Supply Chain Management In Indian Automotive Industry

Overview of Indian Automotive Industry

Discuss about the Supply Chain Management In Indian Automotive Industry.

Harley Davidson operates in the global two wheeler industry. This industry is the part of the entre automobile industry including the four wheelers market, but it is more competitive in nature. This is due to the reason that two markets are having more number of companies compared to the four wheeler market. Moreover, the customer segments in the two wheel industry are also more diverse compared to the four wheeler industry. The starting price point in the two wheeler industry is much lower and thus the customer base is also more than the four wheeler industry. In the global two wheeler market, market segmentation can be done in terms of different aspects. One of the major aspects is the style of the motorbikes (Singh, Rastogi and Sharma 2013). Another aspect is the price point of the motorcycle. The last aspect is the utility of the motorcycle.

Harley Davidson is one of the leading American motorcycle makers operating in the global two wheeler market. They can be considered as one of the major legacy motorcycle manufacturers due to their rich brand history and classic product lines. However, the legacy and the positive brand value of Harley Davidson are less effective in the current competitive market scenario. In addition, with the inflow of the huge number of motorcycle brands from different countries especially the Japanese brands, market share of Harley Davidson is at stake. Moreover, the global two wheeler market is highly segmented in nature (Corey and Millage 2014). This is due to the reason that a certain section of the customers rides motorcycle for utility. On the other hand, another section of the customers ride motorcycles for leisure and lifestyle purposes. There are some companies such as Honda and Suzuki who are having both the premium and affordable models for different customer segments. Some other companies are either operating the premium segment such as Harley Davidson and Indian, while some are operating only in the affordable segment such as Bajaj and Hero from the Asian region.

In along with these, one of the key features for the industry where Harley Davidson operates is the change in the market trend or the customer preference pattern. According to the given case study, heavyweight and classic cruiser styled motorcycles are once preferred by the larger section of the target customers in the American market. However, with the initiation of the globalization, Japanese brands such as Honda, Suzuki and Yamaha entered the market and disrupted the existed market scenario. The market trend slowly changed towards the lighter and faster Japanese bikes. In addition, the sporty styled theme of the Japanese bikes also created attractiveness among the American

Trends in the Global Two-Wheeler Industry

It has been identified that the global motor vehicle industry is still in the growing stage despite the economic downturn in the global environment. In this context, Weiss et al. (2015) commented that the major challenge faced by the industry is the natural disaster, which further created the pricing pressure, rising the fuel price and overall interest rates. Savino, Pierini and Baldanzini (2012) estimated that that the global two-wheeler the connectors market could grow at CAGR of 8.38% during the period 2017-2021. On the other side, Bhattacharya, Mukhopadhyay and Giri (2014) mentioned about a significant trend in the markets is the launch of a next generation ECU connectivity solution which is namely SmartSeal connector. This next generation SmartSeal connector remains as the compact ECU connectivity solution, which further includes a rugged connector holding the capacity of withstanding the demand of two wheeler markets.

According to Bhattacharya,  Mukhopadhyay and Giri (2014) one driver in the market is the rise in the sales of luxury and ultra luxury motorcycle. Because of this legacy of luxury as well as ultra luxury motorcycles, and the increased need for comfort, the sales of two-wheeler vehicles across the globe have increased significantly. Furthermore, it is also observed that in comparison to the commuter as well as the mid-segment motorcycles, the ultra luxury and luxury such as Harley Davidson have observed a higher torque and extending reliability and durability. Thus, Kumaraswamy et al. (2012) mentioned that there is a state of growth in global demand for luxury motorcycles, which includes electronic cruise control (ECC). The major key vendors of two wheelers in the industry are such as Bosch, Hirose Eletric, Japan, YAZAKI and others. The following figure shows the market share for two wheelers.

