Harley Davidson Essay, Research Paper

Harley-Davidson Motor Co. recently announced record profits for a quarter. What wasn’t apparent was the substantial role

purchasing played in taking this American icon from a position of near financial oblivion to star status in investors’ hearts.

Not surprisingly, it’s quite a story. In the mid-1990s, CEO Jeff Bleustein decided to move from the traditional high-walls paradigm of

American manufacturing to one in which purchasing became a full partner in product development with the responsibility of

marshalling resources of the very best suppliers. Half of the purchasing staff was dedicated to the Product Development Center in

Milwaukee where they worked as teams with design engineers and suppliers’ engineers. Many key suppliers, such as Delphi, now

have engineers work full time at the Product Development Center.

Why the change?

“We had picked suppliers whose forte was technical innovation,” says Earl Werner, who took over Harley’s engineering operations

in 1993. “There are suppliers out there who are good in technical innovation, but not in other requirements. And engineering created

disasters for the company. We failed to do well what the purchasing people do well, and that’s consider all of the requirements for a

successful relationship with suppliers.”

Harley recruited Garry Berryman, who earned his spurs at Honda, to infuse the purchasing department with a new attitude. He

created what he calls American keiretsu, or alliances of suppliers and customers that remove the substantial negatives of Japanese

keiretsu, which are powerful combinations of companies that are cemented by family ties or strong financial connections. The

American keiretsu are bound by the goals of mutual success.

Getting into Berryman’s fraternity is not easy–you must commit to annual cost reductions even if your materials and labor costs are

rising. You must also participate in the company’s product development program and significantly improve quality. In return, you

participate in Harley’s success. And suppliers trip over themselves to join the club.

Harley-Davidson is this year’s Medal of Professional Excellence winner, continuing a long and proud tradition. Congratulations to

the biker kings.