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IE Business School
Master in Management
Operations Management
Prof. Felipe Quintana
Matteo Polli
Section 2
THE FERRARI FACTORY - AN ITALIAN EXCELLENCE ALL OVER THE WORLD
My mind map aims to make the Ferrari world better understood. When a person thinks of this brand he only thinks of the wonderful cars that are produced by the Maranello team. Perhaps not everyone knows, however, that behind Ferrari's success there are 90 years of technological innovation that not only concerns the cars, but also the way Ferrari staff work. Since 1939, when Ferrari was founded with the name Auto Avio Costruzioni, the Maranello plant, the only Ferrari plant in the world, has been the hub of operations and over the years has undergone several transformations that have made it one of the most advanced car factories in the world.
I decided to choose Ferrari because as a child I fell in love with this car manufacturer. I remember when Michael Schumacher dominated in Formula 1 and the Maranello team became the most winning team ever. Also, as a car lover, I was always fascinated by the speed and elegance of the cars produced by Ferrari. So this course gave me the tools to really understand what lies behind the secret of Ferrari's success. During this course we analysed two car manufacturers, Toyota and BMW. The analysis of these two manufacturers gave me further tools to really understand how Ferrari manages to fuel demand for its products. I hope that at the end of this mind map it will be possible to actually understand the value of this Italian company and the passion they put into their products.
Let the journey begin! 🏎🇮🇹🐴
Ferrari is trying to improve in all aspects, not only in terms of the cars built, but also in terms of the efficiency and speed of the entire plant. In this regard, it has decided to create a partnership with Infor, an ERP service provider, to improve and speed up its supply chain. I enclose the article's Lin for more details:
https://www.supplychain247.com/article/ferrari_makes_way_for_faster_supply_chain_planning/gt_nexus
You should be able to see the video from the beginning, I don't know why but the link makes it start from the middle.
To be the best in the world you have to be maniacal in all aspects. Ferrari is. When it comes to production, then, it can be said that the optimisation of resources and time are concepts taken very seriously at Maranello. Ferrari knows very well that it has to put its workers in the best conditions to be able to do the job in the best way, producing a Ferrari is a complicated job and requires a very high mental effort because the degree of customization of each car is enormous. Ferrari, through the tools formed by the Lean philosophy, has been able to help its workers in carrying out their operations. At Maranello nothing is left to chance, from the barcode systems to trace each product to the standardisation of the basic processes of car construction, Ferrari has always sought the highest quality in every respect.
In class, waste is defined as something that does not add any value to the process. Over the years, and especially since 1997, with the introduction of the "Formula uomo" project with the aim of training its employees in the best possible way, Ferrari has always tried to reduce waste as much as possible.
Looking back at the 8 Lean Six Sigma wastes, it is possible to appreciate Ferrari's successes in this regard:
Ferrari not only runs its own cars, but also runs when it comes to the production and assembly of new models. In order to be precise and not to make mistakes, it is therefore necessary to limit as much as possible the factors that can lead to error. As it is possible to appreciate from the image of this slide, the Ferrari factory is a factory where order and cleanliness reign supreme. Each work tool has its own position, each product has its own identification code and each person knows exactly what their duties are, which not only concern the assembly of the cars, but also leave their working environment in order, so that other workers can work at their best. The 5S, therefore, a fundamental element of the Lean philosophy, are also a cornerstone of the Ferrari philosophy. Without them, in fact, it would not be possible to achieve such high production standards, standards that are extremely difficult for anyone to achieve.
The first stage of the mind map leads to an essential element of Ferrari culture: Continuous Improvement.
As can be read in the Ferrari Sustainability Report: "Our strategy focuses on maintaining our leading position in the luxury performance sports car market, enhancing and protecting the value and exclusivity of the Ferrari brand.
To maintain and protect the exclusivity, the value of the Ferrari brand continues to invest in its workers and facilities, among the most advanced in the world in the world of car manufacturing.
This principle can be summed up in one word: KAIZEN.
I had the opportunity to deepen the concept of kaizen during session 7 of the course. This lesson was dedicated to Toyota and its production system. The concept of Kaizen is one of the main pillars of the Toyota Production System and should be considered not only as a working system, but as a real philosophy.
Through this spirit of continuous improvement, which is not only desired by the company but by the workers themselves, Ferrari is able to maintain its standards at levels unattainable by others.
