Organizational Setting: Harley-Davidson Davidson

Harley-Davidson-Davidson is an American motorcycle manufacturer headquartered in Milwaukee, United States. Mitchel (2004) considers Harley-Davidson-Davidson as a legendary name in the Motorcycle industry, and has managed to establish itself not only as a motorbike manufacturer but also a brand reflecting the choice and the way of life of people. The vision of Harley-Davidson Davidson is offer extraordinary motorbikes as well as customer experiences. Its mission is to ride with its customers and to make use of this bond to generate superior value for all its stakeholders including the markets that the company serves. Since its establishment, Harley-Davidson Davidson has expanded its operations in at least 60 countries in order to satisfy the expectations of its customers across the globe. Harley-Davidson (2013) reports that Harley-Davidson Davidson is the largest heavyweight motorcycle manufacturer globally in terms of market share, dominating about 50 percent of the US market and about 33 percent of the global market. Harley-Davidson differentiates itself from its competitors by focusing on the production of the heavyweight motorbikes. In addition, its motorbikes are considered a luxury good that competes mainly on the basis of quality and price instead of price; this results in high margins for the company. Harley-Davidson’s past success and continued growth can be attributed to the brand loyalty from its customers (Mitchel, 2004). Harley-Davidson is the only corporation having its customers tattoos its corporate logo on their bodies, which affirms the high levels of brand loyalty from its customers.

Regardless of the fact that its customers are always associated with rebellion, the average Harley-Davidson customer is an upper class white male aged 47 years. Harley-Davidson is expanding its customer base to increase its global presence as well as target new demographics, both in the United States and in global markets (Harley-Davidson, 2013). At present, a significant proportion of its customers come from the United States; however, global retail sales have been on the increase with respect to the global sales for the company. Harley-Davidson forecasts that, by 2014, at least 40 percent of the company’s sales will be from outside the United States. Harley-Davidson has implemented a multi-cultural and multi-generational marketing approach in the United States to increase its customer base to include Caucasian men aged above 35 years, young adults aged 18-34 (both women and men), Caucasian women aged above 35 years, and Hispanics and African Americans above 35 years (Harley-Davidson, 2013). The motorbike registration results in the US point out that Harley-Davidson is a market leader for heavyweight motorcycles among young adults, its core customers, women and diverse customers. Harley-Davidson has a relatively large margin regarding its dominance in the United States heavyweight motorcycle market when compared to the firm’s main competitors. Despite the fact that the US is the most significant Harley-Davidson’s market, the firm distributes its motorcycles in other markers globally, especially in Europe, whereby the firm has increased its market share from 9.8 to10.7 percent during 2005-2007, and Canada, with a market share of 32.7 percent. According to Harley-Davidson (2013), Harley-Davidson has the largest market share of 33 percent globally.

The motorcycle industry, just like other manufacturing sectors, relies significantly on the supply of raw materials and component parts to facilitate their manufacturing operations. In this regard, Harley-Davidson relies significantly on sufficient supply of engine components, wiring, tires, upholstery products, plastics, aluminum sheets, metal coils and sheet coils among others. This implies that Harley-Davidson relies on diverse internal customers to supply its raw materials for its manufacturing activities. Mitchel (2004) points out that supplier diversity is a core component of the business strategy adopted by Harley-Davidson; this is because partnering with diverse suppliers helps the firm to establish a supply base that is diverse as well fuel economic growth and development. The Chairman also pointed out that the company’s ability to achieve its expectation and targets largely depends on its ability to effectively execute its operational strategies.

Integration of Chapter Concepts to Organizational Setting

Supply Chain Management

Business organizations are increasingly becoming aware about the importance of having a competitive advantage in an industry and this can come through SCM (supply chain management), which involves organizing the operations from the customer’s order through the delivery for speed, efficiency, and quality. Meredith & Shafer (2010) outlines SCM as the management of the network of all the business activities or processes involving procurement of raw materials, design, manufacturing and distribution of the finished good. In Harvey’s scenario, SCM simply means, managing demand and supply at a global level. SCM is a critical backbone of Harvey’s operations today.  Effective market coverage translates to the availability of the motorbikes at locations that hold the pass to revenue recognition. Simply stated, when new motorbikes are introduced in the market, the whole market and all sales points need to have the model where customers are able to take deliveries or buy. In the event that a product is not available at the right time and place, customer demand or interest may drop (Bakliwal, 2011).

