Cases

1. Harley-Davidson

Harley-Davidson manufactures high-end motorcycles and sells them worldwide. The company sells more than $6 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 com- pany. 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 changed its supply chain to fulfill the expectations of its brand-aware customers.

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 cooper- ation 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 motor- cycles 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 initia- tive, 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 capabili- ties. 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 Harley- Davidson 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 specifica- tions, 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 infor- mation is integrated with the materials tracking, invoicing, and payment information in the sys- tems 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. In about 200 words, outline the advantages Harley-Davidson might gain by replacing its bar codes and optical scanner technologies with RFID. Be sure to consider the nature of the com- pany’s product, which includes rubber and metal parts in oily/greasy environments, as you draft your answer.

2. In about 100 words, compare and contrast the issues that Walmart and other large retailers faced when they tried to implement RFID in their supply chains with those that a manufacturing company such as Harley-Davidson 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 motor- cycles and use replacement parts in their repair shops. In about 200 words, outline the issues that will likely arise when Harley-Davidson begins requiring RFID tracking of spare parts inventories at its dealers.