Harley-Davidson's biggest challenge today is not generating demand for its motorcycles, it's meeting it. Given that over half of the parts that go into Harley products come from the $1 billion it pays to 350 outside suppliers, managing its supply chain efficiently is critical to increasing production (Sullivan, 2001). Harley-Davidson has put its supply chain through a thorough overhaul in order to meet the production ramp. .
Leading the makeover is procurement expert Garry Berryman. He came to Harley by way of Honda Motors, where he"d been a student of Japan's keiretsu. Keiretsu is defined as huge companies that foster deep, trusting relationships with suppliers. His idea was to form deep strategic alliances with Harley's top suppliers, bringing them into the design and planning process. Not many big companies would trust the development of a critical component to an outsider. But Berryman insisted that trust breeds innovation and loyalty. .
The introduction of keiretsu at Harley-Davidson aligns itself with Covey's fourth habit, Think Win/Win. According to Covey (1989), Win/Win is a total paradigm that seeks mutual benefit in all interactions. Harley essentially outlines these benefits with their suppliers. Each supplier must sign a detailed contract spelling out expectations and obligations on both sides of the relationship.
With contract in hand Harley-Davidson focuses on Win/Win areas within new product design. Harley has implemented on-site supplier staff to assist with new product design. Utilizing industry leaders in the design process promotes improved product for Harley and firm product development strategies for the supplier; clearly a Win/Win situation.
The knowledge gained by the supplier through the design process may be used as a building block towards manufacturing. This should dramatically reduce the time to production availability. This co-involvement enables the supplier to provide a quality product with less time and cost constraints; yet another Win/Win situation.