Inventory visibility and inventory control are critical elements in any business operations since they greatly affect the balance sheet. Therefore, the company should improve its inventory turnaround. That is, increase the number of times the products are sold and replaced within a financial budget period time. In the current global scenario, third parties can be used to manage finished goods inventory held at distant locations or distribution centers. Supply chain management strategy will ensure that there is an effective control of the inventory and visibility. SCM will minimize the loss of inventory in the supply chain that would lead to loss of value. Effective supply chain strategies will improve operational efficiencies and the balance sheet. Given that that the supply chain is very dynamic and full of challenges, the company should strive to hire strategic project managers to head the supply chain. Harley-Davidson should also consider investing in technology which has reshaped all aspects of global business. A state of the art ERP (enterprise resource planning) would provide the company with the effective tools to manage all its functions including production, procurement, finance and sales management is an integrated and seamless manner (Olson & Kesharwani, 2010). Examples of these software systems include Oracle, SAP, Microsoft Dynamics/Navision and People Soft. Enterprise Resource Planning system mirrors the image of the key business processes or functionalities. This software would enhance business processes that are managed manually. Information technology is a critical enabler of SCM in the current complex marketplace transforming to globalization.

Product Customization

Product customization is met through the development of products and services that have the attributes desired by the customers (Meredith & Shafer, 2010). The essence of product customization is to satisfy the customers and maximizes the value at a minimum cost. Harley-Davidson motorbikes are a success due to the fact that they are highly customizable and provide robust performance (Harley-Davidson, 2013). It is possible for a customer to create a persona motorbike design online before placing an order. A bike builder is an online application developed by Harley-Davidson to assist its customers to customize their own bikes. The design of Harley-Davidson products is practical end powerful to give the company a competitive advantage. Besides customization, Harley-Davidson product designs are differentiable. This can be improved through attractive packing and the provision of additional services on the motorbikes. These products aesthetics are high customizable on order and depend on the market and individual customers (Harley-Davidson, Bike Builder, 2013). Harley-Davidson should ensure that product customization service meets the basic needs of the customer. A successful product customization service requires skilled workers and timely technologies. Harley-Davidson has an edge in this respect due to its ability to detect any issues with its manufacturing processes or motorcycles to prevent delays and defects in new model launches, increased warranty costs, recall campaigns or litigation.

Total Quality Control

Quality is an attribute or parameter, which differentiates a product or service from its competitors. It brings out the inferiority or the superiority of a product or service in the market. Harley-Davidson emphasizes on quality since it plays a critical role in it success (Chase, 2007). The company’s culture focuses on the quality of their brands over quantity to survive the harsh conditions of the global market. In industries where there is cut throat competition, quality of the products brings out the difference. According to Cua, McKone, & Schroeder (2001), Total Quality Control is a continuous effort by the management and its employees to ensure long-term client satisfaction and loyalty. It is evident that, one satisfied customer may bring ten other customers. According to Chase, Aquilano & Jacobs (2004), Total Quality Management is a well designed effort by the employees of an organization to continuously improve the quality of their products and services (Cua, McKone, & Schroeder, 2001). This is achieved through research and feedbacks. It is a collective responsibility to ensure the superior quality of the motorbikes and other services. Every individual within the rims of the company has to contribute equally in the design of seamless processes and systems which would result in higher quality products and services. Mercado (2008) asserts that the concept of TQM is indeed a joint endeavor of the management, workforce, staff members and suppliers to meet and surpass the level of customer satisfaction. This responsibility lies on everyone, even those who are remotely linked with the company. The company should offer something extra to the customers to gain and maintain loyalty. Quality can be gauged in terms of reliability, durability and usage. The concept of TQM originated in the manufacturing industry. Harley-Davidson should ensure that every employee works towards the improvement of processes, systems, corporate culture, products and services. Total Quality management is divided into four major categories: Plan, Check, Do and Act. This is also referred to as the PDCA cycle. The planning phase is very critical and should involve all the stakeholders. At this stage, the company should conduct timely research and up to date data which would offer solutions to the problems or challenges the firm is facing. In the doing phase, the company develops solutions to the defined problems. It is essential that the company measures the effectiveness of the strategies and solutions at this phase. At the checking phase, a comparison analysis of before and after generated data to establish the effectiveness of the designed processes or systems. In the last phase, the involved parties document their findings and prepare to address those problems that were identified in the planning phase.

