Ducati: The Lean Racing Machine
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Ducati:
The Lean Racing Machine
Robert W. Hall
D
ucati began its lean migration in Then TPG walked away. Fleshing out
1996 to help revive a proud com- this strategy and executing it was up to
pany fallen into an economic pit so Ducati. And TPG expected them to gener-
deep that it had to be sold to Texas Pacific ate cash, not spend it. The only way to do
Group (TPG). Customers who had come to this was to eliminate waste while sustaining
expect the ultimate in performance motor- high quality, high tech, and fast product roll
cycles no longer experienced top-level bike outs. They had to create a version of the
performance, quality, and delivery. The famed Toyota Production System tailored to
new owner, (TPG), realized that they knew Ducati's unique culture and situation.
nothing about motorcycles, and little about
operations. After meeting with manage- Core Competences
ment, they drew up a simple business turn-
around strategy on one sheet of paper. It To avoid kaizen of operations that
consisted of three basic points: would be outsourced, Ducati leaders re-
examined which functions were their core,
1.Increase the stock value of Ducati by never to be given up. They quickly came up
increasing margins with three:
2.Re-invent the Ducati brand by re-igniting
passion in the hearts of the racing fans 1.Racing, Ducati's lifeblood
forming Ducati's customer base 2.The customer call center
3.Reduce costs. 3.High tech integration, both in design and
as it is realized in hardware form.
In these areas people must thoroughly
In Brief understand motorcycles, Ducati, and the
customer. For example, people phoning
Ducati is a motorcycle racing company that sells street machines
the call center are often exceedingly knowl-
replicating the high-performance technology used in racing.
edgeable about motorcycles. Anyone
Financial difficulties forced them to begin their own version of the
speaking with them must know motorcy-
Toyota Production System in 1996. This conversion has now
cles in depth, not only Ducatis, but motor-
matured, but the story of its development is unique because of
cycles in general, and perhaps be conver-
Ducati's business model. It has a twist or two not common in North
sant about them in several languages.
American lean conversions.
Phone calls are the only live experience
10
Target Volume 23, Number 4Design Italia: In a Class of Its Own
If a sharply dressed man or woman catches your attention, don't be surprised if their clothes were designed by a world-
famous Italian design house — like Gucci, Armani, or Prada. In automobiles, Ferrari, famous in Formula I racing sets
benchmarks in both style and performance. Racing — out-and-out competition — stirs an Italian engineer's blood like noth-
ing else. Ducati motorcycles, from the same region as Ferrari, sports the same Italian scarlet and the same competitive
spirit.
But Italian style design is not restricted to automotive art. For example, Italdesign-Giugiaro, one of Italy's largest
and most famous studios, designs everything from washing machines to railroads. Just as fashion designers influence
everyday clothing, Italdesign influence touches manufacturers in every sphere. If you have a Nikon camera, it is probably
a Giugiaro design. If your camera is made by someone else, its looks and functionality will be compared with Nikon. Apple,
the epitome of style in computing, is another former client of Giugiaro. Your washing machine and dishwasher designs have
likely been influenced by Giugiaro's work for Indesit. And long before Giugiaro, in 1954 an Italian company, Candy,
designed, perfected, and manufactured the Bi-Matic, the first semi-automatic washing machine with a spinner that freed
women from the drudgery of mangle-drying. This innovation was an instant hit in Europe, quickly adopted by North
American manufacturers.
Giugiaro's philosophy is to create elegant form around superior function. Almost everyone now sees it daily. To
create modern rail systems, Giugiaro's company worked with many of the leading rail equipment manufacturers in the
world. Alitalia Airbus interiors, much imitated, were designed by — you guessed it — Italdesign. Crockery design, an Italian
tradition, has been influenced by a range of interesting and appealing shapes from Italdesign. And Giugiaro's medical port-
folio is also extensive. For example, the Sorin Biomedica PMP 2000 programmer is a portable unit to check heart pace-
maker carriers. It combines advanced technology and high-level design in a very compact unit, easy to use and — thanks
to its pull-out handles — very transportable. The adjustable screen provides maximum data visibility. It has an ergonom-
ic programming head. It's available in the United States through Cobe Cardiovascular, with facilities in Arvado, CO, and
Austin, TX.
