IS-560 Enterprise Systems

DePaul University
Robert W. Starinsky, Instructor
Winter Quarter, 2004

SiL’K Supplier Selection

Report of Findings and Recommendations

Harley-Davidson Motor Company

Prepared By:
Thomas A. Pinkowski
Business Analyst
Blue Demons Consulting

January 26, 2004

-Confidential and Proprietary -

Harley-Davidson SiL’K Supplier Selection Report of Findings and Recommendations

Table of Contents

Table of Contents................................................................................................................1
Background and Scope.......................................................................................................2
Current scenario..................................................................................................................2
Situation Analysis................................................................................................................3
Conclusion and Recommendations......................................................................................4

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Background.and Scope

The Harley-Davidson Motor Company is a motorcycle manufacturer that was founded in 1902. Harley-
Davidson Motor Company’s average production is over 150,000 motorcycles a year. The majority of the
company’s revenue is generated from motorcycles and related products. The Harley-Davidson dealerships
consist of over 600 independently owned US dealerships. The company is headquartered in Milwaukee,
Wisconsin with manufacturing plants in Wisconsin, Pennsylvania, and Missouri. Also, Harley-Davidson has
additional facilities of wholly subsidiaries in Germany, Benelux, France, and Japan.

Harley-Davidson Motor Company employs over 6,000 people. The company values both individual
participation and teamwork. The company does not have a traditional hierarchical management structure.
Instead, the organizational structure consists of three interlocking circles of: Create Demand (CDC); Produce
Product Group (PPG); and Provide Support (PSC). The CDC circle is responsible for sales and marketing. The
PPG circle handles development and manufacturing. PSC manages legal, financial, human resources, and
communication areas of the company. To ensure that the circles are working together on the corporation
direction, Harley-Davidson has in place a Leadership and Strategy council. The council consists of executives
from each circle.

Harley-Davidson Motor Company brand name has acquired tremendous and mysterious market strength. Their
customers are willing to wait up to years for a motorcycle. The Harley-Davidson Motor Company traditional
customer makeup was that of young, reckless, and “born to be wild.” However today, most of their growth
consists of customer in their forties with grown children no longer at home and who are looking for an
adventure.

This report has been requested by and prepared for Mr. David Cotteleer, Information System Manager of the
Supplier Information Link (SiL’K), and Garry Berryman, Vice president, Material Management at Harley-
Davidson Motor Company. Mr. Cotteleer and Mr. Berryman have retained Blue Demons Consulting (BDC) to
analyze the current selection process for the SiL’K project and provide a recommendation on a supplier. BDC
composes this review report by conducting an analysis on the activities surrounding the SiL’K project at Harley-
Davidson Motor Company.

Current scenario

BDC found out that in 1996, Mr. Berryman began the development of the Supply Management Strategy (SMS).
The goal of SMS was to “ensure that Harley-Davidson is provided with the right product, at the right time, with
the best quality, for the lowest possible cost.”1 SMS’s main theme was to define the difference between a vendor
and supplier. Mr. Berryman comments on the differences:

“A vendor is what you’ll find on a street corner. You’re simply going to get the product that you see,
you’re not going to get anything behind that product – in terms of innovation, creativity, and
commitment to your business success. A supplier is an extension; is an opportunity to extend our
primary business within organizations that can bring a competency to product development and
innovations.”2

1
SiL’K Newletter 1998, no.1
2
Austin, R; Sole, d.; & Cotteleer, M. 2003, ‘Harley Davidson Motor Company: Enterprise Software
Selection’,Harvard Business School, January 22, 2003, 9-600-006
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.. of SMS are:
.
The strategic objectives

 Shift from a short-term transaction way of thinking to a long-term focus on supplier

relationships.
 Involvement of suppliers with production facilities
 Integration of suppliers into Harley-Davidson’s development process.
 Convince suppliers to participate with new model development teams, which include
representatives from engineering, manufacturing, purchasing, and marketing.

As different departments successfully accepted SMS, it became apparent that current systems were mismatched
to the SMS vision, which depends on people having skills, resources, and time to focus on building suppliers
relationships. The SiL’K team was formed to define requirements and efforts to move from strategy to action.
One of the topics that SiL’K team worked on was the procurement process. While working on the procurement
process, the SiL’K team discovered a need for a new purchasing information system. To begin the process, the
team defined requirements for a proper software selection and to have a successful implementation.
Situation Analysis

As part of the review process, BDC conducted both formal and informal interviews with both executives and
senior level management personnel and other appropriate personnel, who were involved in selection of a supplier
for an enterprise-wide procurement and supplier management system. BDC gathered and reviewed various
business documents, including policy and procedure documents, transactions documents, management reports,
training material, requirement documents, and project documentation relating to the SiL’K supplier selection
process. Visual inspections and observations were made to better understand core business processes and
current information processing systems at the Harley-Davidson headquarter and plants.

