Harley Davidson Essay, Research Paper
Harley-Davidson Motor Co. recently announced record profits for a quarter. What wasn’t apparent was the substantial role
purchasing played in taking this American icon from a position of near financial oblivion to star status in investors’ hearts.
Not surprisingly, it’s quite a story. In the mid-1990s, CEO Jeff Bleustein decided to move from the traditional high-walls paradigm of
American manufacturing to one in which purchasing became a full partner in product development with the responsibility of
marshalling resources of the very best suppliers. Half of the purchasing staff was dedicated to the Product Development Center in
Milwaukee where they worked as teams with design engineers and suppliers’ engineers. Many key suppliers, such as Delphi, now
have engineers work full time at the Product Development Center.
Why the change?
“We had picked suppliers whose forte was technical innovation,” says Earl Werner, who took over Harley’s engineering operations
in 1993. “There are suppliers out there who are good in technical innovation, but not in other requirements. And engineering created
disasters for the company. We failed to do well what the purchasing people do well, and that’s consider all of the requirements for a
successful relationship with suppliers.”
Harley recruited Garry Berryman, who earned his spurs at Honda, to infuse the purchasing department with a new attitude. He
created what he calls American keiretsu, or alliances of suppliers and customers that remove the substantial negatives of Japanese
keiretsu, which are powerful combinations of companies that are cemented by family ties or strong financial connections. The
American keiretsu are bound by the goals of mutual success.
Getting into Berryman’s fraternity is not easy–you must commit to annual cost reductions even if your materials and labor costs are
rising. You must also participate in the company’s product development program and significantly improve quality. In return, you
participate in Harley’s success. And suppliers trip over themselves to join the club.
Harley-Davidson is this year’s Medal of Professional Excellence winner, continuing a long and proud tradition. Congratulations to
the biker kings.