Lean in Harley-Davidson: Launching the Harley-Davidson Operating System

Harley-Davidson! …no need for more introduction. This week, I toured the assembly plant in York—the biggest of four H-D manufacturing plants in the US. Together with H-D tattooed bikers with close-fit leather vests, I had the great opportunity of seeing the factory from inside. Harley is well-known for the feelings it evokes in its customer base, and the H-D culture is an unavoidable teaching case in any marketing course. Few other products better symbolize the American dream. Therefore, my question when visiting the York plant was naturally: is it an American dream factory?

Harley-Davidson Factory in York, PA

Harley-Davidson Factory in York, PA, offers free tours (Photo: better-operations.com)

Harley has offered free factory tours in York since 1973! Of course, the tours help build customer loyalty and is an excellent arena to showcase the motor cycles, but the advantage also goes well beyond that: Offering factory tours means that the factory has to be presentable at any time; it must be sorted, logical and cleaned up. While many factories struggle tremendously to achieve a factory standard that allows further process improvements, a factory that allows customers, competitors and tourist inside the walls has no choice than to be state-of-the-art. Many companies kick off their XPS /lean journeys with a 5S-program. 5S stands for “sort”, “stabilize”, “shine, “standardize”, and “sustain” and is basically about keeping the workplace orderly and effective. 5S is necessary, but boring, and hence hard to sustain. Touring the York plant, I see that 5S-levels are not flawless, but surely as good as it gets in individualistic countries like ours. The York plant leaves an overall positive impression.

The leanness of Harley-Davidson York

Then what about leanness? From what I saw during our restricted tour, the York plant is in good shape today. Lines are well designed and there’s a lot of modern technology in use. One motorcycle rolls off the assembly lines every 90 seconds. Importantly, the complexity and variety that the plant is able to handle is nothing but impressive. The plant also handles much in-house fabrication (gas tanks, fenders and frames), while engines and drive-trains comes from the H-D factory in Kansas City, Missouri. It assembles bikes such as the Softtail and also CKD-sets for offshore assembly in Brazil and India. Add customer requirements and market volatility and all this adds up to higher requirements for flexibility than the plant has ever faced before. And it seems to handle it excellent; the factory stands out as modern, agile and effective.

Our tour guide explains about the “Continuous Improvement System”, which has been implemented with success the last few years. All over the factory we see team-boards titled Continuous Improvement. (A trained eye can see that some are in use while others are not—just like in other “lean” companies.) They take use of standard lean methods such as daily meeting structures and problem solving escalation. Much has been learned from lean champions such as Toyota and Caterpillar [4]. A practical example is how employees came up with a much improved way to cover holes in the frames before painting. “We’re all one team here—we include everybody in how to improve our operations”, the guide can tell. Today, the plant upholds that “In a culture of continuous improvement, Harley-Davidson employees work every day to be the new factory, looking for ways to reinvent the process” [1].

The level of leanness is overall good at the H-D York plant (Photo: better-operations.com)

Fifty years after Toyota, it seems like H-D has succeeded with a transformation in its York plant. But this transformation has not come easy! Even in the York Factory, H-D has tried to implement “lean” long before. The management at York tried to implement the “productivity triad” already in the beginning of the 1980s (!) [2]. The “triad”—that should boost competitiveness against the low cost-high and quality Japanese competitors—consisted of Just-In-Time production, employee involvement through quality circles and statistical operator control. This system soon yielded great success, with the inventory turnover going from 2-a-year to 17-a-year and many other improvements [2]. Clearly, that system however had not found its way into the H-D corporate culture; if it had, there would be no need to start over again thirty years later…

Launching the Harley-Davidson Operating System

The new York transformation has been such a success that Harley Davidson wants to replicate it in the rest of its manufacturing network [4]. The biggest hurdle to do so has apparently been to land a new agreement with the union; the International Association of Machinists and Aerospace Workers. Latest in 2007, there were strikes in the York factory when 2.700 operators feared for their jobs (they were also right so; today they are 1.600… but at least the plant still exists). Harley was even prepared to close three of its factories (including York) and move to Kentucky if the labor unions did not agree to reduce jobs, wages and benefits [4].

In February 2011, Keith Wandell, President and CEO, announced that they have reached such an agreement and that: “Together with our unions, Harley-Davidson is making the necessary changes across all our production facilities to succeed in a competitive, global marketplace. The company is well on its way to build a world-class, sustainable, lean operating structure” [3]. To achieve this, H-D is now launching the group wide XPS under the label the Harley Davidson Operating System. This system is being introduced across all company production facilities. At its Kansas city production facility, the implementation of the Harley-Davidson Operating System will start next month, August 2012.

So, is it an American dream factory?

Different people have different dreams… Seen with the eyes of the customers; YES—the York plant makes dreams come true. From the perspective of the former employees who have been laid off during downsizing at the plant I don’t even have to suggest an answer… But from a lean production perspective; YES—this plant is well above average. I think all who work in manufacturing should (1) take advantage of taking the excellent free tour if passing by Pennsylvania and (2) consider offering free tours at their own facilities; I bet you the latter will help improve competitiveness in the long run.

A plant tour like few other at H-D York (Photo: better-operations.com)

Sources

  1. Plueddeman, C. (2011) A new YORK state of mind, HOG magazine, No. 13, pp. 33-36.
  2. Kotha, S. & Dutton, J. (1993) Transformation at Harley-Davidson, Teaching Case, Stern School of Business, New York University
  3. PR Newswire, February 2011, Harley-Davidson to Implement New Production System at Kansas City Following Vote Approving Contract
  4. Rick Barrett, Milwaukee Journal Sentinel (MCT), April 2012, Winds of change bear down on Harley-Davidson plants

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3 thoughts on “Lean in Harley-Davidson: Launching the Harley-Davidson Operating System

  1. Pingback: Company-wide Quality Management: XPS of the 80s | better operationsbetter operations

  2. Pingback: The World Class Manufacturing programme at Chrysler, Fiat & Co. | better operations

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