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V
 cc"We operate from a strong strategic position," says Berryman, Vice-President,

Material Management and Product Cost. "Our strategy outlines our plans for the future, and we

share this openly with the supplier community and interested and related internal stakeholders."

These include engineering, manufacturing, product planning and product development. Supply

chain management strategies revolve around focusing on quality, cost, timing and technology.

"We understand that we can achieve all of these, so we don't have to sub optimize one for the

other,"


In the year 1903 William S. Harley and Arthur Davidson make available to the public the first

production Harley-Davidson® motorcycle. The bike was built to be a racer, with a 3-1/8 inch

bore and 3-1/2 inch stroke. The factory in which they worked was a 10 x 15-foot wooden shed

with the words "Harley-Davidson Motor Company" crudely scrawled on the door. In 1906, new

factory, measuring 28 x 80 feet, is built on the Chestnut St. site, later renamed Juneau Avenue.

In 1909, six-year-old Harley-Davidson Motor Company introduces its first V-twin powered

motorcycle. With a displacement of 49.5 cubic inches, the bike produces seven horsepower.

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By 1920, Harley-Davidson was the largest motorcycle manufacturer in the world. Their

motorcycles were sold by dealers in 67 countries. Production was 28,189 machines.

H-D¶s corporate headquarters are in Milwaukee, Wis. The Company¶s domestic production

facilities are located in the Milwaukee area, East Troy and Tomahawk, Wis.; York, Pa.; and

Kansas City, Mo. Other key business operations are located in Chicago, Ill.; Franklin, Wis.;

Talladega, Ala.; Valley View, Ohio; Ann Arbor, Mich.; Carson City and Reno, Nev.; and Plano,

Tex. Harley-Davidson also maintains operations in strategic international markets, including

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throughout the continent of Europe, and in Brazil and Japan, to support its worldwide dealer and

distributor network.

Plant tours are conducted regularly at power train operations in Milwaukee, vehicle operations in

York, and vehicle and power train operations in Kansas City.

Àc Wauwatsoa, Wisconsin - Powertrain Operations: Sportster and Buell powertrains,

Screamin' Eagle performance parts, and remanufacturing.

Àc York , Pennsylvania - Vehicle Operations: Manufacturing site for Touring class, Softail,

and custom vehicles.

Àc Tomaha, Wisconsin - Tomahawk Operations: Facility that makes sidecars, saddlebags,

windshields, and more.

Àc Kanasas City, Missouri - Vehicle and Powertrain Operations: Manufacturing site of

Sportster and other vehicles.

Àc Milwaukee, Wisconsin - Harley-Davidson Museum: Archive; exhibits of people,

products, culture and history; restaurant & café; and museum store.

In 1982, H-D introduced the µMaterial as Needed¶ AMAN) application in its production process.

This meant that parts and raw materials would be purchased and built as and when required. The

application led to significant reduction in production cost and product. Second, H-D also adopted

Statistical Operator Control ASOC) process in order to provide each and every employ with

statistical training for gauging the quality of output. Earlier, this work was done by quality

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inspectors. H-D also started encouraging the participation of employees in problem solving and

controlling. Inventory was strictly controlled using the ¶Just in Time¶ system.

H-D¶s branded motorcycles concentrated more on traditional styling, design, simplicity,

durability & quality. The sportster model had already been launched in 1957.From the 1980s, H-

D introduced several families of motorcycles, namely, TouringA1980), SoftailA1984),

DynaA1991), & VRSCA2001).Touring, Softail, Dyna & Sportster had an air-cooled, twin ±

cylinder with a 45¶ ³V´ configuration. The VRSC family had a liquid- cooled, twin-cylinder

engine with a 60¶ ³V´ configuration. The size of H-D engines ranged from 883cc¶s to 1800cc¶s.



 

At Harley-Davidson management has been able to position the supplier community in a key

business role and then leverage this for the benefit of the company's total enterprise performance.

As a result, H-D has seen a very healthy and growing performance on the part of the suppliers.

Two examples:

1 .H-D created a collaboration model involving our chrome plating supply chain, both internal

and external.

Chrome, of course, is a signature component of what customers want from the company's

product. The supply management side of the organization is leading the entire collaborative

business model, leveraging an exclusive business relationship with all of the internal and external

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participants for the benefit of the company's business process and the supplier's role in that

business process.

„

 The benefits H-D derives are counted on and planned for by the financial part of the

business. Supplier knows and understands that, over the past six years, H-D has been in a true

disinflation environment, having worked through this without carving into the margin piece of

the supplier. Instead, supply management has worked with suppliers to remove waste and

heavily integrate them into the company's new product development process.

 
  


 One, be grounded in a strong technical competency and technical

understanding of the supplier community with which you are invested. You need to understand

the value of that technical competency. You also need to insist on its presence and application at

each and every application that presents itself.

Second, make sure that you are able to "be at the table" that deals with the real business issues

of your company Athat is, where senior management makes strategic decisions for the

company).If you are armed with real information, the organization should embrace this with

enthusiasm. Eventually, the enthusiasm changes to excitement once the results start coming in.

