Ducati aims for new angle of lean with Oracle

There are few sights more evocative, few sounds more stirring and few experiences more thrilling than a Ducati carving through a sweeping bend at speed. Once solely the preserve of discerning motorcycle enthusiasts, the stylish V-twins with the distinctive (and patented!) exhaust note are now among the most admired and sought-after sports bikes in the world and the performance benchmark for rival manufacturers.

Founded in 1926 in Bologna, Northern Italy, as an industrial components manufacturer, Ducati produced its first motorcycle engine in 1946 and went on to build a great reputation for off-road bikes. The modern history of Ducati as a superbike maker began in 1972 when its newly introduced 750 V-twin took first and second places in the Imola 200 and gave birth to a legend.

Today, Ducati Motor Holding is one of the world's leading motorcycle manufacturers. It is listed on the New York and Milan Stock Exchanges and has a brand presence in 40 countries worldwide. Its growth and success meant that by 2002 it had outgrown its old information technology IT system based on an IBM AS/400 platform that was no longer able to meet the needs of a company focused on innovation and e-business.

The company was the first motorcycle manufacturer to embrace the power of the Internet. In 2000, when iconic designer Pierre Terblanche created a limited edition model, the MH900e, as homage to the racer Mike Hailwood and to mark the new millennium, the bike became the first motorcycle ever to be sold exclusively on the Web. All 2000 machines sold out within days and Ducati became a committed Internet supporter.

Knowing that the time had also come for a 21 century IT solution, Ducati chose the Oracle E-Business Suite after examining a range of options. The company was particularly interested in the Oracle Enterprise Resources Planning (ERP) and Oracle Supply Chain Management (SCM) modules, which would be implemented in Ducati's offices located in six countries around the world.

"Ducati is a company constantly in search of innovation," said Federico Minoli, President and Chief Executive Officer of Ducati Motor Holding. "Today, it is possible to create the conditions to compete effectively in the market only with an IT system that is entirely Internet-enabled. The policy we have pursued involves a complex project that has ambitious implementation objectives, which could only be addressed with a technological partner that is reliable, competent and a market leader. That is why, after having assessed various solutions, we chose Oracle."

Due to the project's importance to the Italian motorcycle company, the Oracle E-Business Suite has been deployed in two phases. The first phase was implemented at Ducati North America with the support of Oracle Consulting and will be rolled out to the rest of the Ducati empire during 2005, when more than 1000 Ducati employees will be connected to the system.

The Oracle E-Business Suite is the software industry's first integrated suite of Internet business applications that automate critical business processes, offering customers unprecedented choice and flexibility in implementing business applications. Its open architecture and single data model allow applications to be deployed as individual modules, business flows, or as an entire integrated suite. Its ERP and SCM modules will play a critical role in helping Ducati reap the benefits of lean manufacturing principles.

Lean operations concepts offer a proven, structured means of reducing cycle times, increasing quality, cutting costs, reducing inventory investment and improving overall asset performance. According to a research report by Pittiglio, Rabin, Todd & McGrath[1], typical results include reductions of 50-80 per cent in work-in-progress inventory; a 90 per cent decrease in overdue orders; order fulfilment cycle times that are 40-75 per cent shorter; and reductions of 10-30 per cent in overhead cost.

Research by the Performance Measurement Group shows that best-in-class performers enjoy real competitive and financial advantages from lean operations. Total supply chain management costs as a percentage of revenue were 3.6 per cent for best-in-class compared with 11.9 per cent for the median; net asset turns were 6.1 compared with just 2.1 for the median; and cash-to-cash cycle time was 28.5 days compared with 60.7 for the median.

At the heart of the lean movement is a focus on reduction of inventory and lead times, said Simon Pollard, Vice President, Industrial Sector, at Oracle EMEA. Lean manufacturing has been widely adopted on a four-walls basis, with companies practising some form of cell- or flow-based production within their own plants.

But the full benefits only come when manufacturers involve their suppliers and even their customers to achieve continuous improvementa key focus of the whole exerciseto create the Lean Enterprise Supply Chain. The most advanced users extend the concept well beyond the manufacturing process and apply it to every corporate activity, so that the focus is on creating a lean enterprise.

Extending the scope from core manufacturing into the broader supply chain offers a greater chance to manage customer valuean elusive target in many lean projects.  This is because manufacturing delivers a product specification whereas the broader supply chain delivers the service and customer care elements that are of value to the customer.

The Oracle E-Business Suite offers a broad portfolio of solutions to help companies embrace the lean supply chain. It covers not only discrete manufacturing and process industries but the complete range of business flows from design, source, procure, make and store, to market, sell, deliver, service, account and administer.

So what are the benefits of using the Oracle E-Business Suite to follow the lean route? Cost reduction is certainly one, although focusing solely on costs is a shortsighted approach. Inventory reduction is another key benefit. Excessive inventory slows down the manufacturing process, becomes a drag on lead times and reduces the agility needed to respond to customer needs. Lean also means shorter cycle times, allowing manufacturers to respond more quickly to market shifts, and greater flexibility, which is especially important in industries where product lifecycles are shrinking.