Total quality management would ensure superior quality motorbikes and related services. TQM tools would also ensure transformation in the existing processes and systems with the market dynamics which would eventually yield superior quality products and services. Customers need to be satisfied by Harley’s brand. The company should hire and appoint business marketers who would emphasize on quality rather than quantity. Customer satisfaction will eventually lead to customer loyalty. Besides new customers, Harley-Davidson should strive to maintain their old customers. Harley-Davidson should also ensure that their new motorbike designs meets and fulfills their customers’ expectations and needs respectively (Mitchel, 2004). Through regular market research, the company can collect relevant information, which would outline the customers’ needs and demands. Customer feedback is efficient in this aspect. TQM tools help Harley-Davidson to design and manufacture the products which the customers actually want or desires. TQM would also lead to improved productivity and revenues for the company. As the company increases its revenue, the employee also earns and in turn the level of motivation and performance improves. TQM elements would also make the firm a better working environment. Proper implementation of TQM mechanisms results in customer satisfaction, hence better business, improved cash flow, satisfied employees, and healthy environment among others (Meredith & Shafer, 2010).

Capacity planning

Harley-Davidson production system design planning reflects on input requirements, the conversion process and the output. It is essential for any business entity to undertake capacity planning after considering the long-term and forecast of planning (Meredith & Shafer, 2010). Bakliwal (2011) defines capacity as the ability to achieve, store or produce.  In addition, he highlights capacity planning as the process of determining when to have equipment, facilities and the human resource available For Harley-Davidson, capacity would be the ability of its production line to produce motorbikes within a specific time period. A widely accepted meaning of capacity is the maximum production capacity that can be achieved within the normal working schedule (Olson & Kesharwani, 2010). Capacity planning is essential for Harley-Davidson to determine optimum utilization of the allocated resources (Pinedo, 2005). It plays a critical role in decision making process. For example, modification of production lines, extension the existing business operations and development of new motorbike models. Strategic capacity planning is a technique employed by mangers to identify and quantify the overall capacity of production (Mishra, 2009). It is essential for capital intensive resource like machinery, labor and plant. Capacity planning is important as it helps Harley-Davidson to meet its future requirements. Planning ensures that the company’s operating cost is at the minimum level as possible without compromising quality (Chase, 2007). Strategic capacity planning would ensure that Harley-Davidson sustains its competitive advantage and can attain the long term expansion plan. The ultimate objective of capacity planning is to meet the current and future needs at a minimal cost. The three types of strategic capacity planning with reference to the objectives are lag strategy planning, lead capacity planning and match strategy planning. Some of the factors that affects capacity planning include human capital (compensation, job design), operational structure (quality assurance, scheduling), production technology, product matrix, production facility (location, design and layout) and external structure (safety regulations and policy).

Facility location planning

Tompkins (2010) points out that the right location for a manufacturing facility is an important element for commercial success and a sustainable competitive advantage. The key operations of Harley-Davidson are located in Milwaukee, Wisconsin.  This facility has sufficient access to workers, customers and transportation. The overall goal of Harley-Davidson is to satisfy and delight its customers with its high quality motorbikes and services. Therefore, for Harley-Davidson it is important to have a strategy formulated around the production unit. A production unit is where all inputs such as skulled labors, raw materials and equipment are integrated and manufacture products for its clients. Establishing a facility location in business is very critical strategic decision. Facility location is a rigorous scientific process which employs various techniques (Tompkins, 2010). Some of the location selection factors for a company operating in a global scale include labor skill, cost, government policies, available infrastructure and the environment. Harley-Davidson location gives is a competitive advantage in today’s global competitive economy. Other factors that would affect the location of a business include availability of insurance, credit finance and communication infrastructure. Harley-Davidson’s goal is customer delight, which requires access to the customers at a minimum cost. This aspect can be achieved through defining a location strategy.  Tompkins (2010) continues point out that a properly designed location strategy would help the business to determine the market, product offering and demand forecast in various markets. It will also help Harley-Davidson to determine the best service location in other countries. If Harley-Davidson can configure the right location in new markets, it will have sufficient access the workers, customers and the infrastructure. Some of the critical factors that the company should focus on include suppliers, environmental policy Free Trade Zone/Agreement, customer proximity and the availability of skilled labor. The proximity to customers would minimize transportation cost and the time it would take to deliver a product to the clients.