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The 358,000-square-foot Harley-Davidson Vehicle and Powertrain Operations in Kansas City,

Mo. were built in 1998 to increase production of Harley - Davidson motorcycles.

More than 900 Kansas City employees produce the Sportster, Dyna and VRSC families of

motorcycles from fabrication and finishing through final assembly. The plant also has the unique

distinction of being the only Harley-Davidson facility to produce an entire motorcycle, the

groundbreaking VRSCA V-Rod. From assembly of the liquid-cooled Revolution power train and

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hydro formed frame to painting and final testing, people and process converge in Kansas City to

transform raw materials into custom American muscle.

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Harley-Davidson Motor Company, the only major U.S.-based motorcycle manufacturer, is

known for setting the world standard when it comes to the design and manufacture of

heavyweight motorcycles. The company chose M
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standards with its logistics processes. Forecasts of more growth to come presented additional

logistical challenges to the company, particularly for inbound transportation and the supply of

parts and accessories to dealerships. In order to focus on its core competency, the company

sought a third-party logistics provider.

Hundreds of suppliers shipped components to the Harley-Davidson factories in Wisconsin,

Missouri and Pennsylvania. In order to support modern lean manufacturing objectives, the direct,

less-than-truckload shipments from suppliers to factories were occurring at a high frequency,

creating a disproportionate rate of growth for freight expense. UPS Supply Chain Solutions is

gradually optimizing the entire Harley-Davidson inbound transportation network, by calculating

optimal ship frequencies for all the suppliers and identifying cross-docking opportunities at the

other manufacturing facilities. As a result, Harley-Davidson Motor Company is gaining

efficiencies throughout its manufacturing operations, while reducing its transportation costs. The

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comprehensive solution also added value to Harley-Davidson¶s shipments of parts and

accessories to dealerships. In the previous system, Harley-Davidson shipped parts and

accessories to its distribution center in Wisconsin where parts were stocked, picked and packed

to fill orders. The orders were delivered by less-than-truckload to dealerships around the country.

Leveraging its delivery network, UPS will begin shipping orders of less than 1,000 pounds

directly to the Harley-Davidson dealerships. Orders of more than 1,000 pounds will be delivered

to a UPS Supply Chain Solutions cross-docking facility in Wisconsin where they will be loaded

onto pallets the same day and shipped by less-than-truckload. As a result, Harley-Davidson

expects to further reduce its transportation costs and speed up average delivery times of parts and

accessories to its dealerships. Building on the success of the solution, UPS and Harley-Davidson

are now exploring ways to enhance the company¶s distribution of finished goods and its

international transportation processes.

³UPS Supply Chain Solutions won our business due to its ability to offer comprehensive, fully-

integrated services that not only serve our immediate needs, but pave the road for sustainable

growth over the long haul,´ said David Alamshah, Director of Transportation Logistics for

Harley-Davidson.

 



The classic Harley-Davidson engines are two-cylinder, V-twin engines with the pistons mounted

in a 45° "V". The crankshaft has a single pin, and both pistons are connected to this pin through

their connecting, rods.

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This design causes the pistons to fire at uneven intervals. This is due to an engineering tradeoff

to create a large, high-torque engine in a small space. This design choice is entirely vestigial

from an engineering standpoint, but has been sustained because of the strong connection between

the distinctive sound and the Harley-Davidson brand. This design, which is covered under

several United States patents, gives the Harley-Davidson V-twin its unique choppy "potato-

potato" sound. To simplify the engine and reduce costs, the V-twin ignition was designed to

operate with a single set of points and no distributor, which is known as a dual fire ignition

system, causing both spark plugs to fire regardless of which cylinder was on its compression

stroke, with the other spark plug firing on its cylinder's exhaust stroke, effectively "wasting a

spark." The exhaust note is basically a throaty growling sound with some popping.The 45 degree

design of the engine thus creates a plug firing sequencing as such: The first cylinder fires, the

second Arear) cylinder fires 315° later, then there is a 405° gap until the first cylinder fires again,

giving the engine its unique sound.

Harley-Davidson has used various ignition systems throughout its history - be it the early

points/condenser system, ABig Twin up to 1978 and Sportsters 1970 to 1978), magneto ignition

system used on 1958 to 1969 Sportsters, early electronic with centrifugal mechanical advance

weights, Aall models 1978 and a half to 1979), or the late electronic with transistorized ignition

control module, more familiarly known as the black box or the brain, Aall models 1980 to

present).

Starting in 1995, the company introduced Electronic Fuel Injection AEFI) as an option for select

models. With the introduction of the 2007 product line, EFI is now standard on all models,

including Sportsters.

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In 1991, Harley-Davidson began to participate in the Sound Quality Working Group, founded by

Orfield Labs, Bruel and Kjaer, TEAC, Yahama, Sennheiser, SMS and Cortex. This was the

nation's first group to share research on psychological acoustics. Later that year, Harley-

Davidson participated in a series of sound quality studies at Orfield Labs, based on recordings

taken at the Talladega Superspeedway, with the objective to lower the sound level for EU

standards while analytically capturing the "Harley Sound." This research resulted in the bikes

that were introduced in compliance with EU standards for 1998.

