Tag: Harley-Davidson

OM in the News: Harley-Davidson Discovered “The Problem Was Us”

“As he struggled to save Harley-Davidson Inc. from financial ruin in the mid-1980s, Vaughn Beals got a bit of help from Uncle Sam in the form of temporary tariffs on imports of Japanese motorcycles,” writes The Wall Street Journal (Sept. 1-2, 2018). But the CEO’s success in preserving one of America’s strongest brands owed more to one of his insights: The real problem wasn’t the Japanese. It was Harley’s inefficient factories and slipshod quality.

As CEO for most of the 1980s, Beals, who passed away August 18th at age 90, declared war on defects, slashed production costs and aimed marketing at a colossal opportunity: Baby boomers, reaching middle age, were itching for a way to feel young and rebellious again, if only on weekends. “For years we tried to figure out why the Japanese were beating us so badly,” Beals said in 1988. “First we thought it was their culture. Then we thought it was automation. Then we thought it was dumping. Finally, we realized the problem was us, not them.”

Beals told workers to inspect every Harley motorcycle as it came off the line, rather only a sample, and sought suggestions from workers on improving quality. Meanwhile, Harley honchos toured Japanese plants and came back with ideas. Previously, Harley made parts in huge batches and stored them. Inventories were so bloated that workers sometimes couldn’t find a part by the time it was needed. Now the company began making parts only as needed, to match current motorcycle production.

As part of the effort to attract customers who didn’t fit the old Hell’s Angels image, Harley made the motorcycles more comfortable. It reduced vibration on touring bikes by mounting engines on rubber. One thing didn’t change: The rumbling sound from the tailpipe. “It makes your heart thump a bit,” said an Arizona dentist.

We feature Harley in our Global Company Profile in Chapter 7.

Classroom discussion questions:

  1. Describe Harley’s production process (see Ch. 7).
  2. What changes has Harley made over the past decades?

OM in the News: Harley-Davidson’s Manufacturing Strategy

harley2“Before the great recession, Harley-Davidson didn’t have to worry about counting the seconds,” writes The New York Times (Feb. 2, 2014). There was little competition for their core customers — “fat white guys,” as one employee called them. Harley charged a huge premium for its bikes, and its customers waited as long as 18 months to receive them. The union rep at Harley’s York plant said workers could assemble motorcycles at their own pace, music blaring. “We had 30% absenteeism every Monday and Friday,” added the plant manager. This all worked fine until the recession, when the company was close to collapse.

Many firms respond to global competition by breaking their unions, by moving to a right-to-work state (or out of the country), and by employing robots on the assembly line. But Harley has an “American blue-collar, working man” brand, and to get rid of its union or to make its motorcycles in Mexico would have been catastrophic. The company could only compete by redesigning the production system so that each worker created more value than they cost. So Harley tore down the existing plant and built a new one. Unlike most factories, the new plant has people everywhere. There are no robots on the main assembly line; instead, hundreds of workers, operating in teams of 5 or 6, manually build each motorcycle. There are around 1,200 different Harley configurations, and a new bike starts its way through the production line every 80 seconds. Virtually each one is unique.

Human beings can also solve thorny problems that lead to major inefficiencies. At Harley, there are 150 “problem solvers” whose entire job is to continuously monitor their small sections of the production line and search for better ways to make motorcycles. The average tenure of a line worker at the York plant is 18 years, and these workers are extremely devoted to the company. (“How many factory workers have the company logo tattooed on their arm?” asks the plant manager.) Costs have fallen by $100 million at the plant and quality has improved even more significantly. Customer demand is extremely high, especially now that people can get a bike within a few weeks.

Classroom discussion questions:

1. What type of production process does Harley use? (See the Global Company Profile that opens Ch. 7).

2. Why does Harley prefer people to robots?

OM in the News: The Turning of the Screw

Harley's York PA plant
Harley’s York PA plant

Companies’ pursuit of “big data”—collecting and crunching ever larger amounts of information—is often thought of as another way to figure out exactly what customers want. But big data is also a means of measuring millions of little things in factories, such as how many times each screw is turned. That is what Raytheon is doing at its Alabama missile plant, writes The Wall Street Journal (May 16, 2013). If a screw is supposed to be turned 13 times after it is inserted but is instead turned only 12 times, an error message flashes and production of the missile or component halts. Improvising with a defective screw or the wrong size screw isn’t an option.

Similarly, At Harley-Davidson’s plant in York, Pa., software keeps a constant record of the tiniest details of production, such as the speed of fans in the painting booth. When the software detects that fan speed, temperature, humidity or some other variable is drifting away from the prescribed setting, it automatically adjusts the machinery. In the past, says Harley’s VP, operators had leeway on paint jobs and each could do the work in a slightly different way. Harley has also used the software to find bottlenecks that could keep it from its goal of completing a motorcycle every 86 seconds. Harley managers recently determined that installation of the rear fender was taking too long. They changed a factory configuration so those fenders would flow directly to the assembly line rather than having to be put on carts and moved across an aisle.

Harley and Raytheon are just two of many manufacturers installing sophisticated, automated software systems, known as manufacturing execution systems, or MES, to gather and analyze factory-floor data. Semiconductor and other high-tech companies were early adopters of MES, but now others are catching up. Suppliers include Apriso, GE, SAP, Siemens, and Rockwell Automation.

Discussion questions:

1. Why is MES a valuable operations tool?

2.  By what other names is MES known in manufacturing?

OM in the News: Harley Goes Flexible

Our Global Company Profile that opens Chapter 7 describes the manufacturing process at Harley-Davidson’s plant in York, PA. The Wall Street Journal (Sept. 22-23, 2012) writes that “until recently, the company’s sprawling factory here had a lack of automation that made it an industrial museum. Now, production that once was scattered among 41 buildings is consolidated into one brightly lighted facility (see photo) where robots do more heavy lifting. The number of hourly workers, about 1,000, is half the level of three years ago and more than 100 of those workers are “casual” employees who come and go as needed.”

This revamping has allowed Harley to quickly increase or cut production in response to shifting demand. Harley got serious about cutting costs when Keith Wandell became CEO in 2009. On his first visit to the York plant, he declared the layout and working methods unsustainable and began scouting sites for a new plant to replace York. When the company notified its union that the plant would move unless it approved a new contract giving Harley more control over costs, union members voted overwhelmingly to make concessions, and Harley stayed in York.

Instead of 62 job classifications, the plant now has 5, meaning workers have a wider variety of skills and can go where needed. A 136-page labor contract has been replaced by a 58-page document. The pace of work is faster now, but managers and workers work together more smoothly, according to the Journal. In the paint department, for example, people used to do the same chore all day but now rotate through several tasks to avoid body strain and boredom.

Some items formerly made in York, such as brackets and screws, come from outside suppliers. Production fluctuates depending on day-to-day sales, so the company doesn’t have to stock up well ahead of the spring peak-selling period and guess which models and colors will be popular.

Discussion questions:

1. What major OM changes did Waddell make to turn Harley around?

2. What is the impact of job classification changes (a topic of Ch.10)?