Facility Layout

Tompkins (2010) points out that for a company to have an effective and efficient production unit, special attention should be directed to the facility layout. That is, an arrangement of various aspects of the manufacturing process in a standard manner to achieve optimum production results. This is subject to the fact that there is a stable and seamless flow of production material, manpower and equipment at a lower cost. Facility location considers the physical allocation space for the plant operations (Tompkins, 2010). Therefore, the main objective of an effective facility layout planning is to develop a foolproof workflow, hence making the workers and machinery more productive. A facility layout promotes order and safety in the production line through the safety guidelines and standards (Russell &b Taylor, 2003). It also increases the production capacity of the company. A good facility layout will ease the future facility extension program to accommodate a technology upgrade or a new product line (Tompkins, 2010). Harley-Davidson will also benefit from optimum space utilization to facilitate the movement of goods and organize the equipment. To achieve these, the company should carry out regular training of the all the workers. Harley-Davidson should also ensure that optimum space is allocated for technology and the process. The design of the new facility layouts should also account the overall objectives defined by the company (Slack, Chambers & Johnston, 2007). The company should also encourage the employee empowerment and minimize administrative work. The principles that drive the design of a facility layout are capital, space utilization and flexibility. The techniques used to design a facility layout are line balancing, sequence analysis, and two or three dimensional templates.

Operations Scheduling and Workplace Planning

Workplace and schedule planning are the final phases in operation planning and design (Meredith & Shafer, 2010). Workplace and schedule planning are implemented during the actual transformation of production inputs to the output (Pinedo, 2005). At Harley-Davidson, Scheduling planning deals with the production of quality motorbikes of the demanded quantity within the desired time frame. On the other hand, workplace planning deals with the effective allocation of resources considering the priority and delivery dates. These aspects deal with both resources and time for the production of the required number of products. Stevenson (2005) theorize that the key objective of operation planning is to come up with the best way of allocating equipment and labor so as to find a balance between the use of the scarce resources and time in the company.

In the current competitive global market priority is given to lean production and Just-In-Time (JIT). Some of the major tasks performed by operations scheduling include workforce scheduling, allocation of resources and production equipment scheduling. Operations scheduling ensures that a proper workflow is developed by ensuring that there is timely allocation of job on equipment before production activities begin. Harley-Davidson has a production timetable that outlines the sequence of job, quantity and timing of the resource allocation. Scheduling planning serves as an aid in organizing cash flow planning (Tompkins, 2010).  The other objectives of workplace and schedule planning include proper utilization of the work centers, minimize the time of job on equipment and avoid delays in completion due to the importance of the delivery date (Pinedo, 2005). Operations scheduling is done in two approaches. In forward scheduling, the central factor is the date an order is received. In backward scheduling approach, the desired delivery date it the point of focus. Workplace and schedule planning helps the company to minimize bottlenecks in capacity planning. It also helps to order the production process with respect to the due date. Scheduling also enhances products and processes (Russell & Taylor, 2003). The whole process would generate data related to processing time and resource quantities. Workplace planning provides a measurement parameter to determine the efficiency of the manufacturing unit. Therefore, workplace planning and operation scheduling play a vital role in the economic success of the company (Meredith & Shafer, 2010). Harley-Davidson should ensure a continuous job schedule and focus on customer feedback to make relevant adjustments. A skill set workforce will also help in logically sequencing of different job works (Meredith & Shafer, 2010).

