Harley Davidson

Background:

Harley-Davidson Inc. (HD) is the world’s leading producer of heavyweight motorcycles, with gross revenues in fiscal year 2013 over $5.9 billion. At the time under study, HD had gross revenues of over $2 billion (FY 08). The company had approximately 6,000 employees and over 600 independently owned dealerships. Headquartered in Milwaukee, Wisconsin, HD had manufacturing facilities in Wisconsin, Pennsylvania and Missouri as well as wholly owned subsidiaries in Germany, United Kingdom, France and Japan. Its major competitors were Honda, Yamaha, Suzuki and Kawasaki.

The company enjoyed a highly favorable brand image and a very high level of customer loyalty. Its chief customers were young, and older riders in their 40s, who perceived themselves as “born to be wild.” HD’s corporate culture and governing structure reflected this appeal to freedom, adventure, collegiality and tradition—it rejected strict hierarchy and encouraged decentralized collaboration across business lines and support functions, reflecting the value the company placed on employee participation and teamwork at all levels of management. As of 1998, the company was striving to meet its strategic goal of doubling its production capacity by its 100th anniversary in 2003 without losing any of the quality of its products or undermining a corporate culture that CEO Jeffrey Bluestein described as having a “family feeling.” (“Plan 2003”)

One of the company support functions that developed consistent with HD’s decentralized management style was the purchasing organization. Although procurement was tightly integrated with engineering and manufacturing operations, each of the manufacturing sites in the United States had developed independent procurement systems, processes and procedures. This decentralized and independent procurement process drew little attention from management until the arrival of Garry Berryman, who took over primary responsibility for the purchasing organization in...