Cycle News - Archive Issues - 2000's

spirit here now among the ordinary workforce than even three years ago - there's a more buoyan~, confident air about the men and women on the line. It seems you've made a big investment in terms of manpower and production, as well as research facilities. Is that the case - and what was the rationale? I think the creation of value for Ducati is made up of two important parts. The first is obviously R&D - we have to stay on the leading edge of performance, the new edge of design, refreshing our existing models and putting new products into the marketplace that reflect Ducati's unique engineering philosophy. But, secondly in importance, we also have marketing, the activity around the brand but you can't do a lot of marketing if you don't have a solid product, so for Ducati the most important thing is continuous innovation in the longer term, and a focus on our core products. Of course, you can have successful short-term marketing operations - like we sold 2000 MH900e models over the internet, and we had a great success with the entry-level Monster 600 Dark. But marketing can only work in the longer term if you have a very strong product line that's constantly being refreshed, which gives the customer pride in his purchase and keeps his interest in Ducati always alive. The key to this is technical innovation - and that's why we make a substantial ongoing investment in engineering and R&D. Our engineers have a constant flow of great ideas, which even when the company was almost bankrupt, with very little money for R&D investment, they still kept working on .. B~t what was lacking was a total business vision of where Ducati needed to be headed in terms of product - the models that came out of Ducati Corse, or from the R&D people were not really triggered by a marketing perspective, by long-term planning an.d looking ahead, by making deadlines and sticking to them. They just sort of happened - there was no timetable people had to keep to in order to get this stuff out, so the timeframe always took longer than predicted. Now, we have a much more integrated development structure that is more attuned to what the market wants - and I think customers will notice this reflected in the new products we have coming on line in the future. Another problem we had in the past was that.different groups of people within the R&D and technical departments were going in different directions. The designer was working in a separate area from the engineers, and vice versa. There are really two models here - one is the CRC Cagiva method, which while nevertheless an important part of our history, entails the designer working on a new model almost in a vacuum, then when it's all finished bringing this prototype to the R&D and technical people and saying "Here you are - make that!" So then they have to dismantle it, modify it a hundred times over for practical reasons while trying to retain the original concept and spirit, and then put it A in production. This takes months, even years - by which time the original product has already started to lose some of its freshness. The other way is already commonplace in the automotive world, where designers and engineers work hand in hand from the beginning, constantly checking with each other to make sure that this rear suspension layout won't compromise the stylist's design for the rear end, or that the exhaust system can still be integrated satisfactorily into the form of the bodywork, and so on. This means that, by working together, the two groups can produce a more satisfactory, integrated design that will reach production must faster - and that's a model we're aiming to follow in the future. I'd say from past experience at Ducati that, in the pre-Tamburini days, there was also a third model, where the engineers produced a rolling prototype that they then gave to the stylists and said, "Put clothes on that'" The result often looked like it had been dressed up almost as an afterthought - Q l remember not long after I joined the company, Federico Minoli distributed a list of the most frequent complaints by our customers, all of which focused on these two issues. We addressed it by changing practically all our top suppliers, especially for electronic components, even if there was a cost pickup entailed by moving f~om an Italian supplier to a Japanese one. We began an intensive quality-control operation in-house, where we now have a 20strong staff of people doing only that, and we've worked with Porsche Consulting to introduce a system which they in turn developed from Toyota, which allows you to improve your manufacturing quality as well as your costs by motivating your workforce and focusing them on addressing such items as workplace cleanliness, machinery maintenance, component flow and procedural practices. We have focus groups which meet together and exchange ideas and suggestions for improving manufacturing quality, as well as streamlining the production process - it's working very well, and I know that this is reflected in the substantial reduction of warranty claims in the past five years. No longer do we ship the product to the client and then wait for the complaints - the quality problems have been addressed at factory level, and that's why Ducati's reputation for reliability has been deservedly enhanced. Even until three years ago our warranty costs averaged out at over Euro 200 [about $1801 per bike over the 24 months warranty period, but now it's down to around Euro 140 [$125]. That's not perfect, but it's a big improvement, and we also made a dramatic improvement in our spare parts operation, so that we now have a 96-percent turnaround of all orders within 48 hours, compared to 48 percent four years ago. That's why Ducati has won the top award in Germany last year for customer satisfaction, and came number two in a similar poll in France. Has a factor in this satisfaction been the setting up of Ducati's wholly owned sales operation in many countries? EightY-five percent of our turnover is now generated directly through our own distributors around the world, of course working through independent local dealers, which is the way we plan to keep it. Iberia and Australasia are the only major markets where the local Ducati importers are not our own subsidiaries - it's a strategic decision we took in 1997 to prevent too many unnecessary commercial layers getting between us and our customers. That's the reason we also expanded the network of Ducati Stores worldwide - there are 73 in all now, each conveying all aspects of the Ducati experience. AII this must have taken a great deal of money, in terms of investment and operating capital. Yet TPG has liquidated a large part of its initial stake in Ducati: are the resources there to maintain this commitment? Let me set the record straight, because I think many people are confused about what has happened, and who Ducati belongs to. In September 1996, TPG bought 41 percent of Ducati from the Castiglionis, with their partners Deutsche Bank Morgen Grenfell taking another 10 percent. The renaissance of the brand started from that moment - but A Q bikes like the original 851 Tricolore, or the '80s 750 Sport, or even the first belt-drive 90055. Doesn't your proposed new way of developing Ducati's next-generation model run the risk of producing bikes that are equally compromised in looks, where the company's traditionally strong focus on engineering will rule, because the engineers will always call the shots? This is not such a bad thing - I think that sometimes, something which comes from our engineers comes from their heart, and touches the consumer in a way that other company's products can not. But in the new world, you can't just make engineering masterpieces and hang the rest - you must make something that is easy to maintain, has a beautiful design, can be manufactured to a high standard of quality and is therefore reliable, and above all is distinctive: it must say 'Ducati!' when you look at it. Quality of manufacture and reliability are two 'elements that Ducati was not best known for back in the 1990s. What have you done to change that? A Q a U A Q A D I _ n _ _. • OCTOBER 31, 2001 21

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