On 1 February 1994, the company filed a sound trademark application for the distinctive sound

of a Harley-Davidson motorcycle engine: "The mark consists of the exhaust sound of applicant's

motorcycles, produced by V-twin, common crankpin motorcycle engines when the goods are in

use". Nine of Harley-Davidson's competitors filed comments opposing the application, arguing

that cruiser-style motorcycles of various brands use a single-crankpin V-twin engine which

produce a similar sound. These objections were followed by litigation. In August 2001, the

Company dropped efforts to federally register its trademark. However, legal counsel for the

company claims that the Harley-Davidson still holds trademark rights in the sound even without

a registration.

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The Revolution engine is based on the VR-1000 Superbike race program, developed by Harley-

Davidson's Powertrain Engineering team and Porsche Engineering in Stuttgart, Germany. It is a

liquid cooled, dual overhead cam, internally counterbalanced 60 degree V-twin engine with a

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displacement of 69 cubic inches A1130 cc), producing 115 horsepower A86 kW) at 8250 rpm at

the crank, with a redline of 9000 rpm. It was introduced for the new V-Rod line in 2001 for the

2002 model year, starting with the single VRSCA AV-Twin Racing Street Custom) model

A 1250 cc Screamin' Eagle version of the Revolution engine was made available for 2005, and

was present thereafter in a single production model from 2005±2007. In 2008, the 1250 cc

Revolution Engine became standard for the entire VRSC line. Harley-Davidson claims

123 horsepower A92 kW) at the crank for the 2008 VRSCAW model. The VRXSE [   is

equipped with a stroker A75 mm crank) Screamin¶ Eagle 1,300 cubic centimetres A79 cu in)

Revolution Engine, producing over 165 horsepower A123 kW).

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The Company intends that certain matters discussed in this release are ³forward-looking

statements´ intended to qualify for the safe harbor from liability established by the Private

Securities Litigation Reform Act of 1995. These forward-looking statements can generally be

identified as such because the context of the statement will include words such as the Company

³believes,´ ³anticipates,´ ³expects,´ ³plans,´ or ³estimates´ or words of similar meaning.

Similarly, statements that describe future plans, objectives, outlooks, targets, guidance or goals

are also forward-looking statements. Such forward-looking statements are subject to certain risks

and uncertainties that could cause actual results to differ materially from those anticipated as of

the date of this release. Certain of such risks and uncertainties are described below. Shareholders,

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potential investors, and other readers are urged to consider these factors in evaluating the

forward-looking statements and cautioned not to place undue reliance on such forward-looking

statements. The forward-looking statements included in this release are only made as of the date

of this release, and the Company disclaims any obligation to publicly update such forward-

looking statements to reflect subsequent events or circumstances.

Mc manage supply chain issues

Mc continue to realize production efficiencies at its production facilities and manage

operating costs including materials, labor and overhead

Mc manage production capacity and production changes

Mc Detect any issues with our motorcycles or manufacturing processes to avoid delays in

new model launches, recall campaigns, increased warranty costs or litigation.


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As a result of motorcycle volume reduction and the Company¶s commitment to improve its cost

structure, Harley-Davidson plans to:

Àc Consolidate its two engine and transmission plants in the Milwaukee area into its facility

in Menomonee Falls, Wis.

Àc Consolidate paint and frame operations at its assembly facility in York, Pa.

Àc Close its distribution facility in Franklin, Wis., consolidating Parts and Accessories and

General Merchandise distribution through a third party.

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 Àc Discontinue its domestic transportation fleet operation.

The planned volume reduction and restructuring actions are expected to result in the elimination

of about 1,100 jobs over 2009 and 2010, including about 800 hourly production positions and

about 300 non-production, primarily salaried positions. About 70 percent of the workforce

reduction is expected to occur in 2009.

³We obviously need to make adjustments to address the current volume declines,´ said Ziemer.

³But we are also determined to do that in a way that will make us more competitive for the long

term. Our management group will engage with union leaders, through our partnering

relationship, regarding these changes.´

On a combined basis, Harley-Davidson expects the volume reduction and changes to operations

to result in one-time charges of approximately $110 million to $140 million over 2009 and 2010,

and ongoing annual savings of approximately $60 million to $70 million upon completion of the

restructuring actions.

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In the first quarter of 2009, the Company plans to ship between 74,000 and 78,000 new Harley-

Davidson motorcycles, a 3.0 percent to 8.5 percent increase versus the first quarter of 2008.

However, for the full year 2009, the Company plans to ship between 264,000 and 273,000 new

Harley-Davidson motorcycles, a 10 percent to 13 percent reduction from 2008.

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³We reduced our production levels prudently in 2008, helping our dealers achieve lower

inventory levels,´ said Ziemer, ³and we¶re going to show similar discipline in 2009. That¶s not

only critical for the health of our business, but for our dealers¶ businesses, as well.´

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