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Revving up sales at Harley-Davidson
There is a mystique associated with a Harley-Davidson motorcycle. No other motorcycle _ in the world has the look, feel and sound of a Harley-Davidson. Demand for Harley- Davidson motorcycles outweighs supply even though the company produces 300000 motorcycles a year, which generates over USS4 billion in revenue. Some models have a two-year waiting list.
The company recently won a number of awards, including being rated:
- 2nd in ComputerW0rId’s Top 100 Best Places to Work in IT;
- 51st in Fortune’s 100 Best Companies to Work For;
- 1st in Fortune’s 5 Most Admired Companies in the Motor Vehicle Industry;
- 1st in the Top 10 Sincerest Corporations (by the Harris Interactive Report);
- 2nd in the Top 10 Overall Corporations (by the Harris Interactive Report).
Harley-Davidson’s focus on technology.
Harley-Davidson’s technology budget of US$50 million is more than 2 per cent of its revenue, which is far above the manufacturing industry average. More than 50 per cent of this budget is devoted to developing new technologies such as sharing information, gaining business intelligence and enhancing decision making. Harley Davidson’s commitment to technology is paying off; for example, by using strategic information systems, the company has reduced its operating costs by US$40 million.
Talon, Harley-Davidson’s proprietary dealer management system, is one of its most successful information systems. Talon handles inventory, vehicle registration, warranties and point-of-sale transactions for all Harley-Davidson dealerships. The system checks dealer inventory, generates parts orders and analyses global organisation information. Talon gives Harley-Davidson managers a 360-degree view into enterprise-wide information that supports strategic goal setting and decision making throughout all levels of the organisation.
Building supplier relationships
For the legendary motorcycle manufacturer, the direct-to-store model has worked very well. The motorcycle giant had a complex supply chain in the United States, with 16 Midwestern suppliers sending separate shipments to its factories in Wisconsin, Missouri and Pennsylvania. The staff at Harley-Davidson’s Wisconsin distribution centre were responsible for receiving and packing deliveries for parts and accessories; they then shipped those parts and accessories to hundreds of dealerships across the US.
The sheer volume of shipments was increasing the company’s freight expenses, driving Harley-Davidson to evaluate its supply chain efficiency. Since then, the company has streamlined its supply chain to send all shipments weighing less than 1000 pounds (450 kilograms) directly to the dealerships without ever stopping in Wisconsin. As a result, the manufacturer reduced its transportation costs and increased deliveries of parts and accessories to dealerships.
Harley-Davidson also consolidated its orders to reduce the number of deliveries from multiple times a day to only three times a week. This move had the added benefit of giving the distribution centre access to larger stocks of parts, and allowed the company to put more focus on its operations while spending less time worrying about the supply network.
Building customer relationships
Each time a customer reaches out to a company, the company has an opportunity to build a trusting relationship with that particular customer. Harley-Davidson realises that it takes more than just building and selling motorcycles to fulfil the dreams of its customers. For this reason, the company strives to deliver unforgettable experiences along with high-quality products.
Harley-Davidson sells more than US$500 million worth of parts and accessories to its loyal followers. Ken Ostermann, Harley-Davidson’s manager of electronic commerce and communications, decided the company could increase parts and accessories sales if it could offer the products online. The dilemma facing Ostermann’s online strategy was that selling jackets, saddlebags and T-shirts directly to consumers would bypass Harley- Davidson’s 650 dealers, who depend on the high-margin accessories to fuel profits. Ostermann’s solution was to build an online store, Harley-Davidson.com, which prompts, customers to select a participating Harley-Davidson dealership before placing any online orders. The selected dealership is then responsible for fulfilling the order. The strategy ensures that dealers will remain the focal point of customers’ buying experiences. The company currently receives over 1 million visitors a month to its online store. To guarantee that every customer has a highly satisfying online buying experience, the company asks the dealers to agree to a number of standards, including:
- checking online orders twice daily;
- shipping online orders within 24 hours;
- responding to customer inquiries within 24 hours.
Deeley Harley-Davidson Canada (DHDC) is the exclusive Canadian distributor of Buell and Harley-Davidson motorcycles, parts, accessories, and related products and services. DHDC began looking for an integrated solution that could bring together the legacy systems it was using and unify the company. The company needed to sustain and support growth and provide information to its employees in fast, convenient ways. DHDC went through a comprehensive RFP (request for proposal) process. Oracle’s JD Edwards V EnterpriseOne Warehouse Management capability was very important to DHDC. It provided the tools for real warehouse efficiency-improved inventory control, turnaround time and space utilisation-for increased margins and even happier customers.
Harley-Davidson’s corporate culture
Harley-Davidson employees are the engine behind its outstanding performance and the foundation of the company’s overall success. Harley-Davidson believes in a strong sense of corporate ethics and values, and the company’s top five core values serve as a framework for the entire corporation:
- Tell the truth.
- Be fair.
- Keep your promises.
- Respect the individual.
- Encourage intellectual curiosity.
The company credits its core values as the primary reason it won the two prestigious awards from the Harris Interactive Report, one of the most respected consumer reviews for corporate sincerity, ethics and standards. Sticking to strong ethics and values is and will continue to be a top priority for the company and its employees.
To enhance its enterprise further, Harley-Davidson plans to keep taking advantage of new technologies and strategies, including a web-based approach to accessing information and an enterprise-wide system to consolidate procurement at its eight US facilities.
Effect of the economic downturn
Harley-Davidson Inc. took the unusual step of disclosing that worldwide retail sales of Harley motorcycles fell 13 per cent during the first two months of 2009. It did, however, expect that shipments during the whole year would be on track to meet the 2009 guidance outlined in its 2008 annual earnings release. There was good news in the recovery package passed by the US Congress, in that the stimulus package includes a tax credit for buyers of motorcycles in addition to cars.
Questions
1 How does Talon help Harley-Davidson employees improve their decision-making capabilities?
2 Identify a few key metrics a Harley·Davidson marketing executive might want to monitor on a digital dashboard.
3 How can Harley-Davidson benefit from using decision support systems in its business?
4 How can Harley-Davidson use business process improvement to increase customer satisfaction?
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