Policies, Processes, and Methods of Operations Management at Harley-Davidson Motor Company

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Policies, Processes, and Methods of Operations Management
at Harley-Davidson Motor Company
September, 2012

Introduction
The role of operations management (OM) requires a great deal of responsibility. No matter the size or type of business, the technique and knowledge applied by an operations manager when planning, organizing, staffing, leading and controlling, can make or break a company (Heizer & Render, 2011). Harley-Davidson Motor Company is a prime example of a goods producing organization with a history of unstable performance and successful achievements all affected by OM role. The following paper is an overview pertaining to policies, processes, and methods of OM at Harley-Davidson and acknowledgment of how todays’ OM decisions affect HD’s future as the number one motorcycle manufacturer. Background

Harley-Davidson was founded in 1903 in Milwaukee, WI, by William Harley and brothers’ Walter, William, and Arthur Davidson. In 1929, 241 U.S. motorcycle manufacturers were in business but the Depression would find only Harley-Davidson and Indian remaining, until Indian closed its doors in 1953 (H-D History, 2012). Harley-Davidson would spend the following decades in aggressive financial struggles, periods of lowly manufacturing, and relentless foreign competition. Today, Harley-Davidson is a worldly traded organization, a cherished icon, and testament to the survival of an American business. Who is HD?

Harley-Davidson is known for manufacturing heavyweight motorcycles in custom, cruiser and touring models in the U.S. and now with assembly operations in India and Brazil. HD’s domestic plants are; 1) York, PA, maker of Softail models, 2) Tomahawk, WI, for saddlebags and windshields, 3) Kansas City, MO, home of Sportster®, Dyna®, and VSRC™, and 4) Menomonee Falls, WI, an 849,000 square foot powertrain facility (Factory Tours, 2012). Aside from small scale custom cycle shops in the U.S., Harley’s primary competition manufactures overseas. The long-standing Japanese competitors of HD are Yamaha, Suzuki, and Honda. Supply Chain Characteristics

Consumers intent on buying American-made can be assured Harley-Davidson still lives up to its patriotic reputation. Even when cheaper parts are available offshore, HD’s Strategic Sourcing Program (SSP) requires use of domestic manufacturers and suppliers in most all cases, effectively preserving customer perception of HD as an American-made brand (Jesse, 2011). Manufacturing American-made motorcycles with American-made parts lends credit to a definitive supply chain characteristic of Harley-Davidson. Supply Chain Strategy

A substantial percentage of Harley-Davidson’s motorcycles’ are internally produced but HD cannot survive without help from a few critical suppliers helping complete the overall production processes. Of the 6 supply-chain strategies defined in Operations Management, Heizer and Render (2011) define the use of few suppliers as a strategy for establishing long term buyer / vendor relationships which ultimately yield reliability and cost savings over time. For Harley-Davidson, hiring limited-long-term-suppliers is a major contribution to improved manufacturing consistency in its present day motorcycles. Negotiation Strategies

Due to shear diversity of parts and materials required in production of a motorcycle, one can presume Harley-Davidson might prefer a combination of three collective strategies when negotiating and selecting suppliers. Cost-Based Pricing would likely be preferred when determining long term suppliers, Market-Based Pricing for optimum pricing of raw material commodities of frame construction and drivetrain components, and Competitive Bidding, primarily when pricing new HD projects. Suppliers must be familiarized with HD’s Concurrent Product and Process Delivery Methodology (CPPDM) and HD’s alignment with the Automotive Industry Action Group (AIAG) Production Part Approval Process (PPAP) to effectively validate and...
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