Supply Base Mislabeling Reduction Initiative Mislabeling Impact to

Supply Base Mislabeling Reduction Initiative Mislabeling Impact to H-D Enterprise & Labeling Process Kaizen Event Deployment Company Confidential

Supply Base Mislabeling Reduction Initiative Key Takeaways: § Critical importance of reducing mislabeling occurrences § Understanding of resources/tools available for identifying and reducing risks within labeling processes § Working knowledge of how to deploy a labeling process improvement kaizen event in your organization Company Confidential

Mislabeling Impact to Harley-Davidson • Mislabeling occurrences in operations have trended down over 16 months analyzed, but importance of eliminating all occurrences is growing… • Decreased line-side inventories • Smaller marketplaces • Implementation of 3 rd Party Logistics Providers Leaner processes will eliminate current buffers to mislabeling occurrence impacts. 2009 FY Mislabeling Impact: Operations Impact: 301 Occurrences - 1, 214 Work Hours - 10% of PPM (incl. 2009 improvements) Company Confidential

Mislabeling Impact to Harley-Davidson • P&A is greatly impacted by mislabeling occurrences • Quantity of occurrences and time to resolution is lower than OE but % of parts rejected due to mislabeling is far greater 2009 FY Mislabeling Impact: P&A Impact: 253 Occurrences - 523 Work Hours - 36% of Parts Rejected Company Confidential

Mislabeling Impact to Harley-Davidson 50% of Operations Occurrences One Year Impact to Operations: § § § 159 suppliers had mislabeling occurrences 28 mislabeled 5 or more times 11 mislabeled 4 times 14 mislabeled 3 times 32 mislabeled 2 times 64 mislabeled once 50% of Operations Occurrences The long tail of suppliers with minimal occurrences must successfully errorproof their processes to effectively reduce mislabeling occurrences Company Confidential

Strategy for Reduced Mislabeling Occurrences § Provide the tools and methods necessary for suppliers to proactively evaluate their labeling processes for potential failures and introduce improvements, in order to drive down mislabeling occurrences at Harley-Davidson. Company Confidential

Tools for Reduced Mislabeling Occurrences § Kaizen Methodology for Labeling Process Error-Proofing – Structured and team-based approach for conducting an accelerated pace problem-solving event – Follows DMAIC methodology § Mislabeling Risk Quick Assessment – Rapid assessment of labeling processes to identify potential failures and measure risk – Performed for current state and implemented future state § Labeling Process Best Practice Guide – Brainstorming aid for identifying potential labeling process improvements Company Confidential

Labeling Process Kaizen Event Introduction – Any process has at least 3 different versions… Kaizen Event Goals: • Reveal and document the true current state process condition • Identify means to eliminate unnecessary process complexity and introduce errorproofing • Develop a plan for the attainment of the improved state process and process sustainability Company Confidential

Labeling Process Kaizen Event – Steps & Timing § 2 - 3 Weeks 1 - 1. 5 Days 30 & 60 Day Intervals Labeling Process Kaizen Event Steps: – Identify the improvement opportunity & obtain leadership support – Kaizen Event Pre-Work: • DEFINE Phase Deliverables: – Pre-Meeting I – Review methodology & planning – Data Collection – Process documentation – Pre-Meeting II – Process document review & process flow development – Kaizen Event: • MEASURE Phase – Current state assessment • ANALYZE Phase – Identification of process failures/root cause analysis • IMPROVE Phase – Countermeasure prioritization and action plan for improved future state – Kaizen Event Follow-Up: • CONTROL Phase – Tracking to prioritized actions – Assessment of implemented future state Company Confidential

