Harley Goes Lean -Harvard Case Review Class Presentation

1. BY GROUP 2
KIRILL ANTON
ZHAO JENNIE
FAHME KAREEM

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. 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.

4. DIFFERENCIATION
(THE AMERICAN LEGEND)
COST FOCUS
(As a temporary solution to address
uncertainty in the market and
Recession)

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. • Improve production efficiency
• Restructure workforce
• Partner relationships
• Senior level management restructuring
• Reinvigorate conversation with customers

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 time
Before After

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. • Outsourcing parts production
• Partnering with production line
equipment manufacturers for
maintenance
• Improved order coordination
with dealership to reduce
inventory

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. • Continuous improvement of Harley Owner Group
(HOG)
• Sponsored events
• Test drive appointments and production facility visits
• Charitable work and donations
• Classes and Workshops

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. YAHAMA VICTORY MOTORCYCLES
BIG DOG MOTORCYCLES

14. Market Share
29% Harley Davidson
Dorel Industries Inc
Polaries Industries Inc
Yamaha
1% Huffy Corporation
1% 66%
1% Others
2%

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