirements. It altered from producing to 8 weeks inventory, to producing as per the necessity.
KSG did the complete process from bowing to product packaging in only a space of 35ft with two-three operators, with incredible throughput time. Recently the same work was finished with fifteen operators scattered all over the plant.
Ultra Tool the metallic stamping company, a supplier of H-D, experienced great success with MAN program. At Ultra tool for several operations on a component it required part movements. A cell was designed at Ultra Tool that reduces the part activity to just 10 feets. The parts were taken up to a particular area in this cell and it included tooling as well. It made the process reasonably quick.
Commonality of purpose:
Harley advanced the functions at Ultra Tool; in exchange it got no price go up from this distributor for 3-4 years. (a good example of mutual benefit to Customer and Distributor).
Supplier development entails the price which is incurred by the Customer company no immideate earnings are visible for this. This depend after the necessity and the value of the product that the funds are allocated for the trainings and development of suppliers