Labeling Process Kaizen Event – Steps & Timing § 2 - 3 Weeks 1 - 1. 5 Days 30 & 60 Day Intervals Labeling Process Kaizen Event Steps: – Identify the improvement opportunity & obtain leadership support – Kaizen • Event Pre-Work: Attendance of key players in the process is critical to success of the kaizen event, if there is no approval for them • DEFINE Phase Deliverables: to participate in event, DO NOT PROCEED WITH THE EVENT. – Pre-Meeting I – Share methodology & planning – Data Collection – Process documentation – Pre-Meeting II – Process document review & process flow development – Kaizen Event: • MEASURE Phase – Current state assessment • ANALYZE Phase – Identification of process failures/root cause analysis • IMPROVE Phase – Countermeasure prioritization and action plan for improved future state – Kaizen Event Follow-Up: • Tracking to prioritized actions • Assessment of implemented future state • Recognizing the effort and success of the team Company Confidential

Labeling Process Kaizen Workbook § All Tools are maintained within a single Excel Workbook TIP: The Kaizen Workbook contains extensive tabs and information to help the team. The amount of information may be discouraging at first. Focus on the process should be maintained – a very straightforward and valuable approach to problem-solving should emerge. § The Labeling Process Kaizen Workbook provides: – Common problem solving approach – Common method of communication – Captures best practices and lessons learned from previous improvement initiatives Company Confidential

Labeling Process Kaizen Event – Steps & Timing § 2 - 3 Weeks 1 - 1. 5 Days 30 & 60 Day Intervals Labeling Process Kaizen Event Steps: – Identify the improvement opportunity & obtain leadership support – Kaizen Event Pre-Work: • DEFINE Phase Deliverables: – Pre-Meeting I – Review methodology & planning – Data Collection – Process documentation – Pre-Meeting II – Process document review & process flow development – Kaizen Event: • MEASURE Phase – Current state assessment • ANALYZE Phase – Identification of process failures/root cause analysis • IMPROVE Phase – Countermeasure prioritization and action plan for improved future state – Kaizen Event Follow-Up: • CONTROL Phase – Tracking to prioritized actions – Assessment of implemented future state Company Confidential

Define Phase - Kaizen Event Pre-Meeting I Deliverables: § Quantify Mislabeling Occurrence History & Impact to Quality Metrics § Labeling Process Kaizen Overview and Training § Development of Kaizen Process Timeline Company Confidential

Labeling Process Kaizen Event – Steps & Timing § 2 - 3 Weeks 1 - 1. 5 Days 30 & 60 Day Intervals Labeling Process Kaizen Event Steps: – Identify the improvement opportunity & obtain leadership support – Kaizen Event Pre-Work: • DEFINE Phase Deliverables: – Pre-Meeting I – Share methodology & planning – Data Collection – Process documentation – Pre-Meeting II – Process document review & process flow – Kaizen Event: • MEASURE Phase – Current state assessment • ANALYZE Phase – Identification of process failures/root cause analysis • IMPROVE Phase – Countermeasure prioritization and action plan for improved future state – Kaizen Event Follow-Up: • CONTROL Phase – Tracking to prioritized actions – Assessment of implemented future state Company Confidential

Define Phase - Kaizen Event Readiness Deliverables: § Project Champion Identification § Team Leader Identification § Team Selection § Collection of Current State Labeling Process Documentation Company Confidential

Kaizen Event Team Selection § Kaizen Event Leader Role – In charge of facilitating the kaizen event, pre-meetings & follow up – Leads the training, solves method questions – Focuses the group on the activity methodology – Solves conflicts of interest – Questions & challenges the team – Decides/approves changes on the agenda Company Confidential

Labeling Process Kaizen Event – Steps & Timing § 2 - 3 Weeks 1 - 1. 5 Days 30 & 60 Day Intervals Labeling Process Kaizen Event Steps: – Identify the improvement opportunity & obtain leadership support – Kaizen Event Pre-Work: • DEFINE Phase Deliverables: – Pre-Meeting I – Share methodology & planning – Data Collection – Process documentation – Pre-Meeting II – Process document review & process flow – Kaizen Event: • MEASURE Phase – Current state assessment • ANALYZE Phase – Identification of process failures/root cause analysis • IMPROVE Phase – Countermeasure prioritization and action plan for improved future state – Kaizen Event Follow-Up: • CONTROL Phase – Tracking to prioritized actions – Assessment of implemented future state Company Confidential

