The Team

1
The Team

• Chris Czar
• Chris Kowalski
• Dave Martin
• Steve Corle
• Steve Harris

2
Agenda

• Harley-Davidson History
• Organizational Structure
• Issue/Goals/Key Players
• Supply Management Strategy
• Risk Assessment
• Evaluating the Suppliers
• Alternative Evaluation Methods
• Recap
• The Teams Choice
• Questions/Discussion

3
Company Vision

• Harley-Davidson believes the key to success is to
  balance stakeholders interests through the
  empowerment of all employees to focus on
  value-added activities.

4
Company Values

• Tell the Truth.
• Be Fair.
• Keep Your Promises.
• Respect the Individual.
• Encourage Intellectual Curiosity.

5
Company History

• 1903 21-year old William S. Harley and
  20-year old Arthur Davidson make the first
  production Harley-Davidson motorcycle.The
  factory in which they worked was a 10 x 15-foot
  wooden shed with the words "Harley-Davidson Motor
  Company" crudely scrawled on the door.

6
Company History

• 1910 The famed "Bar Shield" logo is used
  for the first time.
• 1912 H-D exports motorcycles to Japan
• 1920 Harley-Davidson becomes the largest
  motorcycle manufacturer in the world.
• 1953 Hendee Manufacturing, the creator of
  the Indian motorcycle, goes out of business.
  Harley-Davidson would be the sole U.S. motorcycle
  manufacturer for the next 46 years.

7
Company History

• 1981 On February 26, thirteen Harley-Davidson
  senior executives sign a letter of intent to
  purchase Harley-Davidson Motor Company and take
  it private. By mid-June, the buyback is official,
  and the phrase "The Eagle Soars Alone" becomes a
  rallying cry.

8
Company History

• 1986 The Motor Company is listed on the
  American Stock Exchange, the first time
  Harley-Davidson is publicly traded since 1969
• 1987 Harley-Davidson is listed on the New
  York Stock Exchange.

9
Customer Loyalty

• 1983 One of Harley-Davidson's most unique
  endeavors begins Harley Owners Group. Fondly
  referred to as H.O.G., the Group immediately
  becomes the largest factory-sponsored motorcycle
  club in the world. Within six years, H.O.G.
  membership soars to more than 90,000. By the year
  2000, it exceeds 500,000 members.

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11
Customer Loyalty

• 1993 Harley-Davidson celebrates its 90th
  Anniversary in Milwaukee with a Family Reunion.
  An estimated 100,000 people ride in a parade of
  motorcycles.
• 1998 Harley-Davidson celebrates its 95th
  Anniversary. 140,000 plus riders are warmly
  received by Milwaukee to help with the
  celebration.

12
90th AnniversaryFamily Reunion Milwaukee,
WI
13
Facilities

• Wisconsin
• Milwaukee HQ, RD, Parts Accessories, Sales,
  General Merchandise
• Wauwatosa Product Development, XL engine
  transmission production
• Menominee Falls FL engine and transmission
  production
• Franklin Parts Accessories Distribution
  Center
• Tomahawk Fiberglass parts production and
  painting
• Pennsylvania
• York Part production, painting, custom and
  touring motorcycle final assembly
• Missouri
• Part production, painting, Sportster motorcycle
  final assembly

14
Facilities

• 1973 Motorcycle production is upgraded when
  all assembly operations are moved to a modern
  400,000 square foot plant in York, Penn. All
  other production operations remain in Milwaukee
  and Tomahawk, WI. The Capitol Drive plant in
  Milwaukee begins production of engines.

15
Facilities

• 1996 A new, state-of-the-art Parts and
  Accessories Distribution Center opens in
  Franklin, Wis. By the beginning of 1997, all
  inventory is moved from the original warehouse at
  Juneau Avenue to the new 250,000-sq.-ft. facility

16
Facilities

• A new 217,000-sq.-ft. Product Development
  Center opens next to the Capitol Drive plant in
  Milwaukee
• A new 330,000-sq.-ft. plant in
  Kansas City produces its first Sportster.