BDC has made the following discoveries about the SiL’K project and supplier selection undertaking:

SiL’K Project
 The Harley-Davidson Business Integration model is used, which highlights People, Process, and
Technology.
 The “People” element had been restructured from a decentralized to a hybrid organization.
 All “Technology” decisions involved the Harley-Davidson’s Architecture Integration (AI). Using
AI ensures that SiL’K technical solutions are compatible with existing Harley-Davidson systems.
 For the “Process”, the SiL’K team identified interface with other business functions. All activities
that the stakeholders were engineering, manufacturing, finance, and suppliers were defined for
involvement with Purchasing.
 The defined interfaced processes were further investigated to define if Purchasing was the owner or
the driver.
 The SiL’K team defined the three implementation phases which consists of:
Phase 1: Transaction Processes / Systems. These are processes and systems used to support
the execution of fundamental Purchasing activities.
Phase 2: Supplier Information Processes /Systems. These are processes and systems used
to manage relationships and information exchange with the Supply web.
Phase 3: Project Tracking Processes / Systems. These are processes and systems that
support Purchasing activities.3
 Through the project, great communication was performed to both 200 people in procurement and
600 people in related functions. This helped manage the expectation for everyone involved.
 The team completed a Request for Quote (RFQ) for a new system.

3
Harley-Davidson internal document
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Supplier Selection Process
 The RFQ for new systems to support SMS was sent to a short list of potential suppliers. The short
list was built from recommendations of an industry research firm.
 A provider conference was held to give supplier exposure to Harley –Davidson selection team and
the team’s selection process. Also, Harley-Davidson’s values and issues were emphasized which
includes such items of: respect the individual; encourage intellectual curiosity; and participation.
 Eight Companies response to RFQ and complete self-evaluation checklist. From the return
checklist’s answers, two groups of suppliers arose, ones who were 90-plus percent fit and those that
were less than 90-percent fit.
 The supplier list was additionally narrow down because one supplier system solution was not
compatible with Harley-Davidson’s current systems and the other supplier was too small.
 The remaining three suppliers were invited to a final demonstration of what they could supply.
 The demonstrations were performed but a decision by SiL’K team could not be made.

Conclusion and Recommendations

BDC has come to the conclusion that the SiL’K team has done an excellent job in defining projects needs and
narrowing the suppliers to three. Harley-Davidson’s methods of using metrics in Functional and Qualitative
Criteria are most adequate in selecting a supplier.
The Functional Criteria consisted of:
 Design and Foundation
 Documentation
 Supply Management
 Miscellaneous
 Training
The Qualitative Criteria consist of:
 Long Term Relationship Potential
 Training Approach
Management Methodology
 Understanding H-D Requirements
 Out of the box Fit
 Cost
 Overall Functionality
Proposal
 Architecture Compatibility
 Web Functionality “to go”
 Request Definition
 Receiving
 Project Tracking
 Interfaces
 Others
 Research and Development
 Implementation / Education / Change
 Enabling the SMS
 Financial Viability
 Technical Support Offerings
 Number of Partner Providers included in Solution
 Platform Portability
 Manufacturing Experience

BDC analyzed the metrics results of the three final Providers. All three Providers were very close to each other.
To future distinguish the Providers from one another, BDC decided to review the Providers management style to
Harleys-Davidson management style.

Provider 1
Although it lacks some items, Provider 1 software solution is very adequate. Their management style is very
complimentary to Harley-Davidson culture. They were very comprehensive in their RFQ and demonstration with
Harley-Davidson, which was noted by several executives at Harley-Davidson. Their down earth business style is
similar to Harley-Davidson.

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Provider 2
.
Although Provider 2 is well respected in the software industries, their management is hierarchical and caters to
upper management, which is in direct conflict with Harley-Davidson style. Provider 2 seems to limit their
involved of others. They are a “shirt-and-tie” organization, which totally opposite of Harley-Davidson style.
Their management style makes them not a good candidate for this engagement.

Provider 3
Currently Provider 3 is involved in another software engagement with Harley-Davidson. Provider 3 did not
prepare well their RFQ and demonstration with Harley-Davidson. Many executives at Harley-Davidson believe
the only reason Provider 3 was considered was because of their other involvement with Harley-Davidson and the
possible economics benefits. Provider 3 was not effective in demonstrating their products’ functionality. Although
Provider 3 is an industry leader for providing software solutions, they seem to lack the commitment that Harley-
Davidson seeks in an engagement and what their employees expect.

BDC is recommending Provider 1 because their software solution is more than adequate, while their management
style is complementary to Harley-Davidson style. On most software projects, the personality of supplier is
important to the success of project as the software solution. Both Provider 2 and Provider 3 provided very good
software solutions, but their management styles were totally opposite of Harley Davidson, which could lead to
possible conflicts.

BDC is available to review these findings with Harley-Davidson Company and answer questions regarding our
analysis and recommendations. BDC extends it gratitude to Harley-Davidson Company for using BDC in
performing this review

- End of Report -

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