The Supplier Base Optimization Information Technology Essay

Harley-Davidson produced their first bike in 1903. In 1910, the logo Bar Shield was used the first clip. Harley-Davidson kept spread outing their concern, in the beginning of the 1920 ‘s they are the biggest bike manufacturer in the universe.

All bikes during the WW1 and WW2 were Harley-Davidson ‘s.

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In the 1960 ‘s most companies started developing their schemes, technology, design and fabrication to hold high quality and respond to client demands. The chief point was to remain competitory.

During the 70 ‘s the chief point was to increase the production, this lead to a quality job. In the early 80 ‘s Harley-Davidson ‘s market portion decreased drastically. In 1982 the MAN plan was introduced to the production. Today Harley-Davidson exists over 100 old ages and in that clip it became a universe celebrated bike trade name.

Video sum-up

The picture shows the jobs that Harley Davidson experienced and how they solved them. With work outing these jobs they became the manufacturers of the legendary Harley Davidson bike. The initial job was the overrun. Some of the effects were quality job and the big stock list. First, stock list bends were driven to 28 per twelvemonth. Next the set up times were reduced drastically, this made smaller lap sizes possible. Then, by utilizing employee engagement, they increased the quality of production.

Harley Davidson evolved more and more to JIT fabrication and supply concatenation direction. They called their JIT plan MAN ( Materials as needed ) , in add-on to the JIT plan, providers are obliged to hold statistical operator controls and employee engagement plans. Harley Davidson does non inquire for statements, they ask for specific mensurable ends. They want uninterrupted betterment.

The company developed side concern like learning others how to pull off their relationships with their providers.

Harley Davidson ‘s challenges


Increasing production

Decreasing market portion

Introduction Just In Time rules

Key theoretical points

Push system – Pull system

Set up times

Inventory bends

Employee engagement

Supplier base optimisation

Single sourcing – multiple sourcing ( purchase on the supply concatenation )

Advanced programming


Statistical procedure control country



Continuous betterment


Theory linked with the practical

Tax return On Capital Employed ( ROCE )

To increase your ROCE, you either desire you gain to increase or you want to diminish you capital employed.

To increase your net income you could higher your monetary value or sell more. But these points are controlled by the market, so you do n’t hold much influence on it. You can take down your cost and lower your operating expenses.

To diminish your capital employed you should either cut down your debitors or increase your creditors. But you can non command these points. You can command to cut down your stock list or fixed assets.

All the following points were done to increase the ROCE.

Push system – pull system

Companies who are utilizing a push scheme are certain about a certain turnover. The provider “ pushes ” the merchandise to the consumer. Companies who are utilizing a pull scheme delay until a client places an order. The client pulls the merchandise through the concatenation.

Harley Davidson their stock list was excessively big. They wanted to increase their stock list bends, which they did. Harley Davidson has now an stock list bend of 28 times a twelvemonth alternatively of 4, 5 times a twelvemonth. Together with the optimizing, diminishing, set up times they were able to bring forth smaller lap sizes.

Harley Davidson changed from a push to a pull system. This has influence on the point where the stock list is held. Before they changed to a pull system the stock list were finished goods. They had a “ Make to Vendor Managed Inventory ” . Now, they have a “ Make to Order ” stock. They can now bring forth the exact merchandise that their client wants.

Employee engagement

The employee engagement was implemented by Harley to reenforce their committedness to quality. Quality circles were one of the plans used by Harley.

Quality circles focus to better the quality of the merchandise. The circle members need developing. This preparation is, largely, given by advisers. If choice circles proof to be productive they can have wagess for their public presentation. These wagess are non ever fiscal wagess, but may besides be symbols, jerseies, feasts, aˆ¦

By utilizing the quality circles Harley Davidson ‘s quality improved. The employees produced the bikes if it were their ain bikes.

