Supply Chain Innovation at Harley-Davidson: An Interview with Leroy Zimdars
Harley-Davidson is known for delivering a consistently high quality product. How does process drive quality?
There are a number of different areas in the process that affect our quality, starting with product design. We work to design quality into the products we develop, and we do this through a concurrent pride methodology, which is very specific for both product development and the input that we get on design from our engineers, our manufacturing people, and our suppliers. We involve everyone in the early stages, and everyone effectively designs products together.We use electronic processes such as EDI and bar coding; we use bar codes and electronic trigger systems for replenishing materials. In many cases our suppliers get a planning schedule, but we actually pull materials from their facilities into ours by means of the trigger system. We have a whole range of electronic resources: funds transfers, POs, and scheduling.
What types of software do you think hold the most promise for extending and enhancing your enterprise?
We offer a large variety of training types for our suppliers. In order to meet our requirements, we have a Continuous Improvement Team that reports to the Materials Group and works both with our suppliers and the Continuous Improvement Programs in our facilities. We have a highly formalized methodology for instructing suppliers that can last up to three months; then we can work with them to drive improvements in their facilities, and we can share the benefits with them. We do P-Pap training and SPC training; we also have training on our materials management strategy as well as master supply agreements that we´ve developed with our suppliers. We have training for the Master Supply Agreements as well.Which bar coding system do you use?
We have our suppliers conform to the EAGE standard; there are a number of different companies where they can buy software, bar code printers, and so on. We try to stay standardized because we have a number of suppliers that do business with automotive suppliers – they all follow the EAGE format, so we do the same.What types of software and technologies do you think hold the most promise for extending and enhancing your enterprise?
We´re moving toward a Web-based approach for accessing information. We´re currently developing software that will allow suppliers access to daily production schedules and production status via our Web site. We feel that using trigger inventory replenishment systems represents the future: rather than push, we pull inventory into the plant, where items are actually re-ordered at the point of use on the shop floor based on a signal sent from our computer to the supplier.We´re moving toward composite supplier performance ratings; we have a number of plants that will be linked in the near future to measure quality, cost, timing, technology, supplier responsiveness to corrective action, and capacity planning capabilities.
We´re developing tool management tracking: we use a wide range of steel-die processes for everything from high-pressure die-casting to permanent molds and stampings, and we need to know where tools are and how to replenish them.
We´re using CAD technologies, where our suppliers have compatible CAD systems and can effectively transfer data through these systems.
We´re piloting Web-based collaboration; we´ve established a Web site to bring people together with Netmeeting. We currently rely on Netmeeting and the telephone for conferencing, but we´re going to expand to video; it´s going to allow us to communicate, collaborate, make commitments, and offer store metrics and performance of chain metrics all on one Web site.
You´ll enter into that with all your strategic partners, I assume.
Exactly. And we can expand this to a great number of chains to be able to collaborate. With this we can cover everything from working through problems to actually driving continuous improvement down to the second or third tier of the chain by working together and driving them through a common interest.What´s the biggest challenge you see in the collaboration effort underway between industry leaders?
I think that there are a couple of ways of looking at it. There is, first of all, the issue of communication: the Web provides for really effective communication, but whenever you rely on electronic communication and you´re not face-to-face there´s always the issue of "Is the message being transferred correctly?" The other, larger issue is trust. If you look at company-to-company or company-to-supplier, it´s important to understand the motives behind wanting some sort of information, or collaboration. We have a long way to go in getting companies to be willing to be open with one another or trust one another.We´ve been able to develop the Master Supply Agreement with our suppliers, and we´ve established a clear understanding of the lines of responsibility and expectations. So when we begin moving down a path with our suppliers there´s a clear understanding over our joint development of a product – what happens if that product is patented? Who has responsibility for it? – and we don´t get into an argument after we´ve begun designing something. The same is the case if there´s a product liability or warranty-related issue. We try to be very clear up-front; once you´ve established that clarity and established trust, there´s a lot more openness. Two words: Be clear.
How does commodity strategy development relate to the supply chain?
In a number of different ways. When we develop a commodity strategy, our intent is to create a clear understanding with our supply base and our internal stakeholders of the expectations we have of a given commodity, beginning with what the customer wants and expects. We document both customer and stakeholder expectations, and try to look five years or more into the future.Then we establish what the product looks like. We want to know what the customer is looking for. We want to know what are the style-related issues. We look at design from a process standpoint that relies on core competency. We focus on internal versus external issues. We look at the product from a commercial standpoint that concentrates on financial issues and cost implications. We look at it from a performance understanding standpoint that focuses on quality management and produ
