Supply Chain Management System Project 2022

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Harley-Davidson: Supply Chain Management System Project
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Executive Summary
Since its conception in 1903, Harley-Davidson Motor Company has been one of the most
dominant companies in the American motorcycle industry. The company was founded by
William Harley and Arthur Davidson. In the 1920s, Harley-Davidson Motor Company had
grown into the world’s largest motorcycle producer, producing over 28,000 units annually. The
company had grown to an extent that it operated in 67 countries. By 1998, Harley-Davidson
Motor Company exported 150,818 motorcycles around the world. The company planned to
celebrate its 100th Anniversary as the leading motorcycle producer and supplier. Despite the
company’s difficulties in the mid-1980s, Harley-Davidson Motor Company successfully
liberated itself. By 2017, the company hires more than five thousand employees and has a net
income of approximately half a billion US dollars. The growth can be attributed to numerous
factors including proper management, a hardworking human resource, effective strategies, and
productive technology.

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Table of Contents
Contents
Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................5
Business and Technical Environment..........................................................................................................6
Business Environment.................................................................................................................................6
Technical Environment...............................................................................................................................7
Case Information.........................................................................................................................................8
Reasons behind SMS formulation...............................................................................................................8
Challenges that faced SMS........................................................................................................................10
Strategic Approaches.................................................................................................................................11
‘As Is’ versus ‘To Be’ Mapping Processes................................................................................................11
Project Team.............................................................................................................................................11
Technology Rationalization.......................................................................................................................12
Supplier Selection......................................................................................................................................12
Success Factors: Summary........................................................................................................................12
Bibliography..............................................................................................................................................14

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List of Figures
Figure 2.1................................................................................................................................7
Figure 2.2................................................................................................................................8

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Introduction
Harley-Davidson Motor Company had survived in the motorcycle manufacturing
industry for 95 years. Due to the changing market characteristics, it was prudent for the Harley-
Davidson Motor Company to re-design its strategies regarding supply and procurement.
Considering the risks of termination and discontinuity that the company had persevered in the
mid-1980s, it was apparent that the management had to get back to their drawing books. A
strategy that would guarantee the company’s sustainable growth, in the long run, was
fundamental. This report attempted to evaluate the formulation and the implementation of the
SMS in the Harley-Davidson Motor Company during the late 1990s. The report recognized the
effectiveness of SMS in transforming and liberating the supply and procurement departments in
the company. This research report examined both the business and technical environments of the
company at the time of the formulation of SMS. The business environment is categorized into
domestic as well as international competitions, company finance, and customer base.
Nonetheless, the technical environment was categorized into information technology (IT)
infrastructure, support structure, among the internal IT skills. The report also identifies the case
information and provides a discussion for the reasons behind the formulation of SMS and the
challenges behind the formulation. The report further examines the strategic approach the
company took towards the implementation of enterprise resource planning systems. The
summary of the report comprises of successful SMS strategies as recommended by Garry
Berryman, Harley-Davidson’s procurement and supplies expert.

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Business and Technical Environment
Business Environment
A couple of years before the formulation of the SMS, Harley-Davidson was almost on its
death-bed. In the 1980s, the Harley-Davidson Motor Company was almost bankrupt (Hill and
Gerras, 2016, pp. 115). Some of the possible reasons that had led to the company’s demise
included the high production and supply costs due to the uncontrolled growth of the company.
The autonomous growth of the company had resulted in diseconomies of scale. Other factors that
were responsible for the risk included; increased competition from foreign markets. Since its
conception, the company has been the dominant motorcycle manufacturer in the USA. The
company outcompeted other US-based motorcycle companies. Many motorcycle industries in
the USA did not survive the harsh economic conditions, especially during the 1930s' Great
Depression. Many domestic motorcycle competitors in the USA went bankrupt. Harley-
Davidson was one of the US-based motorcycle companies that remained in business in the 1980s
and 1990s.
Despite Harley-Davidson being the principal motorcycle producer in the USA, the
company was smaller as compared to bigger Japanese motorcycle manufacturers such as Honda.
Courtesy of the US government’s effort to rescue Harley-Davidson from the jaws of hostile
international competition, Japanese motorcycle imports were heavily taxed in 1987 (Swart and
Krier, 2016, pp. 240). This functioned to save the company from inevitable demise. The US
government intervention liberated Harley-Davidson. By 1998, the company celebrated its
increasing revenues and market shares. The company could project that by 2003, it would have
grown into unassailable levels.