Furthermore, Weiss et al. (2015) states that one significant barrier in the market is treated as pressure from OEMs to set price of the components low. The customer expectation for advanced features and the safety mandates have further led to increase in the number of electronic systems and functions in two wheelers. Nonetheless, the durability, reliability, efficiency and the performance of electronic features may directly the impact the operation of two-wheeler vehicles. The organizations are trying to keep a balance between costs incurred, as there are increasing numbers of electronic components associated with two wheelers and providing the buyers with high quality at reasonable price. When it comes to trend, in the industry, the major player like Harley Davidson focuses on manufacturing a heat-resistant and lightweight component for the automotive wiring. Apart from functional strategy, Harley Davidson primary intensive growth strategy is to penetrate in the large market. This means Harley Davidson develops its operation by applying intensive strategy in reaching wide customers in its current markets like United State. Harley Davidson, for example, tends to promote and sell more products to new buyers in United State. The major objective of such strategy is to widen the sales network of the organization.

Harley Davidson in the Global Two-Wheeler Industry

In Harley Davidson, various aspects are being considered in initiating the change and transformation process. One of the major processes of change management initiated is the incremental change. This is process of change management refers to the continuous, small and effective improvements in the organization (van der Voet 2014). This process of change management is being implemented in the root level. In the case of the Harley Davidson, incremental change is being implemented in involving the employees responsible for the quality of the products. According to the information in the case study, Harley Davidson motivated the employees to give their feedback and opinions in the decision making process. This helped in making the employees responsible for the quality of the products rather than just the quantity. In the earlier case, the employee in Harley Davidson are only responsible for building the motorcycle at any cost without determining the quality of them. This caused in the low quality of the products as compared to the competition. This process in Harley Davidson also involved providence of the training to the employees regarding the quality control process (Hechanova and Cementina-Olpoc 2013). They are being given training regarding how the issues in the production process can be traced and those can be solved.

Another type of change management being initiated by them is the remedial change. This process of change refers to the change that is implemented in reaction to the originated challenge or threat in the industry. In the case of the Harley Davidson, they have faced the threat from the Japanese motorcycle brands in mainly two ways (K. Vora 2013). According to the information in the case study, one of the major threats being faced by Harley Davidson is the popularity of low cost, faster and fuel efficient motorcycles. Another challenge being faced by Harley Davidson is the entry of the Japanese motorcycle brands in the target market of them. For instance, launching of the Honda Goldwing 1000 posed direct challenge to the Harley Davidson due to the reason that this bike was designed according to the choice ad preference pattern of the customers willing to buy Harley Davidson. In response to these threats, Harley Davidson initiated the remedial change by changing the existing approach and design of their assembly line. It was reported that, the assembly line of Honda is much cleaner and neat compared to the Harley Davidson. This caused in the increase of efficiency in the case of the Honda. With the initiation of the remedial change, Harley Davidson changed their existing approach and designed their new assembly line in more neat and cleaner way (Catulli, Cook and Potter 2017).

Market Drivers and Barriers

Another process of change being initiated is the transformational change. This change refers to the initiation of the change from the top level management and impacts the organizational vision. In the case of the Harley Davidson, IPO was issued in the stock market in to gain more capital for further investment. This enabled Harley Davidson to have access to more capital to further invest in their business operation and compete effectively in the market (Kezar 2013). Another example of transformational change in Harley Davidson is the initiation of organizational learning across all levels in the organizations. According to the reports, learning institute is being initiated in the organization in order to have more formal approach of the entire internal stakeholders. This also helped them in having an effective knowledge sharing process in the organization.

The last change that is being identified for Harley Davidson is the process and system change. This refers to the change in the internal management of the organization in order to create more value and enhance the effectiveness of the organizational process. Harley Davidson initiated the concept of pay for performance for the employees (Eijkenaar 2013). The key objective for the initiation of this concept is to increase the productivity of the employees. This also acts as the motivational factor for the employees due to the reason the employees will be more motivated to work more and better to gain more financial reward. Another process and system change initiated by them is providence of the flexibility for the employees (Swift and Hwang 2013). This is due to the reason that employee are being given the responsibility to take their decision regarding the need of training. This is increasing the level of responsibility for the employees in their workplace.