Ferrari was a huge success right from the start, so anyone would have immediately thought of increasing production in order to further profit from the success of these cars. Everyone except Enzo Ferrari, the creator of Ferrari knew that the excellence of his products could only be achieved by limiting the number of cars produced. Enzo Ferrari's legacy is still alive today and in fact Ferrari's choice is to produce less than 10,000 cars a year, a very small number if we consider the almost 4,000 employees.
This choice allows Ferrari to focus more on the development of new models and the continuous improvement of production techniques, a flagship of the Maranello plant.
Ferrari products, specifically the cars produced in Maranello, are the natural consequence of the excellence found in both Ferrari workers and the factory. We can therefore consider Ferrari cars as the daughters of this process of continuous improvement (Kaizen) within the Ferrari factory. As it is possible to read from the Ferrari report, one of Ferrari's objectives, in addition to the enhancement of its employees, is the desire to continue to improve the characteristics and performance of its cars and at the same time to increase the range of products in order to welcome new groups of customers who have the desire to become part of an exclusive world like Ferrari.
A short video introducing one of Ferrari's latest models further demonstrates the passion that this brand puts into the production of its products.
As mentioned before, the only Ferrari plant is in Maranello, but to really appreciate the importance of this plant it must be analysed from a Kaizen point of view. How can you expect to build the most advanced cars in the world if your factory doesn't evolve? This paragraph is called "factory as a body" because just as a living organism the plant has evolved over the years. Since 1947 several buildings have been added, but the real change came in 1997 when the concept of "Cittadella Ferrari", that is, a conglomerate of buildings that allows Ferrari to internalize and develop its construction processes as much as possible. Great architects such as Renzo Piano, who signed the wind tunnel, and Massimilano Fuksas, have contributed to making this dream come true. This enormous leap forward has made Ferrari independent in the study of aerodynamics and the development and manufacture of its engines.
People, as Ferrari also points out, are the greatest resource of the Maranello company. Around 3900 workers and managers work at the Maranello plant. The new Ferrari employees attend a preparation course lasting several weeks before they can work, and even if they are not useful for the production of cars, they are already paid by Ferrari.
In order to further understand the importance of its workers for Ferrari, it is enough to think that every year more than 50.000 hours of refresher and preparation courses are held, in which each employee can participate and at the same time, in order to be able to further train the workers involved in the assembly of delicate parts such as the engine or the gearbox, about 13.000 hours of lessons are given each year. In addition, Ferrari workers enjoy benefits unthinkable for other companies, including the possibility to do complete check-ups free of charge and, above all, the possibility to work in a context designed to make them perform at their best.
During the Second World War Enzo Ferrari was forced to move his factory from Modena to Maranello, a small town in Emilia Romagna. Enzo Ferrari thus began to build his own factory and from that day on all the Ferraris that were produced were only produced in the Maranello factory. Still today it is the only factory in the world of the Ferrari brand. This factor is extraordinary when we consider the fact that the Ferrari brand, according to Brandfinance, is the strongest and best known brand in the world but at the same time still produces all its cars in one plant. Having just one plant is not a limiting factor, because having just one plant means that quality controls are always at the highest level. That is why I decided to do my project on the Ferrari world, because in 2019 it is impossible to find a car manufacturer that has resisted the call to move its production to less developed countries. Ferrari has resisted and this can be seen in the quality of its products, a quality that is unrivalled in the world.
The triple A supply chain requires a company's ability to best manage and react to changes within its business. Specifically, the three necessary requirements are identified in:
In this respect Ferrari proves to be an excellent example of Triple A Chain, and in the next slides it will be possible to understand why.
I decide to talk about Triple A supply chain because during Session 17 we deeply analysed this aspect and for this reason I wanted to discover if it was applicable for Ferrari as well.
The reason why I chose a Ferrari in front of the Shanghai skyline is very simple. Ferrari had to adapt to the needs of new customers from China in a very short time. This is a perfect example of adaptability as Asian clients are different from the traditional clients Ferrari used to work with. In fact, if a traditional customer could wait up to a year to receive their Ferrari, this is not the case for Asian customers. The impatience of Asian customers has forced Ferrari to review many of their company's manufacturing processes to ensure that they are able to deliver more speed without losing the quality typical of Ferrari. The Chinese market is proving very difficult to penetrate but Ferrari, also thanks to the adaptability put on display, is trying to impose itself in this new and fascinating market.
