Introduction:
In the business enterprise market there are various organizations, but those people who have good quality, design, and manufacturing process with low cost and meet market requirement they wins like Harley-Davidson.
The main objective of Harley- Davidson was to concentrate on Just In Time manufacturing, Supply Chain Management and Total Quality Management to be able to compete with other organizations. In this case study the emphasis is on how they developed the Supply Chain Management, Supplier Relationship, timed delivery and Quality. How sharing of information help them to implement just in time at supplier end, its brief history, problems it had faced in mid 70's, the remedies, the steps followed to overcome the downfall, with focus on Supply Chain Management, and finally it concludes with the findings and learning's from the entire case study
Brief History
Harley Davidson is an American manufacturing motor cycle company which was built in 1903 by William Harley and author Davidson. In year 1970 the decision taking power was at the hand of cooperate parent company American machine and foundry in those days Harley Davidson was sole surviving company who were making heavy weight motor cycle in united states. AMF wanted to take the advantage of the market so opt to improve the production neglecting the value of supply chain which made the product quality walk out control. In 1981 new management was appointed by Harley Davidson to get out of this problem. Better operations towards better Bikes was their goal.
Problems faced by Harley Davidson
In the mid 1970's H-D had tough times, the market share was decreasing due to the poor quality of the merchandise. After a detailed analysing it became evident that overproduction has led to a defocus from the Supply Chain Management. The grade of the H-D product which was the basis for his or her success did no more exist. The low amount of the Inventory Turns led to a high degree of Stocks. Together with the demand decreasing and the high stocks the company was cash ridden. The recession also had its impact on low returns of the company. Another problem was that they had no control over the suppliers and supplier quality was unpredictable which added to customer dissatisfaction.
Remedial Measures Taken
In 1980 Harley Davidson really had bad time so the management decided to do something by organizing there company with new start, management launched production schedule which increased inventory turns. Inventory Turns is define as the ratio of cost of goods and average inventory.
The inventory dropped to 4 million Dollars, with advanced of productions. Inventory turns increased from 16 to 28 million per year.
Supplier base was reduced from 320 to 120 it leads to concentrate on supplier and better relationship with supplier.
Set up times were reduced drastically, it made smaller lifesize feasible which increased the production.
Harley Davidson introduced SUPPLY CHAIN MANAGEMET and JUST WITH TIME MANAGEMENT that assist to accomplish continuous improvement in quality and delivery services, so there is drop in warranty cost also helped to eliminate inventory.
Shift of production focus from PUSH (anticipating demand) to PULL (responding to orders).
Supplier involvement program was evolved to increase the product development efficiencies and effectiveness which lead to development cost and reduced amount of developed time and reduce the cost and increase product value. Suppliers must install JIT, Statistical Operator Control, and should benefit continuous improvements. Supplier development must improve the performance and capacity to meet the long term supply need.
Rewards and Outcome
The main achievement of Harley Davidson is Quality and Delivery, it had established its base on the market. Introduction of just in time management helped these to work according to customer needs which led to client satisfaction. Continuous improvement and bench marking the supplier helped them to increase the quality of the product.
Analysis
Supply chain management:-It is an activity which is defined as planning of operations, implementing the functions and controlling the procedure of the supply chain to meet customer requirement as successfully as possible. It includes production scheduling; Order processing, inventory management and customer services.
Just with time or Man: Just in time helped Harley Davidson by eliminating waste by using quality of raw material, producing right quality of product in right place at right time. In addition, it improves the product quality, increase the productivity and reduce the cost. Harley Davidson called just with time as man (material as needed). just with time help Harley Davidson to develop trust between suppliers, it also helped to increase inventory turns which generate the cash flow.
Principles and Technique of just with time utilized by Harley Davidson
Total quality control:- The purpose of total quality management is to concentrate on client satisfaction by enhancing process, high quality of product and services. Total quality may be accomplished by Employee involvement program and stastical operator control.
Reducing batch size production:- small batch size production really helps to reduce inventory, reduce handling cost, smooth production flow and improves quality of the product.
Reduce create time:- Reduced amount of create time really helps to make smaller and larger size doable. It also increases the productivity and quality. Reduces inventory, space and time.
Pull system (kanban):- pull system is a method in which we can control the flow production predicated on customer demand. In this technique production is performed in small batches in case if there is any problem at any point of operation the complete production line will quickly come to stop. Implementation of pull system can enable you to eliminate waste in handling, optimize the shop floor space usage and increases on time delivery to customer.
Supplier development:- supplier development is long-term relationship between customer and supplier that intent to benefit both. Supplier shouldn't be treated as external source but part of supply chain management. Supplier development is actually developing supplier in same manner the employer are developed, providing scheduling information about product and involving supplier in design stage can enhance the quality of product. Darren docemsolo lean supply chain mgnt
Total employee involvement:- Every single employee should be committed and dedicated to their work. employeer should be engaged in quality circle with in the business in order to go over and develop management issue. Quality circle to encourage employee to use responsibility of the work which helps to improve quality and elimination of waste.
Supplier selection: The best decision taken by the management of the Harley Davidson was proper selection of supplier. Before there have been lot of suppliers so quality of the product was unpredictable single sourcing helped them to check the defect. selection was done by better interviewing the supplier and understanding supplier capability.
Supplier relationship: Another important step taken by Harley Davidson was improvement of supplier relationship. Their past relationship with suppliers had not been that good which lead to quality and delivery problem, weak relation with supplier make a difference the business and entire supply chain. Sharing information and conducting problem solving programs like statically operation control and employee involvement program helped Harley Davidson to improve the long term relationship. Working with the supplier in a variety of forms improves effectiveness and efficiency of operations in a corporation. Good use of relationship with the supplier can boost the resource and capability of the company and therefore it can improve market effectiveness. Harley Davidson would conduct meeting twice a year and looked for continuous improvement process.
Continuous improvement
continuous improvement is a management policy that sees quality improvement as an on-going process, and increasing improvement rather than once and for all improvement efforts. It can help to improve the supply chain all together.
Future Trends
Harley Davidson has diversified futuristic plans. Apart from being a leader in the Motorcycle manufacturing, these are into Branding with their logos. Supplier trainings, with a detailed study of these past strategies, problems and the way they may have approached the solutions. The progressive Supply Chain Management systems which they inculcated in the business. Also their aims are:
- Being top notch customer
- Make worlds profitable motor cycle
- To have best supplier in the world
- To be recognised by customer for quality, value of product, services
Key point
Key points that people could learn from this layout are
- Quality
- cost
- Delivery and demand
- Development
- Management
Quality is the main objective of each and every organization but is also needs to be affordable. The efficient logistics must ensure that the delivery is promptly, which escalates the demand. Continual improvement of the merchandise is achieved by development of research, training and supplier relationship. Management must be actively involved in strategically controlling the operations of Supply chain.
Conclusion
From the above mentioned study we can conclude that how Harley Davidson regained their reputation on the market by applying Supply Chain Management, just with time program and also good relation with the supplier helped them to improve their quality and standard of the merchandise. Supplier quality was unpredictable in past, sharing information, good scheduling and teaching their supplier to adapt just in time program improved Harley Davidson's quality, delivery and sevices. Thus applying supply chain management organization can enhance their product range and make a much better method for their future.
