Ducati Motorcycles

In the summer of 1996 Frederico Minoli was appointed as the CEO of Ducati in order to lead the company into a new era of profitability and to establish Ducati as a brand to contend in the sports motorcycle segment. Minoli was faced with a company which, despite having a team of top engineers, had gained a reputation for average quality as a result of inefficient production and poor management. It was Minoli whom later described Ducati’s top management as operating in “a structured chaos”, as he believed that by incorporating certain basic structural changes and by redefining company’s strategic goals, it could be turned into a profitable brand-driven company. Ducati’s turnaround focused on brand building, which was supported by the reconfiguration of a number of activities, ranging from increased efficiency in the production process to broadening its customer base. Having almost doubled its market share in 2001, Minoli wanted to find new sources of growth. Among others he considered the cruiser market, currently dominated by Harley Davidson. His goal was to compete directly with Harley Davidson in Europe by introducing a cruiser that combined Ducati’s high performance engine with its own unique design. To compete directly, Ducati invested heavily in R&D and its distribution chain to enable more flexibility within its supply chain. Ducati implemented strict selection procedures for suppliers of components, which enabled them to reduce their total suppliers. Once the suppliers were reduced, two (2) potential suppliers were selected for every component to allow for flexibility, bargaining power and increasing competition among suppliers to improve quality. This type of approach to the production of components resulted in an increased accountability of the main component supplier who was responsible for sub-component suppliers. By 2001, over 87% of Ducati’s production had been outsourced. This allowed Ducati to standardize the production of cylinder heads