Ferrari means excellence, which is why it expects the same level of excellence from both its suppliers and its employees. As for suppliers, to make sure they maintain the same levels of excellence, it not only performs compliance checks when the material arrives at Maranello, but at the same time tries to build a relationship of trust with the supplier. This means that Ferrari not only carries out a commercial exchange, but also makes its knowledge available to the supplier, so that together they can develop products that are increasingly cutting-edge and of the highest level. This type of relationship is an incentive for suppliers, which in this way sees the possibility of long-term partnerships with Ferrari, one of the most prestigious brands in the world. In the same way Ferrari expects excellent performance from its employees. In addition to the excellent organisation at Maranello, to further motivate its employees, Ferrari guarantees collective production awards every year. When certain production levels are reached, both in terms of number and quality, bonuses are awarded to all employees in that sector. This motivates all employees to work in a team to achieve the common goal.
The definition of agility is: "respond to short-term changes in demand or supply quickly; handle external disruptions smoothly".
Ferrari proves to be a very agile company, both in terms of supplier and customer relations.
With regard to suppliers, as already mentioned in the supply chain slides, in recent years Ferrari has adopted an ERP system that has allowed it to interact better with suppliers and above all to be faster and more effective in the organization of its supply chain. Moreover, agility means promoting the flow of information between suppliers and customers; Ferrari has established excellent communication channels with historical suppliers in order to be able to continuously update its situation. In the same way Ferrari promotes the development of constructive collaborations with its suppliers in order to get the best from them.
As far as the relationship with customers is concerned, Ferrari proves to be a leader in managing the needs and desires of its customers. Thanks to an efficient and effective supply chain, Ferrari is able to manage every customer's request, even if this involves the use of materials not normally foreseen.
Ferrari is an agile company, able to have a reduced inventory but at the same time never having to stop its production due to lack of materials or raw materials.
To start analyzing the development and research related to new products it is necessary to quote this statement, present in the Ferrari 2019 report: "We represent a company in which tradition and innovation are melded each and every day to fuel the Ferrari legend. Our rich heritage and ability to combine developing extreme technological solutions with human-scale artisanal craftsmanship are a direct result of our company history and the international and multicultural context in which we operate.
From these words one can understand that although Ferrari revives the history of the brand within each new product at the same time it must be able to continuously innovate the supercar market, to be always ahead of its competitors. In the next slides it will be possible to understand how Ferrari is able to position itself as a trendestter within this industry.
During session 13 it was possible to appreciate, analyzing BMW, the delicate balance between TTM (Time to market) and TTP (Time to perfection). From my point of view Ferrari, just like BMW, prefers quality over quantity. Ferrari therefore decides to spend more time in order to achieve an impeccable result in terms of design and materials.
In order to really understand how Ferrari manages to anticipate the competition most of the time you have to understand how they manage to establish themselves as technological leaders in the sector. As said, the adoption of a flexible model, which allows their inventions to be immediately tested within the context of racing cars, succeeds in accelerating the development of all new products developed by Ferrari's R&D department. Moreover, inside the factory there is a perfect integration between the engineers working in the racing department and those working in the road department. This integration allows Ferrari to be faster in the implementation of new technologies and their application on road cars. In conclusion, it can be said that this unique structure and where communication is at its best allows Ferrari to be faster from an R&D point of view.
Everything that has been stated in the previous slides at a theoretical level can actually be proven. Here are some examples to further appreciate Ferrari's ability to be trendsetters, both when it comes to racing and road cars.
All these technological solutions have a common thread: they have all been applied by Ferrari the world of road cars. This shows the skill of Ferrari engineers in anticipating market trends. Over the years Ferrari has established itself as a trendsetter in the automotive market. This leading position entails many risks, but Ferrari successfully always manages to anticipate its competitors.
Ferrari would be nothing without its presence in major international competitions, whether Formula 1 or the 24 hours of Le Mans. In addition to a matter of prestige, participating in this type of competition allows Ferrari engineers to experiment and find engineering solutions that could then be applied not only to the world of racing, but also to the world of road cars. What Ferrari has undertaken is a vicious circle that begins with racing, financed by the sale of road cars, and then has an impact on road cars as they receive the technological innovations designed for the track. Within the context of product development we therefore find an ultra-flexible approach because many of the solutions engineered by Ferrari engineers are adopted by racing cars to further refine them, and at the same time, if the solution is successful, they are applied to the world of road cars. Ferrari is always one step ahead in introducing new technology as the know-how developed within the racing world is then poured into the road cars. It can therefore be said that Ferrari is one big workshop that unites all the various departments in order to get the best out of every innovation.