17
Facilities

• 2001 Harley-Davidson announces expansions at
  the Product Development Center (Milwaukee), as
  well as Tomahawk, WI, and York, PA, facilities.

18
Recent Unit Sales History
19
The Leadership Circles
Produce Product (PPG)
ITC
Create Demand (CDC)
Leadership and Strategy Council
ITC
Provide Support (PSC)
ITC
20
Organizational Structure

• Self directed teams from factory floor to
  executive level
• Three interlocking circles versus a functionally
  separated hierarchy
• Each group (circle) had their own IS Director
• Each IS Director ran their own ITC (Information
  Technology Circle)

21
The Purchase Unity Group - PUG

• Over the years site independence had been
  encouraged
• Different information systems were developed for
  purchasing at different sites.
• Different OE systems were being used at different
  sites
• The maintenance systems differed from the OE
  systems

22
Whats The Issue ?

• As a result of encouraged independence, several
  of the HD sites developed different methods for
  acquiring or developing various information
  systems for purchasing related activities.
• Realized a need for one strategy for all HD sites
  known as the Supply Management Strategy (SMS).

23
The Main Goal of SMS

• Supply HD with the right product, at the right
  time, with the best quality, for the lowest
  possible cost
• Link suppliers with HD purchasing department and
  focus on that relationship.

24
4-Stage Attitude Formation Model
Attitude (Evaluation)
25
The Project Players

• Garry Berryman (VP of Material Mgt)
• Dave Cotteleer (SiLK Project Manager)
• Pat Davidson (Mgr. Purchasing/Planning and
  Control)
• Cory Mason (CIO of PPG)
• SiLK Team (Supplier Information Link)

26
Supply Management Strategy

• None - Each area managed their own supplies
• Short-term transaction mentality
• HDs supplier relationship wasnt viewed as a
  strategic opportunity to speed time to market,
  reduce costs, and improve product quality -
  Gary Berryman, VP Materials Management.

27
Changing the Supply Management Strategy

• There was a high degree of dissatisfaction with
  the current system(s)
• HDs first concern was the huge unmet demand for
  their product
• Most times the company chose continuous
  improvement versus transforming business
  functions (IS largest fear)
• Organizational change would be required

28
Changing the Supply Management Strategy

• Initial PUG Presentation
• Purchase cost reductions over 5 years, 34M
• Lower DM Cost
• Lower inventory costs
• Lower carrying costs
• Project Team Formed (SiLK)
• The software selection process was used as the
  backbone to overhaul the SMS

29
Changing the Supply Management Strategy

• Map the current process
• Survey the stakeholders
• Map the new process
• Define the project scope
• Submit RFQ to potential suppliers
  (RFQ - Request for Quote)

30
Risk Assessment

• Risk Assessment is an important part of managing
  IT projects
• Ignoring project risk can lead to
• Higher than expected implementation cost
• Longer than expected implementation time
• Failure to obtain anticipated benefits due to
  implementation difficulties

31
Risk Assessment

• A weighted risk assessment questionnaire can be
  used to determine the level of implementation
  risk
• Sample Question
• Estimated project implementation time
• 12 mo. or less Low 1
• 13 mo to 24 mos. Medium 2
• More than 24 mos. High 3

32
SiLK Team Selection

• Best person!
• Handpicked influential players from across the
  PPG.
• Opinion leaders in their organization.
• Intimate with the existing process.
• Tough customers to accomplish the hard sell first.