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In 1998, the company projected to increase its revenues and customer base exponentially.
Exporting 150, 818 motorcycles in 1998, it meant that the company had approximately 150,818
customers in the foreign market. Even in 1986, the company’s heavyweight market share for
heavyweight machines was 33.3% (Lee and Strategos, 2014). The company hoped to
dramatically increase the market before its 100th anniversary in 2003. In 2006, Harley-Davidson
had record sales and joined Japanese firms in the worldwide market share (Roese and Kompella,
2016, pp. 4). High increasing sales have been experienced since the 1990s. The following table
shows the revenues of the company in the 1990s.
1998 1997 1996 1995 1994
Revenues ($) 2,063,956 1,762,569 1,531,227 1,350,466 1,158,887
Gross
Margin ($)
690,670 586,217 490,094 411,399 358,399
Net Income
($)
213,500 174,070 166,028 112,480 104,272
Total Assets
($)
1,920,209 1,598,901 1,299,985 1,000,670 676,663
Figure 2.1
Technical Environment
Technically, Harley-Davidson boasted having an effective technical infrastructure by the
time the SMS strategy was conceived. The company’s human capital was about 6,000
employees. Apart from its headquarters in Milwaukee, Wisconsin, the company had other sixty
shops including in Pennsylvania and Missouri. Each site in the Wisconsin, Missouri and
Pennsylvania performed different tasks as detailed in the table below.

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Site Function
Milwaukee The company’s headquarters, research and
development, sales, eneral merchandise, parts
and accessories.
Pennsylvania Painting, parts production, final assembly. The
Pennsylvania site majorly focused on custom
and touring motorcycles.
Missouri Painting, parts production and final assembly
of Sportster motorcycles.
Figure 2.2
The management also performed various technical decisions; including replacing the
chief information officer (CIO) with three directors. This served by making information though
the company flows smoothly and efficiently. The processes in the company were also highly
computerized. Although Harley-Davidson used old and obsolete computers by the time SMS was
adopted, the IT infrastructure was still effective by the time SMS was adopted. The main support
systems for the company was its large sponsors and top-level management officers. Moreover,
the Harley-Davidson support system may be attributed to the fact that the employees were the
owners of the company. Most of the employees in the company owned a Harley-Davidson
motorcycle. This eventually led to developing the firm’s loyalty, trust, and engagement.

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Case Information
Reasons behind SMS formulation
Garry Berryman played a large role in establishing the SMS. Due to the experience, he
had gained from Honda and John Deere, the supply and procurement head in Harley-Davidson
sought to revolutionize the procurement and supply department of the company. According To
Garry Berryman, Harley-Davidson had to develop new strategies that would enable the firm to
efficiently supply to its worldwide customers. According to Garry Berryman, good supply
strategies should ensure that there is a speedy movement of a company's products to its market,
the logistics incur fewer costs and that supplied products have good quality. Improved quality
products, the speedy movement to the market and reduced costs are the main goals targeted to
enhance a firm's logistics, procurement and supply chain management strategies (Durmusoglu,
Hirunyawipada, and McNally, 2017, pp. 36). These scholars believe that any good supply chain
manager should aim at improving the quality of the products supplied. The time factor, as usual,
is the most fundamental in supply chains, management. Considering the time during transport
and shipping also function by reducing the costs incurred during the processes, minimizing w
According to Garry Berryman, SMS was formulated so as Harley-Davidson could produce and
distribute high-quality motorcycles at the cheapest cost and at the right time.
SMS was also meant to change the company’s short-term mentality regarding the market
conditions and replace it with a long term strategic plan to improve its supply and chain
management strategies. When Garry Berryman initiated SMS, he stressed that Harley-Davidson
could never achieve efficiency in supplies and distribution if it continued to rely on purchasing
products and then selling them to their prospective customers. According to the procurement

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expert, the company needed to engage and convince its customers about the efficiency of Harley-
Davidson products. Sustainable supply management strategies exploit the engagement of the
involved company with its customers (Dubey, et al., 2017, pp. 1120). Berryman believed that
SMS will eventually increase trust, confidence, and loyalty held by the customers if Howards is
committed to engaging them. Considering that most of the Harley-Davidson’s clients were
businesses who acted as suppliers of the Harley-Davidson brand, the firm needed to form strong
business-to-business relationships with their prospective clients. Commitment and engagement
are very vital fundamentals in business-to-business (B2B) as well as business-to-customer (B2C)
relationships (Wieteska, 2016, pp. 310). Knowing this from his experience in John Deere and
Honda, Garry Berryman formulated the SMS strategy for Harley-Davidson. The main aim was to
bring the customer more close to the business.
Challenges that faced SMS
According to Cory Mason, head of information systems, the introduction of the SMS
faced two challenges during its formulation. Firstly, the new strategy would face repulsion from
the workforce due to the employee’s wariness to change of systems. Most of the employees, as
well as the managers in the company, would show reluctance, in some cases, repulsion to a new
strategy. This is because normally, although humans appreciate change, very fewer humans are
ready to change when time is due. The main fear of the employee revolves around the
uncertainties that follow a change of system, process or strategy in the workforce (Cullen, et al.,
2014, pp. 274). Many employees are inclined to the misconception that a change, despite its
efficiency to the business, is likely to increase and complicate the processes and the activities
around their companies. Others believe that setting new strategies act as baits to trap the lazy or

