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Harley-Davidson manufactures high-end motorcycles and sells them worldwide. The company
sells more than $4 billion in motorcycles and related products each year, and has one of the
most recognized brands in the world. However, business was not always so good for the company. In the 1980s, the company was on the brink of bankruptcy. Facing increasing competition
from Japanese and German manufacturers, Harley-Davidson had allowed its quality
standards and cost controls to slip. In a legendary business turnaround, the company rebuilt
itself. Harley-Davidson completely Over a period of several years, Harley-Davidson reduced its number of suppliers from 4000
to fewer than 350. More important, it began to work with those suppliers to reduce costs
throughout the supply chain. Each supplier is expected to find ways (with the help and cooperation of Harley-Davidson) to reduce manufacturing costs and improve quality every year. This
was the only way Harley-Davidson believed it could avoid moving its factories to lower-cost
locations in other countries. The efforts paid off and the company still manufactures its motorcycles only in the United States.
In 2000, the company decided to focus its cost reduction and quality improvement efforts
on its information technology infrastructure. Because it had been so successful in working with
its suppliers to reduce manufacturing costs and improve quality, Harley-Davidson wanted to do
the same thing with information technology. By using Internet technologies to share information
throughout the supply chain, the company hoped to find opportunities for efficiencies and cost
reductions at all stages of the process of creating motorcycles.
When the company first talked with its suppliers about its information technology initiative,
those suppliers noted that each of Harley-Davidson’s main factories used different invoices,
production schedules, and purchasing procedures. The suppliers explained that this created difficulties for them when they dealt with more than one factory and increased their cost of doing
business with Harley-Davidson. Thus, one of the first things the company did was to standardize
forms and procedures. Then it moved to require all suppliers to use EDI. For smaller suppliers,
the company set up a Web site that had Internet EDI capabilities. The smaller suppliers could
simply log in to the Web site and conduct EDI transactions through their Web browsers.
This Web browser interface grew to become a complete extranet portal called HarleyDavidson Supply Net. All suppliers now use the portal to consolidate orders, track production
schedule changes, obtain inventory forecasts in real time, and obtain payments for materials
shipped. The portal also allows suppliers to obtain product testing information, part specifications, and product design drawings.
Key elements in both EDI and the Web portal systems have been bar codes and scanners.
Most of Harley-Davidson’s individual parts and all shipments are bar coded. The bar-code information is integrated with the materials tracking, invoicing, and payment information in the systems and is made available, as appropriate, to suppliers. Harley-Davidson uses bar-code
standards developed by the Automotive Industry Action Group.
Required:
1. Become familiar with RFID technology and its potential uses in Harley-Davidson’s supply
chain using the information presented in this chapter and information you obtain through
the Web Links, your favorite search engine, and your library. evaluate the advantages and disadvantages for Harley-Davidson of replacing its bar
codes and scanners technology with RFID.
2. compare and contrast the issues that Wal-Mart and other large retailers faced when they tried to implement RFID in their supply chains with those that HarleyDavidson will likely face as it moves into RFID implementations with its suppliers.
3. When Harley-Davidson implements RFID, it will likely use the technology to help manage
its relationships with its main customers, which are the local dealerships that sell motorcycles and use replacement parts in their repair shops. outline the
issues that will likely arise when Harley-Davidson begins requiring RFID tracking of spare
parts inventories at its dealers.
4. Idevelop and present an approximate timetable for the
adoption of RFID technology with specific recommendations about where HarleyDavidson should first implement it. For example, RFID tags could be installed in motorcycles as they leave final assembly, in various parts before they are shipped from
suppliers, or in subassemblies as they are created at various Harley-Davidson
manufacturing operations. Justify the time delays you propose in the adoption of RFID at
each stage of the supply chain.
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