Just-In-Time ( JIT )

“ Just-in-Time is a doctrine of fabricating based on planned riddance of all waste and uninterrupted betterment of productivity.A It encompasses the successful executing of all fabrication activities required to bring forth a concluding merchandise, from design technology to bringing and including all phases of transition from natural stuff onward.A The primary elements include holding merely the needed stock list when needed ; to better quality to zero defects ; to cut down lead clip by cut downing apparatus times, queue lengths and batch sizes ; to incrementally revise the operations themselves ; and to carry through these things at minimal cost. ” ( The American Production and Inventory Control Society ( APICS ) )

If Harley Davidson wanted to hold JIT truly work, it had to be installed through the whole concatenation. But to hold JIT besides installed with their providers, Harley Davidson needed to be able to convert them. This was possible if they implemented JIT, so they did. Afterwards they went to the providers and they implemented it every bit good.

Supplier base optimisation

Because non every provider wanted to alter to the JIT system, Harley decided to pare their provider base. They decided to halt working with 200 providers, merely 120 providers were left of the 320 original providers. The chief advantage of paring down your providers base is the purchase and the power you have over your provider, but on the other manus, with more providers, you are certain of your supply of goods.

Advanced programming

The providers that remained providing for Harley Davidson received advanced programming. The providers knew precisely what they had to present at what clip. They knew when Harley Davidson was traveling to bring forth more or less. They could accommodate their ain production line to that and the production line of their providers. You could state that this was a precursor for EDI ( Electronic Data Interchange )

One of the providers, KSG, dedicated a whole cell to Harley Davidson. The full procedure can be done in a little country of the company, so the production can be done faster. Because of the execution of JIT and the advanced programming, KSG can now accommodate their full production cell to the demand of Harley Davidson.

Statistic operator controll

The quality of the merchandise is really of import for a company, statistic operator control is non the manner to good quality direction. A company should cognize, before they start the production, if they can execute the occupation good. Roll uping informations and analysing it is necessary to command the occupation that is being performed. If everything is controlled ( the input and the procedures ) so the end product is assured. Harley uses the system, but they name it otherwise because they prefer that the individual who does the fabrication besides does the measurement and coverage of the informations. They call it statistical operator control.


Harley Davidson developed their ain plan. They demand of their providers that they install the MAN ( Materials As Needed ) plan in their mills. The MAN plan contains the JIT plan, together with statistical operator control and employee engagement.

Continuous betterment

Harley Davidson was looking for uninterrupted betterment, it means that if one of their providers did n’t do the end, it was non a job. But they had to hold a plan to run into the ends the following clip. Continuous betterment is the changeless, little, betterment of the public presentation.


“ Benchmarking is the uninterrupted measurement of merchandises, services, procedures, activities and patterns against a house ‘s best rivals or those rivals or those companies recognized as industry or functional leaders ” ( Camp, R. C. , 1989 )

Harley Davidson says that it ‘s best to ne’er halt benchmarking. Because of the benchmarking your company can larn from the other companies.


Becoming a universe category supplier/customer

Continuous betterment

Be competitory

Key larning points

Internal betterment

Optimizing providers base


Benchmark providers

Information exchange

Competitive supply concatenation direction

Entire quality direction

Mistakes made

Harley Davidson would hold done a better occupation if they knew if their provider was truly interested in fall ining their MAN plan alternatively. They could hold sorted out the better providers faster. Some of the providers tried to put in JIT, but really they installed a JIT warehouse and they delivered JIT, but Harley Davidson wanted a JIT production. When there is a quality job, the whole warehouse is filled with manufactured goods with quality jobs. If they knew their providers better they would n’t hold had these jobs.


Harley Davidson optimized the complete supply concatenation, they implemented JIT, employee engagement, aˆ¦ A good, trust based, relationship was developed with their providers.

All the old points had their impact on the quality of the bikes, from a hapless quality to an first-class quality. In the terminal the client wants a high quality bike.

Harley Davidson succeeded in going an efficient bike maker and they became an first-class illustration how to pull off a company ‘s supply concatenation.


JIT Or just-in-Time Fabrication, what is it? by Inventory Solutions [ online ] available from & lt ; hypertext transfer protocol: // & gt ; [ 2/21/2010 2010 ]

Handfiels, R. B. , Monczka, R. M. , Giunipero, L. C. , and Patterson, J. L. ( explosive detection systems. ) ( 2009 ) Sourcing and Supply Chain Management. 4th edn.

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