Material Handling

Raw materials play a critical role of the manufacturing as well as the service management. In Harley-Davidson, a significant quantity of material handling is done on a daily basis. It ranges from the movement of raw material, scraps, packing motorbikes and accessories, work in progress, rejected, and finished goods (Meredith & Shafer, 2010). Material handling is a logical and scientific process of transporting, storing or packing of material in a suitable and appropriate location (Tompkins, 2010). Material handling is meant o improve production and efficiency. The company should improve its overall manufacturing time by establishing efficient material movement mechanisms. Harley-Davidson should also continue to train its workers to ensure a safe working environment. It is critical for Harley-Davidson to identify the need for material handling principle as the pivotal step in facilitating the job improvement process. In the prevailing harsh market forces, the company control operational cost and minimize the time lost in handling material.

An efficient material handling framework improves the overall production process. It also reduces the production losses (Slack, Chambers, & Johnston, 2007). Therefore, the company should consider designing a proper facility layout while expanding or establishing new facilities. Harley-Davidson should also design methods that improves or simplifies the workflow. Harley-Davidson has mechanized most of its sensitive operations to encourage efficiently. The mechanization principle is complemented with computerization principle, which digitizes the material handling process (Tompkins, 2010). The company should also consider more efficient energy generation and saving techniques. Gravity principle can also be used to move materials where necessary hence minimizing energy consumption.

Enterprise and Material Requirement Planning

In the current global economy, integrated management information systems (IMIS) are at the core of the business operations. They are used to coordinate enterprise-wide operations, especially in procurement and settling payments. According to Olson & Kesharwani (2010), operations management outlines the importance focusing on the quality and related processes. Procurement and staffing are some of the key functional units within an organization that ensures quality. Quality in recruitment and procurement results in quality processes. Harley-Davidson can use sampling method as defined in Six-Sigma or Kaizen to improve the quality of its processes (Jacowski, 2013). Continuous improvement is linked to Kaizen methodology. Harley-Davidson strives for quality which gives it an edge, which makes its motorbikes unique from others.

The success of an operation department is often attributed to the efficiency of a production plan. One of the key components of a production plan is a manufacturing and material planning system. Material requirement planning plays a primary role in any assembly line. It is a system based technique that systematically organizes the needed production material. Material requirement planning is an information management system approach based on the company’s inventory management. This system gives information about the products and raw material available for production.  Olson & Kesharwani (2010) highlights that an effective material requirement planning avails information production scheduling and planning, as well as, information pertaining to stocking and dispatch. Planning also ensures the company inventory is maintained at desired levels. It also ensures that products and raw materials are readily available in the manufacturing unit as scheduled thus helping in matching the dynamic demand and supply.

The top management must readily accept the benefits of material resource planning for the approach to be readily acceptable by the whole unit. Harley-Davidson should also carry out training and encourage employee participation in the process. The success of the material planning depends on the accuracy and precision of the input data. Such data will give credible and reliable data.

Besides the operation department, material resource planning is beneficial to other functional departments (Mahadevan, 2009). For example, it assists the procurement team to plan and schedule the purchase of necessary input. It is also helpful to the sales department to determine the actual delivery dates of the final products.

 

Quality Management and Control

According to Russell & Taylor (2003), quality is the parameter that indicates whether the desired requirements are met. Quality management is a comprehensive process that consists of all the elements of quality planning. It involves coming up with the plans that defines standards that are needed in a project (Mahadevan, 2009).  It also outlines the people that should be involved in ensuring quality as per the laid metrics. On the other hand, quality control is a collection of predefined processes, which quantify the quality by evaluating the results of a specific project (Slack, Chambers, & Johnston, 2007). Quality control takes place during production monitoring and controlling activities, but quality management is carried out at the planning phase or operations. Quality control is a subset of the quality management and is the final phase of production management (Stevenson, 2005). Quality control is handled by specific people who the measuring and tracking of the metrics in a specialized manner. Quality management at Harley-Davidson involves representatives from its quality department. Quality control during the manufacturing process is an independent audit of the quality of the motorbikes, which is necessary at the end of the production line.

