HarleyDavidson: Enterprise Software Selection

1
Harley-Davidson Enterprise Software Selection

• Presented by
• Anthony M. Saglimbene
• Tamra Bays
• Tamie Jones

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Agenda

• Harley-Davidson Background
• Harley-Davidsons Information Systems
  Organization Supply Management Strategy
• Who is the SiLK team and why were they formed
• Mapping a solution for choosing a supplier to
  implement a supplier management system
• Three Final Contendersthe process
• The Winner is
• Questions

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Who is Harley-Davidson

• In 1903 21-year old William S. Harley and 20-year
  old Arthur Davidson make available to the public
  the first production Harley-Davidson motorcycle.
  
• Primarily manufacture and sell heavyweight
  motorcycles (651cc or more).
• Sales totaled 1.19 billion in 2004 up 19 from
  2003 levels.
• Motorcycles range in price from 6500 to
  30,000.
• Harley-Davidson s 2005 model year line-up
  includes 32 models of touring and custom
  heavyweight motorcycles.

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Individual Participation Teamwork
ITC
Produce Product (PPG)
Create Demand (CDC)
ITC
Provide Support (PSC)
Organizational Structure three interlocking
circles Office of the CIO3 directors
ITC
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The Purchasing Organization

• Purchasing at Harley-Davidson was decentralized.
• Purchasing operation groups were located within
  their manufacturing counterparts at various
  plants and facilities.
• Site independence was encouraged, which resulted
  in different methods for handling procurement and
  the development of information systems for
  purchasing.

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Whats the Problem?

• 55 to 60 of a motorcycles value comes form
  purchased parts.
• Current purchasing system does not take into
  account economies of scale.
• The supplier relationship was currently not
  viewed as a strategic opportunity to speed time
  to market, reduce costs, and improve product
  quality.

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A New Era

• In 1996 Harley-Davidson developed a corporate
  wide supply management strategy (SMS)
• The Goal
• To be provided the right product
• at the right time
• with the best quality
• for the lowest price

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The Heart of SMS

• SMS was designed to
• Shift organization to long-term focus on
  supplier relationships
• Leverage supplier resources and convince
  suppliers of the value of colocation
• Involve all functional areas of the company

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A Slow and Steady Approach

• We can afford to take the time to do it right.
  Youre better off being a little slow, a little
  deliberate to make certain you get it right
  because you dont have second chance.
• Sun Tzu, The Art of War

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Strategy to Action

• January 1997 the SiLK team is formed.
• Role was to define the requirements and
  capabilities necessary to realize the strategic
  vision of SMS.

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Chronology of SiLK

• January 1997- Supply Management Strategy (SMS)
  begins
• Mid 1997- SilK planning begins
• November 1997- Silk project team assembled
• Fall 1997 through Summer 1998- Vision
  characteristics and processes analyzed and
  project specifications developed.
• Sept. And Oct. 1998- Specifications undergo
  internal stakeholder review.
• October 1998- Provider bid process begins
• December 1998- Provider list narrowed to three
  potential providers.
• January 1999- Final provider selection.

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HURDLES TO CHANGE

• Wariness of change that might affect production
• Tendency to continuously improve rather than
  transform business functions

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SiLK

• WHAT IS SiLK?
• SiLK (Supplier information link)
• Key Players David Cotteleer Pat Davidson
• Purpose Develop specifications for integrated
  procurement system to support new SMS

• WHY SiLK?
• High degree of dissatisfaction with existing
  systems
• Mismatch with SMS
• Value Proposition for instigating significant
  changes

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Mapping As Is vs. To Be Processes
(Stakeholder Survey)

• AS IS
• 85 of time spent on non-strategic activities
  like reviewing inventory, expediting, and data
  entry

• TO BE
• Goal 70 of time spent on supplier management
  activities

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SiLK Project Scope
Order/ Scheduling
Requirements
Material Ordering
Development
Inbound Logistics
Receiving
Internal Material Movement
Material Use/ Consumption
Distribution
Legend SiLK will deliver process or enable
process to be defined by another group Not
within SiLK scope
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SiLK Implementation Phases
PHASE 1 TRANSACTION PROCESS Support execution
of fundamental purchasing activities.
PHASE 2 SUPPLIER INFO PROCESS Manage
relationships and info exchange within supply web
PHASE 3 PROJECT-TRACKING PROCESS Support
execution of fundamental purchasing activities.
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Supplier Selection
ServiceProvider
ServiceProvider
ServiceProvider
ServiceRequester
Registry
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Selecting Service Partners
SELECTION
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Qualitative Relationship Criteria

• Long-term relationship potential
• Research development
• Training approach
• Implementation/education
• /change management methodology
• Understanding Harleys requirements
• Enabling the SMS
• Out-of-the-box fit

• Financial viability
• Cost
• Technical support offerings
• Overall functionality
• Number of partner providers
• included in solution proposal
• Architecture compatibility
• Platform portability
• Web functionality to go
• Manufacturing experience

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Quantitative Functional Criteria

• Design and foundation
• Request definition
• Documentation
• Receiving
• Supply management

• Project Tracking
• Miscellaneous
• Interfaces
• Training
• Other

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Results of Analysis

• Functional Criteria
• Provider 2 98.6
• Provider 1 93.44
• Provider 3 96.8
• needed extra time due to inadequate
  understanding of requirements

• Relationship Criteria
• Provider 1 most potential
• Provider 2 close second
• Provider 3 distant last

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Provider Comparison

• Provider 1- best long-term relationship
  potential, good functionality, similar culture
• Provider 2- best functionality fit, good
  relationship potential, culture more rigid

• Provider 3- good functionality, poor planning and
  lack of understanding, prior relationship, poor
  long-term relationship potential

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How to Choose?

• Decision between Provider 1 with greatest
  relationship potential and Provider 2 with best
  functionality fit
• SilK teams Strategic Road Map indicated that
  supply management strategy is driven 50-75 by
  people, 20-40 by processes, and 5-10 by
  technology

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The Winner Is

• Provider 1- it demonstrated sufficient
  functionality and it rated the highest in terms
  of training approach, implementation, education,
  and change management and architecture and
  platform compatibility. It showed an enthusiasm
  for the project, complete understanding of the
  requirements and its culture blended well with
  Harley-Davidson.

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Questions?