The Italian tradition of stylish design long preceded the advent of lean thinking. When a company like Ducati
adopts lean principles, it cannot abandon style. Dowdy designs are totally unacceptable.
This information courtesy of Bart Pascoli, Machines Italia, Chicago, a frequent exhibitor at AME events.
many customers will have with Ducati. Ducati trained everyone in all areas, not
Phone converations are a prime source of just assembly specialists, in lean thinking
intelligence about what customers know and the lean tools.
and don't know; want and don't want. To Training was immediately followed by
qualify to work the Ducati call center, one kaizen projects. Ducati's kaizen approach
must be a passionate expert about motor- differs from most North American compa-
cycles and the company. nies. It's a four-week workshop following a
weekly format:
Internal Conversion Week 1: Gather data; study; analyze; end the
Ducati began lean conversion where week with a summary diagnosis.
most companies do, in production, which is Week 2: Generate improvement ideas; select
mostly assembly and test. However, some to work on.
Ducati's production floor and engineering Week 3: Physically implement selected ideas.
is an integrative area where great design Week 4: Monitor the outcome; adjust; refine.
converts to hardware for discriminating During the second week ideas flow
customers. Many orders have engineering freely. Of 40-60 ideas generated in the
tweaks, so little production is truly high vol- average workshop, only 15 or so will be
ume. Consequently, from the beginning implemented. They pick ones possible to
11
Fourth Issue 2007execute in a week or two; leaving the rest Once kaizen began rolling, the results
for another round. The objective is not per- in the first month were astounding.
fection in one pass, but solid improvement. According to Contino, "We cut cycle time by
Once that's well consolidated at the end of 13 per cent; leadtime by half, and travel
four weeks, go at it again. time by one-fifth, while reducing space.
The leader of Ducati's lean program Quality improved by 21 per cent." Now, ten
since 1996 is Dr. Giovanni Contino. He years later, measured process improve-
likes the four-week program because it ments aren't as eye-popping. All operations
leaves time for a cross-functional team to are run by the lean philosophy. How they
work a project while continuing daily oper- once worked is so far in the past that com-
ations. Major, disruptive changes can be parisons aren't meaningful.
scheduled overnight or over a weekend. In retrospect, conversion seemed to go
People are not delaying customers while fast, but for a time, it was sticky. If Contino
improving the process. And at the end of a had it to do over, he would explain the strat-
month, few tag end follow-ups remain on a egy early and thoroughly to the shop work-
list. One is more certain that an improve- ers. Initially, the unions were very wary,
ment works and will stick because most suspecting lean to be a cover for speeding
auxiliary changes to make it practical have up work or getting rid of people, and that
been completed. slowed progress appreciably. This melted
The Ducati Tradition: Il Cuore Sportivo
Il Cuore Sportivo, the sporting heart, is long identified with Alfa Romeo, but all Italian companies involved in racing have
it. So do some that are not Italian.
But Ducati did not begin in motorcycle racing. The Ducati family founded it in 1926 in Bologna, Italy to produce radio
components. They did not venture into motorcycles until after World War II, with the original factory bombed to rubble. It
wasn't a roaring start, but a small "whizzer" engine to attach to bicycles (much as Honda began in 1947). This soon devel-
oped into a small, mini-motorcycle, the Cucciolo. In 1954, the famed engineer Fabio Taglioni arrived to lead Ducati into
racing. By 1960, a world-famous racer, Mike "The Bike" Hailwood, ordered a Ducati design of superior performance to be
built for him. Ducati racing was coming of age.
In 1968, Ducati came out with the 450 Mark 3D, a production bike capable of over 100 mph, fast for the time, and
the first production bike with Ducati's trademark desmodromic valving, which guarantees precise valve control up to the
highest rpms, wringing the utmost out of a compact engine that packages into a tight, aerodynamic Ducati profile. This
bike began the Ducati tradition of street marketable bikes that replicate the most advanced racing technology, now refined
well beyond 1968. This tradition continues in 2007. In July Ducati will begin shipping the limited edition Desmosedici RR,
a commercial version of the Desmosedici GP6, run in the 2006 Italian Grand Prix at Mugello. Only 400 of these advanced
machines will be made each year.
