Supply Chain Conference 2016

1

Aspiring for Operational Excellence

Simon Jolliffe, Inventory Manager, H-D EMEA

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

• 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

Operations Dir.EMEA

SAP SME (OTC)

S&OP Mgr.MC

S-CAPAC

Senior S-CAGM

S&OP LeadPAC

S&OP LeadGM

Senior S&OP Analyst

Reporting Analyst

S&OP Analyst

Administrator

Marketing Mgr.

Simon Jolliffe Inventory Mgr.

Logistics Mgr.SAP SME (OTC)

PAC & GM

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

• *SKU Count

• Define future business’ needs

• Aggressive implementation

• Key stakeholder engagement

• Global v Local without exception

July Aug Sept Oct Nov-Mar

Define/Analyze

- Establish SA w/ToolsgGroup x

- Architecture analysis x

- Design solution x

- Build Solution x x

- Run proof-of-concept x

Recommend

- Measure results x

- Decision point on scalability x

ME80FN

MARM

MVKE

MARC

MARA

Supersessions

Demand

Outstanding Orders

On Orders

Current Stock

Item Warehouse

Item Master

MBEW

VAO5*1Demand.txt

ZHDI_CUSTOM_MARC

Monthly Load FilesWeekly Load Files

Ad hoc / screen based load

BoMCustom

AttributesMicro Areas

SupplierEINA4KNVVKNA1

ZIM04

VAO5*2OpenSales.txt

H-D EMEA File Flow Design

Development of Strategy

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

• Revised weighed purchasing logic:

• Now stocking to service level targets by category• Initially constrained optimisation

• ABC classifications extended to D&E during Pilot• Annual reduction of 93,785 deliveries on stocked items = $750k est. savings

Critical ConsumablesTarget = 99%

Spark Plugs

Brake Pad Kits

Air Cleaner Filters

Batteries

Oil Filters

Oil & Fluids

Tires

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 PlacementOf 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 yearsrealising 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

Knowledge

Specification

Source the

market

Appraise suppliers

RFQ / Tender

Analyse & short-

list

Negotiate

Award contract

Contract Manage

ment

Select & Requisition

Authorise

Order

Receive

Payment

Socialising the Purchasing Cycle

GTM / CHANNEL

SOURCING

PROCUREMENT(Purchase to Pay)

5 Rights of Procurement1. Quantity2. Place3. Time4. Quality5. Price

Value-Add Contribution:• Support Contract Management

SLA & KPI Measurement• Develop Supplier Relations

Early Buyer Involvement (EBI)• Product & Relationship Lifecycle Management Facilitation

Possible Closing Video

Meet our Custom Kings - Harley-Davidson Prestige Motorcycles - YouTubeto close session on.

THANK YOU