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underperforming employees. Therefore, during the setting of these strategies, most of the
employees are against the setting of new strategies.
The second challenge, as foreseen by Mason, was Harley-Davidson's natural preference
for improving rather than transforming its business functions. Many employees prefer
incremental change to radical shifts (Gillon, et al., 2014, pp. 13). Mason affirmed that he knew
that the Harley-Davidson community was fixed on their traditional practices and thus coming up
with an all-new system would be a problem to the staff. Employees usually prefer small
consistent changes as compared to drastic big changes that function to transform a company
(McComb, et al., 2015, pp. nd.). According to Mason, it would be difficult to adopt the SMS
strategy without convincing and seeking endorsement from senior managers in organizations.
Considering that many people are not willing to radical changes, the SMS may find it difficult in
the market. In his wisdom, Mason asked his colleagues to think outside the box and ‘get wild’
when thinking about strategies to transform a business. The expert suggested that
transformational leadership demands radical strategies. Radical ideas and strategies lead to the
exponential transformation and robust growths of businesses and companies (Troilo, Luca and
Atuahene Gima, 2014, pp. 265). The use of radical ideas has been known for starting successful‐
start-ups such as Facebook, Wal-Mart, and other popular brands. These new ideas usually lead to
exponential profits and revenues.
Strategic Approaches
‘As Is’ versus ‘To Be’ Mapping Processes
In this approach, managers attempted to ascertain the effectiveness of Harley-Davidson
SMS strategies by measuring certain variables. The reason behind the approach was to determine

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the purchasing requirements accurately. Some of the variables under investigation in the ‘As Is’
mapping processes include accounts payable, human resources and logistics. In essence, ‘as is’
mapping processes was to investigate the current activities of Harley-Davidson. On the other
hand, the ‘To Be' mapping process attempted to investigate the ideal future vision of how the
company would work after the employment of the SMS plan. Some of the suggested strategies
included the use of artificial intelligence (AI). Currently, Harley-Davidson has already invested
in AI technology to remain relevant in the future market (Anita and Abhinav, 2017, pp. 894).
The company is already implementing its ‘To Be' ideals. However, both the ‘As Is' and ‘To Be'
approaches used by the company suffer from deficiencies. For the ‘As Is' processes, the company
fails to acknowledge the underlying competition from other suppliers. For the ‘To Be’ processes,
the company seems to be so ambitious about the development of their supply processes. The
move to artificial intelligence is quite ambitious. More achievable processes would include
investing in the electrification of the company's motorcycle as well as diversifying its market by
producing more models of motorcycle products.
Project Team
To implement its strategies, Harley-Davidson relied on a team of 19 members. Among
them, two were sponsors, five formed the steering committee and the remaining twelve were
team members.
Technology Rationalization
As aforementioned, Harley-Davidson looked forward to the use of AI technology in its
future manufacturing and distributional activities. The company believes that AI technology
could help it grow even further.

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Supplier Selection
On October 16, 1998, the request for quotes (RFQs) of new systems supporting SMS was
submitted to a few suppliers. The RFQs sought recommendations about the company's new
products.
Success Factors (Recommendations)
To conclude, according to Garry Berryman, the success of SMS primarily depends on the
in-depth understanding of the strategy. Berryman quotes Sun Tzu’s Art of War and asserts that
deep and far-reaching strategy yields too much while shallow strategic thinking only leads to
little outcomes (Austin, Sole and Cotteleer, 2003, pp. 622). In Sun Tzu’s wisdom, a good
strategy enables one to win a war before starting a war while for a poor strategy, one loses even
before the war begins. Berryman also believes that commitment and engagement between a
company and its customers function hand-in-hand. According to Islam and Rahman (2016, pp.
50), the concept of engagement is attributed to ‘boosting customer involvement, trust, and
loyalty’ to a company. Customer trust has a positive impact on increasing profits (Park, et al.,
2012, pp. 460). According to Bilgihan, Okumus and Cobanoglu, (2013, pp. 20), loyalty and trust
are positively related to both affective and calculative commitments of the company. Therefore,
the SMS project managers in Harley-Davidson had to ensure that the company was committed
enough to building healthy engagement bonds with its customers. Customer engagement has
proven to be a success factor in any business setting.

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