In class, during Session12 with Ritz-Carlton Hotel company, it was possible to understand the relationship that any company must create with the customer to be able to make the most of the final experience of those who decide to purchase that particular product/service. Ferrari, as far as customer care and attention is concerned, is the best you can ask for. The customer experience at Ferrari is not only a process that the sales department takes care of, but is a goal of all the company's employees. In order to make a company customer-centric it is not enough just to provide a good sales service, you have to think of your product and services according to the customer, and this is what happens in Ferrari. The fact of producing a few examples compared to other car manufacturers allows the Maranello team to create a special bond with each individual customer, a bond that will last forever.
Analysing Ferrari specifically, we can highlight some factors studied in class:
Ferraris are built with maniacal care to be safe and fast at the same time. Like all cars, however, they must be maintained in the correct way to avoid unpleasant surprises. As far as ordinary and extraordinary maintenance is concerned, Ferrari is also a pioneer in the world of cars. In fact, for more than 60 years the Maranello-based company has been forging alliances or allowing the best workshops around the world to offer a maintenance service to their Ferraris, so as not to force the customer to return to Maranello every time. Ferrari workshops around the world are run by the best professionals in the sector and offer an excellent service for all Ferrari customers, who feel protected and safe at the wheel of their Ferrari. The care taken in the after-sales phase makes it possible to understand the attention that Ferrari has towards the customer. Selling the car is in fact only the beginning of the relationship with a customer, not the end, as for most other manufacturers.
As learned during the course the customization of products and experiences is becoming the real added value for customers, who in a world where everything is more and more connected and equal try in every way to distinguish themselves. To further underline Ferrari's greatness and expertise, it must be said that Ferrari has been offering a complete customization service for more than 30 years.
Customisation does not only mean the choice of colours, it means the choice of all the materials and all the finishes inside the cockpit. For example, you can choose the material of the steering wheel, the shape of the seats, the colours and materials of the dashboard. You can also customise the exterior of your Ferrari. In the choice of these details the customer is followed by Ferrari employees who follow the customer throughout the customization process. The latest service created to satisfy all the customer's needs is called "Ferrari tailor made" and provides the possibility to choose any detail inside the car and to modify it thanks to a 3D rendering service that gives the customer the possibility to see the finished work on the computer.
Ferraris are built to go fast, to break records and to be pushed to the limit. As Ferrari says, their mission is "We build cars, symbols of Italian excellence the world over, and we do so to win on both road and track". So having a Ferrari means having a racing car, but not every person who buys one of these cars knows how to drive such powerful cars. To help customers get the most out of driving their Ferrari, the Maranello team offers a service called "Ferrari track days" or "Ferrari racing days". These are essentially track days with the aim of teaching all Ferrari owners how to get the most out of their cars so that they can enjoy the excitement of driving a Ferrari. During these days Ferrari puts at the service of its customers former drivers and driving instructors and there is also the possibility to drive very exclusive cars such as Formula 1 or the Ferraris that participated in the 24 Hours of Le Mans. The customer's attention in Ferrari is one of the main objectives, as said before, buying a Ferrari does not only mean buying a car, but it means buying emotions.
CHALLENGES, FUTURE RECOMMENDATIONS
Thanks to this work I was able to appreciate more the work done by Ferrari in terms of optimizing production processes. Specifically:
This experience has made me appreciate even more a very stimulating production context like Ferrari's, a context where passion and engineering come together to create masterpieces. I hope that this mindmap has transmitted my love for this company, a true Italian excellence.
"If you can dream it, you can do it"
Enzo Ferrari
Here's the sources I used for my Mind Map:
https://corporate.ferrari.com/sites/ferrari15ipo/files/ar_2018_ferrari_nv_web.pdf
https://corporate.ferrari.com/sites/ferrari15ipo/files/sustainability_report_2018_ferrari_nv_navi_4.pdf
https://corporate.ferrari.com/sites/ferrari15ipo/files/sustainability_report_2018_ferrari_nv_navi_4.pdf
https://www.infor.com/content/casestudies/ferrari.pdf/
https://www.procurementbulletin.com/ferraris-supply-chain-is-facing-more-demand/
https://www.supplychaindigital.com/logistics/inside-ferraris-supply-chain
Know your past to understand your future.
Before starting with the analysis of Ferrari today it is essential to understand how Ferrari was born. Enzo Ferrari, founder of the historic car manufacturer, after a past as a driver and after working for Alfa Romeo for several years, decided to create his own cars to challenge Alfa Romeo in the Formula 1 World Championship. Ferrari was therefore born with the aim of producing racing cars, not cars intended for road use. The cars for road use have been produced since 1947 to finance Formula 1 races. The enormous success of these models, however, pushed Ferrari and FIAT, which had become its shareholder, to produce new models of road cars. Thus began the Ferrari legend...