The Desmosedici RR is the epitome of Ducati's business model. It's a racing company that sells motorcycles for afi-
cionados. Ducati styling is the real thing, loaded with substance, challenging a rider to get the most out of the bike, and
out of themselves.
The company is relatively small. Of 1100 total employees, 150 are engineers going for the ultimate in motorcycle
design. Almost all production operations are assembly and test. Virtually all parts are purchased, so 90 percent of pro-
duction cost is payment to suppliers, which makes supplier relations critical. But Ducati is so deep into advanced motor-
cycle technology that anyone not enthused about that does not fit in, whether they work for Ducati or a supplier.
In the early 1990s, Ducati hit a soft patch in business profitability, partly caused by losses at sister companies. To
pull out, Ducati was sold to Texas Pacific Group (TPG) in 1996. They began a turnaround, with lean operations as part of
the strategy. By 2006, Ducati was financially strong and growing fast. TPG cashed out, selling the company to Invest
Industrial, an Italian private equity firm.
12
Target Volume 23, Number 4away only when Ducati began bringing out in 2002 was running 15-20 percent per year.
rave products again, and sales volume That is necessary to participate in introduc-
began to grow, so obviously everyone ing new bike designs with ever-increasing
would retain a job. Once through their ini- technical demands and a shorter develop-
tial fears, the shop workforce proved to ment time, now 18 months or less. Jumping
have some of the soundest ideas for process through these hoops reduced the total num-
improvement, just as is discovered every- ber of suppliers from 360 to 175.
where. Ten years later, workshops still take Ducati labeled supplier development,
place regularly, and internal improvement DESMO, after their desmodromic engine
continues. But it took four years before the technology. It stands for Ducati Evolution
effort matured enough to start major and Supply Management Optimization.
improvement with suppliers in 2001. They Ducati's supplier kaizen projects follow the
did not want to demand good performance same four phases as the internal one, but it
from suppliers without being able to lasts twice as long, eight weeks consisting
demonstrate good performance themselves. of four two-week phases, and often done
with Ducati facilitators. The key is sharing
The Supply Chain the benefits with the suppliers.
When waste is eliminated, costs
Since all but the most critical parts of a shrink. Savings are shared about 50-50
motorcycle are outsourced, improvement of with suppliers, sometimes after giving the
suppliers was the big opportunity. Both in customer a price reduction. Actually the
design and in production Ducati is really the same margin the supplier had before an
hub of a racing enterprise, a network of sup- improvement is the floor in post-kaizen
pliers and dealers that gives customers their price adjustment, and usually it's higher.
full experience. The challenge is to make It's a no-lose deal for suppliers, and they
that enterprise roar like a Ducati bike. like it even better when they can top this up
Ducati selects suppliers primarily on with increased margins from other compa-
technical prowess. Preferred suppliers pro-
pose technology to keep Ducati in the van-
guard of motorcycle design, but Ducati must
also have full confidence in their ability to
deliver top quality. A discovery of "Made in
China" on a Ducati part by any customer
would be a kiss of death. If any supplier
needs help improving their processes,
Ducati provides it, knowing that the suppli-
er's improvement will also benefit some of
their competitors. That is a risk well worth
taking. Ducati wants to be each supplier's
preferred customer, in pole position on their
newest technical ideas, the first to learn of
anything that might improve either a motor-
cycle design or a process. Being first to mar-
ket with the best technology is incompatible
with beating up suppliers in cost negotia-
tions. Racing is not a commodity business.
