harley goes lean -harvard case review

BY GROUP 2

ANTON

JENNIE

KAREEM

KIRILL

ZHAO

FAHME

• Recession - Harley Davidson & Motorcycle Industry feels the Crunch. Motorcycle industry demand has continuously reduced for last 7 years.

• Strategic Decisions - Sustain and maintain Competitive Advantage. Production

location and negotiations with the Union. • Management Restructure - New CEO and Centralized decision making • Outcome - Profit Margins at 16% (2011) from 12.5% in (2009)

VISION

We fulfill dreams inspired by the many roads of the world by providing remarkable motorcycles and extraordinary customer experiences. We fuel the passion for freedom in our customers to express their own identity.

MISSION we ride with our customers and apply this deep connection in every market we serve to create superior value for all of our stakeholders.

DIFFERENCIATION

COST FOCUS (As a temporary solution to address

uncertainty in the market and Recession)

(THE AMERICAN LEGEND)

• Innovation • Customer Loyalty and reputation • Strong Financial Position • Extensive supplementary product

line

• Emerging markets • Changing demographics • Rising gas prices • Outsourcing parts manufacturing

• Weak global presence • Decentralized production prior to

2009 • Narrow position design

• Competition • Safety Regulations for riders • Weather conditions

• Improve production efficiency

• Restructure workforce

• Partner relationships

• Senior level management restructuring

• Reinvigorate conversation with customers

• Consolidation of 41 production facility into 1

• Order coordination system is revamped

• Atomization of the production line

• Technically efficient new floor layout to decrease transition time

Before After

• Reduced number of hourly workers from over 2000 to 1000 (with 100 “casual” employees)

• Alternative forms of employment (flexible hours, part-time and outside contractors)

• Renegotiated union agreement (58 pages instead of 136 in the old contract)

• Redesigning jobs, instead of 62 job classifications down to 5

• Employee empowerment

• Total quality control production system (every person encouraged to fix minor defects)

• Outsourcing parts production

• Partnering with production line

equipment manufacturers for

maintenance

• Improved order coordination

with dealership to reduce

inventory

• New CEO, Keith Wandell

• Centralization of decision making

• Senior managers are required to spend time at dealerships to

understand distributor’s needs

• Manager’s community involvement

• Continuous improvement of Harley Owner Group

(HOG)

• Sponsored events

• Test drive appointments and production facility visits

• Charitable work and donations

• Classes and Workshops

ENVIRONMENTAL • Global warming: Shifts in warmer weather

• Increasing environmental awareness: Pollution

POLITICAL & ECONOMIC • Current regulation and policy: Low

• Public infrastructure aids

• Increasing gas/oil costs

SOCIAL & TECHNOLOGICAL • Falling costs of insurance

• Shifts in consumer taste in commuting tools

• Current technology change is moderate

• Trend of computer-aided design/Computer-aided manufacturing:

YAHAMA

VICTORY MOTORCYCLES

BIG DOG MOTORCYCLES

66%

2% 1%

1% 1%

29%

Market Share

Harley DavidsonDorel Industries IncPolaries Industries IncYamahaHuffy CorporationOthers

• Alternative forms of employment could mean:

– Higher worker turnover, less commitment to brand

– Higher HR costs, (it costs money to replace a skilled worker)

• Outsourcing of part manufacturing leads to

– Less control over quality

– Potential disruptions

• Firm’s strategic management might be at risk, as senior managers could

start searching better paying employment