Harley Goes Lean -Harvard Case Review

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Harley Goes Lean -Harvard Case Review

  1. 1. BY GROUP 2KIRILL ANTONZHAO JENNIEFAHME KAREEM
  2. 2. • 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)
  3. 3. VISIONWe fulfill dreams inspired by the many roads of the worldby providing remarkable motorcycles and extraordinarycustomer experiences. We fuel the passion for freedom inour customers to express their own identity.MISSIONwe ride with our customers and apply this deepconnection in every market we serve to create superiorvalue for all of our stakeholders.
  4. 4. DIFFERENCIATION (THE AMERICAN LEGEND) COST FOCUS (As a temporary solution to address uncertainty in the market and Recession)
  5. 5. • Innovation • Weak global presence• Customer Loyalty and reputation • Decentralized production prior to• Strong Financial Position 2009• Extensive supplementary product • Narrow position design line• Emerging markets • Competition• Changing demographics • Safety Regulations for riders• Rising gas prices • Weather conditions• Outsourcing parts manufacturing
  6. 6. • Improve production efficiency• Restructure workforce• Partner relationships• Senior level management restructuring• Reinvigorate conversation with customers
  7. 7. • 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 timeBefore After
  8. 8. • 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)
  9. 9. • Outsourcing parts production• Partnering with production line equipment manufacturers for maintenance • Improved order coordination with dealership to reduce inventory
  10. 10. • 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
  11. 11. • Continuous improvement of Harley Owner Group (HOG)• Sponsored events• Test drive appointments and production facility visits• Charitable work and donations• Classes and Workshops
  12. 12. 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:
  13. 13. YAHAMA VICTORY MOTORCYCLES BIG DOG MOTORCYCLES
  14. 14. Market Share 29% Harley Davidson Dorel Industries Inc Polaries Industries Inc Yamaha 1% Huffy Corporation1% 66% 1% Others 2%
  15. 15. • 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

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