TRANSFORMATION OF TRANSFORMATION OF

HARLEY-DAVIDSONHARLEY-DAVIDSON - - A CASE ANALYSISA CASE ANALYSIS

REYNALDO ROBLES

PROJECT MANAGEMENT, MAINTENANCE & QUALITY

Short- Term 1. A. Growing Production Backlog of almost a

year B. If need to Export Production Abroad

Long-Term 1. Renewed efforts by Japanese firm (Kawasaki ) 2. Europe as the new battleground for

heavyweight motorcycle segment.

STATEMENT OF THE PROBLEM

CAUSES OF THE PROBLEM

STRENGHTSMajor US motorcycle maker

Nation’s number one seller of motorcycles (heavyweight)

Has greatest market share(49%) of heavyweight segment

Excellent brand recognition

Superior customer loyalty. High repurchase intent

Quality engineering of motorcycles unit

Low turnover rates

STRENGHTSSold through a strong dealer network, which also provides service and sales of parts and accessories

Excellent and long lasting relationship with its dealer, suppliers and employees

Promoting motorcycle club

With licensing activities which is a great source of advertising

Large quantity of patents and trademarks deposited

WEAKNESSESHas not been able to fully meet the demand allowing other entrants to penetrate the market

Foreign competitors have lower manufacturing cost

Products not desired by younger motorcyclist

OPPORTUNITIESIndustry Expansion

International demand expansion

THREATSRenewed attempts by leading Japanese firm to gain share of heavyweight segment

Possible emergence of Europe as the new battleground for heavyweight motorcycles

Foreign motorcycles companies focusing their sales on younger riders

DETAILED ANALYSIS

Increase in production

capacity = quality problem

Big demand=backlog of nearly one year or

81,000 units

Exporting Production

International Sales

1992..$263 million..28% of net income

1993..$240 million..29%

of net income

Problem 2 & 3Threat-Kawasaki entering in

heavyweight segment

Threat-new battleground for heavyweight motorcycles

REEBOK ( shoe industry )

45 & above…..strong market

strategy….enter in 12-35

segment to compete with Nike

- Almost closed down when Honda enter in their strongbase

Need to improve quality of the firm’s distribution system,

dealer network and customer support activities

DELL COMPUTER CORP.

Strategy…adopt “Build-to –Order Manufacturing model

( product-focused to increase market share)

DECISION CRITERIA AND ALTERNATIVE SOLUTION

Problem 1 1. Adopt a Six Sigma Approach Rationale : In an attempt to address the

backlog orders, a total package of statistical measure, a goal and system of management

PROS - Genuine focus on the customer - Data and Fact Driven Management - Processes are where the action is - Proactive management - System of management - Applicability as it originated from US firm - Reduces cycle time - Reduces defects CONS - Investment in training

2. Transform from a Job Shop Approach to a Cellular Process

Development

PROS

- Rework will be lessened

CONS

- New sets of training

- Additional sets of control and possible errors might be encountered

Problem 2 1. Strategizing the Reebok’s concept of

entering into other segment of the market

Rationale: To expand the share of the market

PROS - Market share will increase - Capture the demand of the larger

market - Answer the need of the customer

( focus ) CONS Niche will somehow erode Out of concentration

2. Concentrate on the heavyweight category

Rationale: To defend their expertise segment of the market

PROS -Preserving the pride of Harley-

Davidson CONS -Lost opportunities in the market -Can’t cope up with the demand -Will not answer the need of the

customer ( focus )

Problem 3

1. Implement a Dell Computer Corporation “ Customer Focused Products”

Rationale: To customize certain parts prior to its order

PROS - Orders will be addressed - Inventory will be controlled - Will eliminate problem in mass

customization - Secure a 12% premium through add-

on and upgrade CONS - Additional hold over area - Increase manufacturing cost by 5%

( based on Dell’s account)

RECOMMENDED SOLUTION, IMPLEMENTATION & JUSTIFICATION

Problem 1

- “Employ Six-Sigma Approach” Ultimate solution to address backlog as it is a customer

focus Manpower are trained and open-minded Originated from American culture First pilot project will then form another sets of group Six sigma level means 99.99966 or 3.4 dpmo

Problem 2

“Conceptualize Reebok’s Idea or Diversification” Enter into other segment of the market “Jack of All Trades”-defending “your cream of the crop” and

increasing the share on lightweight category Reebok was able to defend its 45 years and above category and

getting a lion’s share of 12-35 years category because of its buying power

Problem 3 Strategize Dell Computer Corp. “Customer Focused Products” Idea of Dell’s offering a customer a means of choice and then

assemble the individual computer to the precise specification is applicable to motorcycle industry

Market demand is inevitable and needs a customization to have control of the process

Customer’s feeling of satisfaction as they were highly regarded Provides a specific products both quickly and cost-efficiently

SUMMARY

In summary, Harley-Davidson has to consider the following

1. Increase the market share by including lightweight category to their stronghold base

2. Employ the Six-Sigma concept to make sure that production backlog and quality problems will be addressed.

3. Customize to precise customer specification thus reducing the fear of big inventory

Gantt Chart

Qtr 1 Qtr 2 Qtr 3 Qtr 4

1. Identifying and selecting GM Black Belt seminar, project the project

2. Forming the team Sponsor seminar, manpowerImplementation

3. Developing the charter Leader

4. Training the team HR seminar

5. Doing DMAIC and Team access to operation implementing solution

6. Handing of the solution Six Sigma Team

RemarksActivities Responsible Resources Target Date

Thank you !!!