Before investing in a supplier's devel-
opment, Ducati re-evaluated whether it
merited a close partnership. Intimate part-
ners need to be both technical leaders and
able to keep up with Ducati's growth, which
13
Fourth Issue 2007nies using the same improvement. Well- earliest concept, and when armed with bet-
developed suppliers that are able to ter expertise in production. If suppliers can
increase capacity to meet Ducati's increas- assure that a part can be made, in expected
ing sales are also rewarded with more volume and at target cost, product develop-
Ducati business. And if the quality and per- ment has fewer delays. Furthermore, sup-
formance of the bikes increases at little or pliers now have ideas for process improve-
no increase in cost to the customer, every- ments as well as hotter motorcycle designs.
body is a winner. Many of these would have escaped the
Supplier development was concurrent imagination inside Ducati. Return to
with redesign of the product line. The bet- design leadership took some time crawling
ter suppliers were rewarded with more back up the slope, but by 2004, Ducati was
parts to make. Many now ship subassem- once again wowing the faithful at the track.
blies rather than individual parts. This sim- And this time, they had the means to trans-
plified Ducati operations; they now build late racing prominence into products that
many more bikes with about the same adventurous motorcyclists drool over. A
labor force as in 1996. A motorcycle that summary of a few benefits to Ducati as in
once had about 1400 part numbers at Figure 1 does not capture the impact of the
Ducati final assembly now has 450. Ducati revolution. Ducati could never
Just as with Ducati shop workers, operate as it does today without it.
some of the suppliers were initially suspi- Benefits to Ducati suppliers are also
cious, but most embraced it. Before start- huge. They become part of the inner work-
ing the lean journey, Ducati had close engi- ings of Ducati's racing community. In busi-
neering relations with a number of suppli- ness terms, that enhances market reputa-
ers, so a bond of trust already existed, and tion, but reality is that constant contact
DESMO, the supplier development program, with the latest technical thinking is the
began with Ducati's closest suppliers. ingredient necessary for anyone to stay in
Ducati's experience with suppliers was a bit this business. Suppliers' guest engineers
mixed; not all suppliers "assigned their first participating in Ducati racing not only
team" to it. However, the overall benefit come up with more great ideas for Ducati,
has been great, as shown in Figure 1, and but some to take back to their own compa-
the suppliers continue to come along. nies as well. By 2004, the supplier develop-
But the biggest gains are from involv- ment initiative was mature in the sense that
ing key suppliers in new designs from the there were no more suppliers "to convert."
Enterprise-Wide Results of Ducati's DESMO Supplier Development
25% reduction in production time at Ducati
70% improvement in overall finished bike quality
Faster response to market changes; higher flexibility
21% growth in annual revenue
Formation of Ducati Consulting to make use of the expertise developed.
Figure 1.
14
Target Volume 23, Number 4The Culture
Ducati working culture has become a
blend of high tech racing, catering to dis-
criminating customers, and lean thinking.
Most new hires to Ducati today start
absorbing the lean environment around
them from the start. Ten years ago, while
lean was still gestating, new hires often
needed weeks of training. Now, if they are
going to fit at all, they begin working the
Ducati way within days. In addition, lean
thinking is no longer a strange new world
to most new hires even if they come from
companies where it is not well-practiced.
Early in conversion, Ducati mapped its
employees' skills base. Then they began
rotating people between activities, a major
factor in gaining flexibility. The kaizen experience in lean conversion had less to
projects brought people together in cross- do. Ducati recently spun off a consulting
functional teams. The silo mentality weak- company, Ducati Consulting headed by Dr.
ened and communication strengthened, Giovanni Contino, to take care of the
reinforced by workshops to develop com- numerous requests from other companies
munication — listening to others. Plus it to help them with lean operations change
helped when everybody was more or less management.
"on the same page" because Ducati insisted
that all departments align with the compa- Editor’s Note: Photos courtesy of Ducati.
ny's new strategies.
Ducati's internal lean culture remains
strong. The only change in the past year is Robert W. Hall is editor-in-chief of Target and
from Invest Industrial, which encouraged a founding member of AME.
Ducati to slow down on expansion to keep
the Ducati experience special. They should
never become so successful that they out-
grow a successful business model. © 2007 AME® For information on reprints, contact: AME
As DESMO matured with suppliers, Association for Manufacturing Excellence
www.ame.org
and internal change became a new Ducati
way of life, several facilitators with long
15
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