Define Phase - Kaizen Event Kaizen Pre-Meeting II Deliverables: § Review of Define Phase Event Readiness Deliverables § Review of Current State Process Documentation § Review Current State Labeling Process Training Documentation § Review/Development of Current State Labeling Process Flow Company Confidential

Kaizen Event: Facilities Workstation Requirements: • Overhead projector • Speaker phone • Whiteboard • Beverage Table Projector Screen / Whiteboard FLIP CHART CHAIR SPEAKER PHONE CHAIR TABLE CHAIR OVERHEAD PROJECTOR TABLE CHAIR LEADER CHAIR TABLE CHAIR Office Supply Requirements: • 2 Portable flip charts • Dry erase markers – multiple colors • Scotch tape CHAIR Remember to post and frequently revisit the agenda with the team! CHAIR SUB-LEADER (Optional) BEVERAGE TABLE FLIP CHART WALL (Agenda, Whiteboard) Company Confidential

Kaizen Event Agenda § Labeling Process Kaizen Events can be completed in an accelerated timeframe of 1 day § A sample agenda is included as a tab in the workbook Splitting the agenda over two partial days may be more appropriate for the team. Planning is critical – consider the needs of the team and the appropriate schedule during your planning activities. Company Confidential

Labeling Process Kaizen Event – Steps & Timing § 2 - 3 Weeks 1 - 1. 5 Days 30 & 60 Day Intervals Labeling Process Kaizen Event Steps: – Identify the improvement opportunity & obtain leadership support – Kaizen Event Pre-Work: • DEFINE Phase Deliverables: – Pre-Meeting I – Share methodology & planning – Data Collection – Process documentation – Pre-Meeting II – Process document review & process flow – Kaizen Event: • MEASURE Phase – Current state assessment • ANALYZE Phase – Identification of process failures/root cause analysis • IMPROVE Phase – Countermeasure prioritization and action plan for improved future state – Kaizen Event Follow-Up: • CONTROL Phase – Tracking to prioritized actions – Assessment of implemented future state Company Confidential

Measure Phase - Kaizen Event Measure Phase Deliverables: § Team Observation of Labeling Processes and Validation of Process Documentation § Completion and Review of the Mislabeling Risk Quick Assessment for the Current State TIP: Remember to respect the agenda and be careful not jump into a problem-solving mode during the Measure Phase. Waste, gaps to the documented process, and improvement opportunities may be discovered – these items should be shelved and addressed in the Analyze and Improve Phases. Also, printed copies of the current state process map are of benefit to team members during the Measure Phase. Company Confidential

Measure Phase - Kaizen Event Mislabeling Risk Quick Assessment § Tool to identify potential failures and measure risk § Provides a quantifiable baseline for improvement in the Measure Phase § The Quick Assessment is performed a second time after implementation of the future state Company Confidential

Labeling Process Kaizen Event – Steps & Timing § 2 - 3 Weeks 1 - 1. 5 Days 30 & 60 Day Intervals Labeling Process Kaizen Event Steps: – Identify the improvement opportunity & obtain leadership support – Kaizen Event Pre-Work: • DEFINE Phase Deliverables: – Pre-Meeting I – Share methodology & planning – Data Collection – Process documentation – Pre-Meeting II – Process document review & process flow – Kaizen Event: • MEASURE Phase – Current state assessment • ANALYZE Phase – Identification of process failures/root cause analysis • IMPROVE Phase – Countermeasure prioritization and action plan for improved future state – Kaizen Event Follow-Up: • CONTROL Phase – Tracking to prioritized actions – Assessment of implemented future state Company Confidential