The leadership roles in Harley Davidson are having both negative and positives being identified. In the case of me as a leader with Harley Davidson, my first job was to identify the industrial benchmark. This is due to the reason that for any organization, it is important to have the idea about the benchmark in the industry. Effective determination of the benchmark in the industry will help me as a leader to design the organizational strategies and processes to meet the standards. Another aspect that I would have considered as the leader is to have diversified product portfolio. This is due to the reason that operating in the competitive market of two wheelers with single product line is very much difficult. In the case of Harley Davidson, the bikes such as Roadsters and Vrod came much later in the market. Before that, Harley Davidson only had heavyweight cruiser bikes for long route driving. According to me, Harley Davidson should have diversified product portfolio with having different style of bikes. This would have helped them to compete with other brands effectively and attract diverse customers. I will not recommend that Harley Davidson should have sports bikes due to the reason that it will dilute their brand image, but they should have different designs and styles in the highway and heavyweight bike segments such as chopper, cruiser and bobbers.

Incremental and Remedial Change in Harley Davidson

I will also recommend that a change in product strategy for Harley Davidson. This is due to the reason that currently Harley Davidson is only having engines above 750 cc, which is much higher compared to other motorcycles brands. Moreover, due to having only higher engine capacity, the price of Harley Davidson is also comparatively higher. Thus, according to me, Harley Davidson should have the smaller capacity bikes ranging between 250cc and 500 cc. It would have increase the target customer base for Harley Davidson and will reduce the price. More customers can get attracted with having lower priced models. It will also help Harley Davidson to develop their market in the developing countries also.

Reference

Reference List

Bhattacharya, S., Mukhopadhyay, D. and Giri, S., 2014. Supply chain management in Indian automotive industry: Complexities, challenges and way ahead. International Journal of Managing Value and Supply Chains, 5(2), p.49.

Catulli, M., Cook, M. and Potter, S., 2017. Product service systems users and Harley Davidson riders: The importance of consumer identity in the diffusion of sustainable consumption solutions. Journal of Industrial Ecology, 21(5), pp.1370-1379.

Corey, J. and Millage, P., 2014. Ethnographic study on the Harley Davidson culture and community. Journal of Technology Management in China, 9(1), pp.67-74.

Eijkenaar, F., 2013. Key issues in the design of pay for performance programs. The European Journal of Health Economics, 14(1), pp.117-131.

Hechanova, R.M. and Cementina-Olpoc, R., 2013. Transformational leadership, change management, and commitment to change: A comparison of academic and business organizations. The Asia-Pacific Education Researcher, 22(1), pp.11-19.

1. Vora, M., 2013. Business excellence through sustainable change management. The TQM Journal, 25(6), pp.625-640.

Kezar, A., 2013. Understanding sensemaking/sensegiving in transformational change processes from the bottom up. Higher Education, 65(6), pp.761-780.

Kumaraswamy, A., Mudambi, R., Saranga, H. and Tripathy, A., 2012. Catch-up strategies in the Indian auto components industry: Domestic firms’ responses to market liberalization. Journal of International Business Studies, 43(4), pp.368-395.

Savino, G., Pierini, M., Rizzi, M. and Frampton, R., 2013. Evaluation of an autonomous braking system in real-world PTW crashes. Traffic injury prevention, 14(5), pp.532-543. 

Singh, J., Rastogi, V. and Sharma, R., 2013. Total productive maintenance review: a case study in automobile manufacturing industry. International Journal of Current Engineering and Technology, 3(5), pp.2010-2016.

Swift, P.E. and Hwang, A., 2013. The impact of affective and cognitive trust on knowledge sharing and organizational learning. The Learning Organization, 20(1), pp.20-37.

Van der Voet, J., 2014. The effectiveness and specificity of change management in a public organization: Transformational leadership and a bureaucratic organizational structure. European Management Journal, 32(3), pp.373-382.

Weiss, M., Dekker, P., Moro, A., Scholz, H. and Patel, M.K., 2015. On the electrification of road transportation–a review of the environmental, economic, and social performance of electric two-wheelers. Transportation Research Part D: Transport and Environment, 41, pp.348-366.