Consumers often expect a company to maintain its superiority in quality and consider it as an element of consumer satisfaction. This can be attained through various techniques. These include statistical quality control and acceptance sampling. Harley-Davidson should ensure that their existing and new designing processes are foolproof and followed to achieve the quality of service and products. The designing processes can be complimented by appropriate technologies which match the requirements of the customers (Mahadevan, 2009). This will eventually eliminate errors and defects from the process. Therefore, quality control should include designing, planning, gaps identification, improvising and implementation. If Harley-Davidson can fully implement a stringent or total quality control, then it would gain from a larger pool of satisfied clients. Quality maintenance programs would also reduce the plant maintenance costs. Quality control is equally important to delivery process, manufacturing process and input material.

Inventory Management

Business function units are interlinked and often overlap (Meredith & Shafer, 2010). Some key business aspects such as logistics, supply chain management and inventory form the pillar of the business. These function areas are very important to both finance controllers and marketing managers. Inventory management is a critical function that relays the financial health of a supply chain (Mercado, 2008). It also impacts the financial status of the bushiness. Harley-Davidson strives to maintain an optimum inventory to be able to attain its requirements and president over or under inventory that can negatively affect the financial figures. Given that inventory is very dynamic, Harley-Davidson should carry out frequent evaluation on internal and external factors, and control it through serious planning and reviews.  Mercado (2008) defines inventory as simply the idle stock of tangible goods with economic value, and held by a business in various forms waiting processing, transformation and packing sale or use in the future. Harley-Davidson holds various forms of tangible resources to assist in the future sale or consumption. Input inventory includes stationery, bolts and nuts, fuel, packing materials and locally purchased materials meant for daily operations or production. Work in process inventory includes semi-finished motorbikes in various departments like QC, paint shop outbound store and packing department. These also include defectives and rejections. Output inventory include finished motorbikes, at distribution centers in the supply chain. Other include repaired stock and parts, sample stocks, sales returns and finished motorbikes with dealers or stockiest.

Harley-Davidson should maintain a raw material inventory to meet the variation in production demand. Keeping such inventories at a facility next to the manufacturing unit ensures that the required quantity and items are available for production on JIT basis (Mercado, 2008). Raw material inventories also meet seasonal and cyclical demand. This move will also reduce transportation cost and transit times.

Conclusion and Recommendations

Operations management and production management are very critical in achieving the objectives of an organization. The key essence of any company  it o meet the needs of its customers by providing quality services and goods through processes that create high value and solve problems for customers. For Harley to deliver value and quality in its products and service, it is impertinent for the company engages external and internal vendors. This would create a continuous supply chain for its key raw materials and finished products between the production facility and customers. Harley-Davidson should also carry out extensive market research to identify customer needs and convert the collected data into specific service or product. The company can also run a backward working based on the product to identify the raw material requirements.

A stringent quality control approach will increase productivity and the overall company efficiency. It will also minimize wastages, pollution and scrap. Enterprise Resource Planning systems are gaining popularity by providing many advantages. The implementation of ERP system is a strategic decision involving both human and financial resources. Harley-Davidson must commit all its levels in it operations. A failed implementation of the organization operation aspects may result in bankruptcy. Therefore, it is essential for any company to assess and re-engineer it business operations as per the market dynamics at a minimum cost. Harley-Davidson continued market dominance in various customer segments is an indication there is a strong and growing appeal of their brand and products across various cultures and generations. Harley-Davidson should continue to focus on continuous improvement in all its operations and provide more outstanding customer experience and services. The company should also continue to deliver benefits in Harley-Davidson’s competitive and financial performance. The company should also continue to motivate the employees, suppliers and dealers for their outstanding effort towards position the company in the global market. This will ensure that the company serve its customers and generate better results for its investors. Lastly, Harley-Davidson should install and implement an up to date ERP or realest information technology solutions at its manufacturing unit and ensure that the data in those facilities is secured.

 

References

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Harley-Davidson. (2013, January 29). Chairman’s Letter. Retrieved April 2007, 2013, from Harley-Davidson: http://ar.harley-davidson.com/letter.php

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