Analyze Phase - Kaizen Event Analyze Phase Deliverables: § Team Brainstorming to Identify Potential Root Causes § Analyze Potential Labeling Process Failures – 5 Whys Company Confidential

Analyze Phase - Kaizen Event Fishbone Diagram: § Provides the structure for the team to brainstorm potential process failures § The Kaizen Workbook documents facilitation methods in the comments within the Analyze tab Company Confidential

Analyze Phase - Kaizen Event The three most critical potential failures, as determined by the Kaizen team, will be pursued for root cause analysis in the Improve Phase Company Confidential

Analyze Phase - Kaizen Event 5 Whys & 3 x 5 Whys Exercise: § Analyze three process failures identified by the Kaizen team as critical for actionable root causes § The Kaizen Workbook documents facilitation methods in the comments within the Analyze tab TIP: Beware of the pitfall of stopping investigations at symptoms rather than determining level root causes. The most elemental level of root cause should be understood in order to drive improvement. Company Confidential

Labeling Process Kaizen Event – Steps & Timing § 2 - 3 Weeks 1 - 1. 5 Days 30 & 60 Day Intervals Labeling Process Kaizen Event Steps: – Identify the improvement opportunity & obtain leadership support – Kaizen Event Pre-Work: • DEFINE Phase Deliverables: – Pre-Meeting I – Share methodology & planning – Data Collection – Process documentation – Pre-Meeting II – Process document review & process flow – Kaizen Event: • MEASURE Phase – Current state assessment • ANALYZE Phase – Identification of process failures/root cause analysis • IMPROVE Phase – Countermeasure prioritization and action plan for improved future state – Kaizen Event Follow-Up: • CONTROL Phase – Tracking to prioritized actions – Assessment of implemented future state Company Confidential

Improve Phase - Kaizen Event Improve Phase Deliverables: § Team Brainstorming for Potential Countermeasures § Review the Harley-Davidson Labeling Best Practice Guide § Prioritize Countermeasures to be Pursued TIP: Print copies of the Labeling Best Practice Guide for all team participants prior to the event, but do not distribute them until after the team brainstorms for potential countermeasures. Doing so may hinder the creativity of the team. Company Confidential

Labeling Process Kaizen Event – Steps & Timing § 2 - 3 Weeks 1 - 1. 5 Days 30 & 60 Day Intervals Labeling Process Kaizen Event Steps: – Identify the improvement opportunity & obtain leadership support – Kaizen Event Pre-Work: • DEFINE Phase Deliverables: – Pre-Meeting I – Share methodology & planning – Data Collection – Process documentation – Pre-Meeting II – Process document review & process flow – Kaizen Event: • MEASURE Phase – Current state assessment • ANALYZE Phase – Identification of process failures/root cause analysis • IMPROVE Phase – Countermeasure prioritization and action plan for improved future state – Kaizen Event Follow-Up: • CONTROL Phase – Tracking to prioritized actions – Assessment of implemented future state Company Confidential

Control Phase - Kaizen Workbook Control Phase Deliverables: § Post-Kaizen Mislabeling Risk Quick Assessment (30 Days Post-Kaizen) § 30 -Day Follow-Up Meeting with H-D Team § 60 -Day Follow-Up Meeting with H-D Team § Congratulate the Team Company Confidential

Follow-Up Next Steps: § Review the history of mislabeling at your organization § Investigate the impact to your business and your customers – Quantity of occurrences – Impact to quality metrics/PPM § Communicate the benefits of conducting a labeling process § § kaizen event in your organization upward and obtain support Form a cross-functional team to pursue the opportunity of a more robust labeling process Report your success to the Supplier Development Team and Supply Base Management organization Company Confidential

Supply Base Mislabeling Reduction Initiative Questions? You can reach out to the Supplier Development Engineering team at… supplier. development@harley-davidson. com Company Confidential