Harley Davidson Supply Chain Improvements Essay Example for Free

Harley Davidson deliver Chain Improvements EssayIn the early 1980s Wisconsin-based Harley-Davidson Motor Company, the countrys largest manufacturer of motorcycles, was assay to survive. Faced with an onslaught of sever competition from Japan and failing newly products, Harley-Davidson was challenged to take a breather profitable. However, non unaccompanied did Harley-Davidson survive, it became a huge success story, with sales increasing from 36,735 motorcycles in 1986 to 291,417 in 2003 to over 350,000 motorcycles in 2006. It has to a fault expanded globally into Europe, China and India.A significant factor in its turnaround was the strategic changes it make in managing its render chain during the next decade. In the mid-1990s Harley-Davidson initiated sophisticated leave chain strategies to humble breed and purchasing damages while improving product quality and delivery times from providers. Harley-Davidson this instant expects suppliers to focus strategically o n cost, delivery, and quality improvement and to hit established cost and quality targets.Suppliers be expected to meet twice the level of quality and to develop a written strategic platform to achieve goals for quality improvement. Suppliers argon graded according to defective parts-per-million and it has a target goal of 48 defective parts-per-million that suppliers are expected to achieve. Harley-Davison sends suppliers a monthly report showing their quality and delivery performance, and if the supplier receives a bad report Harley-Davidson sends their people to the supplier to determine the problems and help them resolve them.If the supplier does not improve its performance, it is replaced. In 1995 defective parts-per-million for suppliers were generally around 10,000 however, by 2001 approximately 75% of Harley-Davidsons supplier base was performing at 48 defective parts-per-million or better, and 36 suppliers were performing at nonentity defective parts-per-million. These objectives consciously reduced Harley-Davidsons supplier base that could not meet expectations for cost, quality, and delivery by 80%, from 4,000 suppliers to 800.In some cases Harley-Davidson has moved toward single-source relationships with suppliers. In these instances, the company partners with one supplier for a part, system, or component for example, lighting systems, instrumentation gauges, or ignition systems and works closely with the supplier to develop applied science that the company needs to remain competitive. Approximately 80 on-site (resident) suppliers take part in new product design, creating an interface between the company and its suppliers that helps Harley-Davidson improve quality and cut costs.In return, Harley-Davidson remains allegiant to the supplier and reduces supplier uncertainty, provided of course that the supplier continues to meet the companys objectives for improvement. In order for Harley-Davidson suppliers to remain competitive they must enfor ce similar exacting goals and standards on their own suppliers, thus creating efficiency and cost effectiveness along the entire length of the supply chain from Harley-Davidsons suppliers to its suppliers suppliers, and so on.Harley Davidson is using the cyberspace to further improve its supply chain performance. The company launched an interactive Internet-based supply chain management system that placed a large portion of the companys supply chain management plainly to the Internet. It provided all suppliers with learning they need to conduct online financial transactions and reduce the time spent chasing invoices. Suppliers are linked by a web portal to critical business transaction information, including data on delivery and quality performance and the status of financial transactions.In-house software reports defect rates that provides quick feedback to suppliers close to bad components. Suppliers can look at production schedules and delivery requirements and assess their ability to meet those schedules. Documents and information previously sent using an EDI format are now sent more cheaply with the Internet, which is also more universally available to supply companies, particularly smaller ones.What has been the effect of these changes in supply chain management at Harley-Davidson? They reduced operating expenses by $161 million the company now manages its inventory according to a JIT system, and it runs on 6. 5 to 10 days worth of inventory compared to 8 to 15 days of inventory before its supply chain initiatives its logistics and distribution center costs as a percentage of sales decreased by 59%. By any measure Harley-Davidsons supply chain management strategy has been a success.