33
SMS Software Selection Timeline
34
Summary - Provider 1

• Pros
• Paid very specific attention to what Harley
  wanted.
• Software appeared strong functionality as well as
  from a Change Management perspective.
• Very knowledgeable with their software.
• Provided work-around solutions if functionality
  was not met
• Engaged Each Harley member according to where
  they fit in on the team
• Enthusiastic/Matching Cultures (Harley/Provider 1
  Shirts)
• Harley Team Felt a Natural Affinity to Provider 1
• Cons
• Provider 1 was not No. 1 regarding functionality
• Did not provide web enablement

35
Summary - Provider 2

• Pros
• Software appeared to be No.1
• Widely admired in the industry
• Very professional, yet somewhat more formal that
  what Harley was used to.
• Provided work-around solutions if functionality
  was not met
• Seamless web-enablement
• Cons
• A few Harley members were wary of the Heavy
  consultant attitude that prevailed
• More Expensive than competition
• Didnt emphasis processes for assessing
  organizational needs and preparing people for
  change.

36
Summary - Provider 3

• Pros
• Major ERP Player.
• Software had good reviews
• High Self Evaluation Score (96.8)
• Already existing partnership between Provider 3
  Harley (political Economical Advantages)
• Cons
• Appeared unprepared for Initial Presentation to
  Harley.
• Initially, did not distinguish itself
• Provider 3 had a functional product but had a
  weak focus on social dimensions
• A few Harley members questioned whether they even
  read the RFQ.

37
The Evaluation Process

• The SiLK team did many things well
• Most importantly, they obtained executive
  sponsorship
• Developed a wish list based on end-user survey
• Included key members from all affected teams in
  the selection process
• Marketed themselves well to the HD Enterprise
• IDd a current as is state and developed a
  desired to be state
• Concluded that Change Management was important to
  the success of the implementation of the new
  product
• Kept vendors at a safe distance, and delivered
  their expectations to them ahead of time

38
Areas of Improvement?

• Some shortcomings with the selection process
• Software products were evaluated in a safe,
  controlled environment rather than in an
  environment which mimics HDs network
• Improvements could be made in the Qualitative
  Evaluation

39
Complexities of a Network
Business Applications
Servers
Each Introduces New Interoperability Concerns
Network Components
Data Backup
40
Complexities of a Network, Cont.

• Any software will work in an environment the
  vendor can control
• HD could have obtained an evaluation version of
  the software candidates to monitor in their own
  test environment.
• A test environment mimics the live network
  environment on a smaller scale
• Used to test interoperability
• Additionally a self-evaluation would allow HD to
• Further critique the features and functionalities
• Stress Test the software based on expected
  transaction volumes
• Determine the ease of installation and
  scalability of the software throughout the
  enterprise
• Would you buy a new car without test driving?
  Then why software?

41
An Alternative Qualitative Evaluation

• In the method used by HD (Llow, Mmedium,
  Hhigh)
• they balanced all criteria equally with some
  overlap (overall functionality web
  functionality?)
• No Final winner selected
• Weighing Criteria and giving each vendor a
  score could resolve these shortcomings.

42
An Alternative Qualitative Evaluation, Cont.
43
The Harley-Davidson Way

• Trademark
• Conservative.
• Employee enthusiasm.
• Continuous improvement.
• Old School co. in networked economy.
• Culture driven decisions.
• Customer loyalty based dependencies.

44
Just to Recap

• Acknowledged an issue.
• Developed a strategy to solve the issue.
• Organized a project team to develop requirements
  to meet that strategy.
• Put out an RFQ for a supplier to implement the
  requirements.
• Evaluated potential suppliers.

45
The Big Question

• Who should HD chose as their supplier and partner
  in implementing an enterprise wide procurement
  and supply management system?
• Provider 1
• Provider 2
• Provider 3
• None of the Above

46
Why Provider 2?

• Functionality leader.
• Close line by line detail.
• Work around plans.
• Web enabled.
• Major Player in ERP market.

47
Questions/Discussion

• What factors were important to HD and on what
  elements should the decision be based on?
• Did HD do everything possible to allow them to
  make an informed decision?
• Should HD outsource?