Supply Chain Conference 2016

Aspiring for Operational Excellence

Simon Jolliffe, Inventory Manager, H-D EMEA

1
Content

• About H-DMC
• Business Scenario
• Target SCM Solution
• Initiative Objectives & Deliverables
• Results
• Highlights
• Unexpected Outcomes
H-DMC

• Founded: 1903
• HQ: Milwaukee, Wisconsin
• 2015 Revenue: $5.3 B
• Motorcycles $4,127 M
• Parts & Accessories (PAC) $863 M
• General Merchandise (GM) $292 M
• Employees: 5,700 approx.
• Dealer Network: 1435
• 2015 MC Retails: 264,627
• US Market Share: 50.2% (on-road 601+cc models)
Possible Opening Video

Touring by Harley-Davidson Touring by Harley-Davidson – YouTube to open

up with “About H-D”
H-D EMEA

• HQ: Oxford, UK (2003)

• Subsidiaries: France, GmbH, BeNeLux, Italy, Switzerland & Spain
• Sales Offices: Czech Republic, Russia, UAE, Greece and South Africa
• Employees: 250 approx.
• Dealer Network: 378
• 2015 MC Retails: 43,287
• Europe 36,894
• Others 6,393
• Europe Market Share: 10.5%
data provided by ACEM, an independent agency.
• ERP: SAP since Jul-2009
• Distribution: Houthalen, Belgium
• 3PL Services: Neovia Logistics
 EMEA Operations
Operations Dir.
EMEA

S&OP Mgr. Marketing Simon Jolliffe SAP SME (OTC)

Logistics Mgr.
MC Mgr. Inventory Mgr. PAC & GM

SAP SME (OTC) Senior S&OP S&OP Lead Senior S-CA

Administrator
Analyst GM GM

Reporting S&OP Lead S-CA

S&OP Analyst
Analyst PAC PAC

• PAC & GM Supply Headcount = 3

• Appointed April-2013
• 98% PAC SKUs procured from H-DMC
• 50% of GM revenue is One-Time-Buy (cut to order biannually)
• ~42K active SKUs across PAC & GM Core
Business Scenario

• Technical resources and funding focused on global rollout of SAP

• Rudimentary stock replenishment solution
• Fundamental flaws and capability gaps
• Average sales data
• No seasonality
• Service levels fluctuated
• International impacting domestic business

• Independently surveyed the market for possible solution providers

• Completed feasibility study of solution locally
• Pilot pending US approval
Target Solution

• A demand-driven, inventory optimisation and supply chain management

solution:
• Improve forecast accuracy at SKU level
• “Reduces” inventory while maintaining service levels >99%
• Modules include:
• Statistical Demand Forecasting
• Fulfilment
• Replenishment
• Functionality
• Plan promotions and/or step changes in demand
• Manage exceptions
• Simulate ‘what-if’ scenarios
Objectives & Deliverables

• Improve service levels and optimise Inventory

• Hosted solution without interfaces from SAP
• Cost Effective
• Low technical risk
• Defined KPIs by category
• Stock Value
• Fill Rate(s)
• Backorders as % of Revenue July Aug Sept Oct Nov-Mar

Define/Analyze
• *SKU Count - Establish SA w/ToolsgGroup x

• Define future business’ needs - Architecture analysis x

- Design solution x
• Aggressive implementation - Build Solution x x
- Run proof-of-concept x
• Key stakeholder engagement Recommend

• Global v Local without exception - Measure results x

- Decision point on scalability x
H-D EMEA File Flow Design
Weekly Load Files Monthly Load Files

Supersessions ZHDI_CUSTOM_MARC

MARM
ME80FN
On Orders MVKE Item Master
ZIM04
MARA

Demand VAO5*1
Demand.txt MARC
Outstanding VAO5*2 Item
Orders OpenSales.txt Warehouse

Current Stock MBEW

Ad hoc / screen based load

KNVV Micro Custom
EINA4 Supplier BoM
KNA1 Areas Attributes
Development of Strategy

• Reduced stocking criteria from 8 to 4 demand hits P/A

• Revised weighed purchasing logic:

Critical Consumables
Target = 99%
Spark Plugs
Brake Pad Kits
Air Cleaner Filters
Batteries
Oil Filters
• Now stocking to service level targets by category Oil & Fluids
• Initially constrained optimisation Tires

• ABC classifications extended to D&E during Pilot

• Annual reduction of 93,785 deliveries on stocked items = $750k est. savings
Pilot Results

• Data cleansing alone improved integrity of SAP

• High / growing line fill rates across all portfolios
• Ttl Parts = 90.9%, SKU Parts = 94.3%, Crit.Cons. = 99.6%
• Ttl Accs = 94.2%, SKU Accs = 94.6%, Key Accs = 98.5%

• High Order Proposal Placement

Of 2,214 only 10 investigated and all subsequently placed!

• Inventory modelling looked great

• High inventory value but healthy
• Days of Supply was stable
• Polar Vortex
• Lowest backorders for 5 years
realising 5% more revenue per month than prior year

• Facilitated sales growth

Additional Highlights

• True scalability of designed solution

• Efficient operation allowing time to explore CI opportunities
• Vendor Managed Inventory initiative
• Expand direct procurement portfolio
• New supplier on-boarding process
• Developing resources
• Improved engagement and boosted team moral
• Manual biannual re-stratification > automated weekly
• Expect inventory to increase initially
• Ability to proactively reduce or avoid backorders
• Assumes a perfect Supply-Chain
Unexpected Outcomes

• Reverting to SAP standard functionality

• Influence across S&OP process
• Global Inventory Management Team
• Centralised KPI reporting
• Making data driven decisions
• Cross functional user forum
• Greater global awareness and role
appreciation
 Socialising the Purchasing Cycle

PROCUREMENT
(Purchase to Pay) Payment Knowledge
GTM / CHANNEL
Receive Specification

5 Rights of
Procurement Order
Source
the
1. Quantity market

2. Place
3. Time
4. Quality Authorise
Appraise
suppliers SOURCING
5. Price

Select & RFQ /

Value-Add Contribution: Requisition Tender

• Support Contract Management

SLA & KPI Measurement Contract
Manage
Analyse
& short-
• Develop Supplier Relations ment list

Award Negotiat
Early Buyer Involvement (EBI) contract e

• Product & Relationship Lifecycle Management Facilitation

Possible Closing Video

Meet our Custom Kings - Harley-Davidson Prestige Motorcycles - YouTube

to close session on.
THANK YOU