Harley Davidson Case
1. Describe and evaluate Harley’s operations strategy (using the framework of Chapter 1)
It is helpful to adopt three different yet complementary views of operations strategy:
The resource view of operations comprises 4 key questions:
• Sizing –Due to the volatility and cyclical motorcycle business, Harley-Davidson attempts to expand capacity without taking on further debt. Thus, it would expand capacity first through internal process improvements and restructuring, and externally only if needed.
• Timing – In 1992, production capacity was increased from 75,000 to 100,000 after an internal expansion project. In 1995, a further capacity expansion was planned in response to the growing motorcycle market.
• Type – Harley-Davidson has plants capable of producing the entry-level Sportster model as well as the heavier models. Due to Employee Involvement and Statistical Operator Control, the labour force is well-trained to measure the quality of their own output and thus assure quality throughout the process. Employee and union involvement is deeply rooted in the corporate culture.
• Location – Harley-Davidson operates two main facilities: The Capitol Drive plant produces engines and transmissions while the York plant performs all final assembly. Management is reluctant to construct new greenfield plants due to high risk.
The process view of operations comprises 4 key questions:
• Supply – Due to strong nationalistic roots, Harley-Davidson outsources very few of its components and produces them in-house instead. HD is not vertically nor horizontally integrated. HD utilizes JIT supply concepts to reduce inventory levels.
• Technology o Coordination and information technology: HD implemented a project status monitoring system that projected COGS figures for given future volumes. o Product technology – HD utilizes its V-Twin technology, which is also offered by competitors Honda and Yamaha. o Process technology – Using Employee Involvement, JIT and SOC,
It is helpful to adopt three different yet complementary views of operations strategy:
The resource view of operations comprises 4 key questions:
• Sizing –Due to the volatility and cyclical motorcycle business, Harley-Davidson attempts to expand capacity without taking on further debt. Thus, it would expand capacity first through internal process improvements and restructuring, and externally only if needed.
• Timing – In 1992, production capacity was increased from 75,000 to 100,000 after an internal expansion project. In 1995, a further capacity expansion was planned in response to the growing motorcycle market.
• Type – Harley-Davidson has plants capable of producing the entry-level Sportster model as well as the heavier models. Due to Employee Involvement and Statistical Operator Control, the labour force is well-trained to measure the quality of their own output and thus assure quality throughout the process. Employee and union involvement is deeply rooted in the corporate culture.
• Location – Harley-Davidson operates two main facilities: The Capitol Drive plant produces engines and transmissions while the York plant performs all final assembly. Management is reluctant to construct new greenfield plants due to high risk.
The process view of operations comprises 4 key questions:
• Supply – Due to strong nationalistic roots, Harley-Davidson outsources very few of its components and produces them in-house instead. HD is not vertically nor horizontally integrated. HD utilizes JIT supply concepts to reduce inventory levels.
• Technology o Coordination and information technology: HD implemented a project status monitoring system that projected COGS figures for given future volumes. o Product technology – HD utilizes its V-Twin technology, which is also offered by competitors Honda and Yamaha. o Process technology – Using Employee Involvement, JIT and SOC,