Manufacturing & Logistics IT spoke with Vittorio Boero, chief information officer at Ferrari, about sports and luxury car manufacture's intensive five-year IT re-structuring roadmap in the wake of ever greater customer expectation and the increasing demand from newer markets in the Far East and Middle East.
Established in 1929, Ferrari is a truly iconic Italian sports car manufacturer based in Maranello, Italy with a name known around the world. Originally founded by Enzo Ferrari as Scuderia Ferrari, the company moved into the production of street-legal vehicles in 1947. Throughout its distinguished history, Ferrari has been noted for its continued participation in racing, especially in Formula One, where it has enjoyed great success as well as being an engineering, design and innovation leader in the high-performance automobile market.
Away from the race track, 2011 saw sales of just over 7000 cars, generating revenue of €2.2 billion. The company remains at the forefront of sports and luxury car manufacture and has seen year-on-year sales growth of 7 per cent.
As Ferrari is known around the globe for high-performance automobiles, its customers demand and expect the absolute best in customer responsiveness and service. Faced with increased demands from new markets such as China and the Middle East – where customers are much less willing to wait the standard 12 months for their prized delivery – Ferrari realised that it had to increase production rates in terms of both quantity and speed to meet growing output demand, without compromising on quality.
This presented a profound challenge because each Ferrari is unique. Every customer has the luxury to customise and tailor their new purchase, from unique paint colours to the materials that cover the seats and interior, as well as many other personalised details on each car. The result is that no two Ferrari cars are the same. Each buyer has a unique vehicle. This led Ferrari to realise it needed a very responsive and flexible manufacturing setup, supported by agile business software that could help achieve targets for new production output.
Vittorio Boero, chief information officer at Ferrari, joined the company a little over a year ago. During 2012 he and his team began an ambitious five-year technology roadmap, which involves the replacement of many of Ferrari's older IT implementations. Ferrari also put in place a custom development planning regime with its new IT partners in order to ensure the newly sourced solutions were the very best fit for the company's requirements.
Boero explained that the company needed these new solutions to cover many of its internal processes, and also to simplify its application landscape, which had become over-complex. So last year Ferrari kicked-off its multi-implementation plan with the target of adopting state-of-the-art IT systems that also offered cost savings and a substantial reduction in IT complexity.
ERP is one of the primary areas covered within Ferrari's new IT roadmap. Ferrari's owner, Fiat, operates a centralised IT policy that group companies should standardise on SAP to run the business. But, faced with the challenges of delivering faster production in order to capture market share in fast-growing economies, Ferrari quickly proved it should not adopt such a solution. SAP was not going to deliver what was demanded by the company in terms of coverage of the developments done in the past and the business model to be implemented through the ERP.
Speed and agility
Confronted by this demand for speed and agility in its production processes, Ferrari undertook an extensive review of its processes and identified a range of targeted improvements.
After assessing both customisation and manufacturing speed demands, combined with the need to maintain the quality that is a hallmark of the Ferrari brand, senior management decided to update its existing ERP (Baan IV) software to the latest Infor LN version. The project has been split into phases covering the industrial (sport car manufacture), Finance & Control, Spare parts and Grand Prix (Formula One) divisions.
Last year the company began its implementation of Infor LN, concentrating on Manufacturing and Supply Chain. Senior management at Ferrari places a heavy focus on the Supply Chain and Manufacturing operations because both are of vital importance to both the day-to-day and strategic focus of the organisation. Ferrari has introduced new Supply Chain processes with the target of 'zero shortages' along the production line – that is to say no parts missing at any point of the production chain, eliminating the unacceptable delay such a shortage would cause.
Much of this Manufacturing and Supply Chain functionality has went live after the first and second waves which were completed in December last year and February this year. But, as Boero explained, this is far from the end of the ERP implementation for Ferrari. "In addition to Manufacturing and Supply Chain, the plan over the next two or three years is to also approach other areas such as Finance and Accounting; as these aren't yet covered by our current ERP implementation," he said. Also, Boero pointed out that Ferrai is looking to introduce a commercial component to the system; comprising after-sales for technical assistance, and brand-related functionality etc.
LN is well-suited to the organisational and operational model of Ferrari as it provides flexibility and automotive industry-specific functionality in order to handle the complexity of the infinite number of customisations without compromising on either speed of information delivery or finished product quality.
LN has the capability to build individual custom configured vehicles in sequence yet maintain high operating line efficiencies and full sequencing with the supply chain. Some other ERP solutions rely on multiple external sequencing and MES systems, which can increase complexity, risk, errors and cost.
As part of its manufacturing strategy, Ferrari created a production grid, which takes into account all of the possible combinations of customisation elements. The grid enables Ferrari to have all the right components ready and in the right place at the right time. Cars can then be produced quickly and with precision to the exact requirements of customers, while still making use of the time and efficiency savings of automated processes.
As a result, LN is used widely across Ferrari, from manufacturing and the supply chain, taking the orders coming from its commercial network worldwide and providing the finished cars to customers. This demands a very tight connection between the supply chain and manufacturing technology, driven by a focus on the planned increase in production numbers.
This communication has been enabled by Infor ION, Infor's own Intelligent Open Network which provides connectivity between Infor and non-Infor applications. This has led to integrated business processes such as order configuration, advanced planning and scheduling, assembly line scheduling and sequencing, and supplier management, increasing control over the Ferrari supply chain and asset maintenance and management. As an example of this control, Ferrari can now freeze engineering changes at the sub-line level while still making changes to the overall bill of materials.
The first phase of supply chain changes has marked a major development at Ferrari. IT now works hand-in-hand with new physical manufacturing technology with the new setup going live in June 2012. LN currently improves processes and the efficiency of the logistics supply chain at all stages of manufacturing.
The transition from Baan to LN, supplemented by integration to third-party solutions, in-house applications and ION was delivered in a fraction of the time, compared to the timescale proposed by other vendors. Ferrari is confident that this transition will contribute towards significant rise in annual production volumes expected especially on the Engine production side.
A second relevant step was implemented at the end of 2012 with the application of a new concept for the supply chain management and manufacturing management of a 'new turbo engine production'. The implementation was successfully executed for the V8/V12 engine family in December 2012 and was then rolled-out in February this year for the new V6 engines.
As part of the production technology roadmap, Ferrari has also started the implementation of a Siemens Manufacturing Execution System (MES) for shop floor control. "This fits in with our plan to put in place a very limited number of specialist solutions," said Boero. "Last December we went live with the first implementation of the MES system, and we are now aiming to replace the old legacy application for the other production line by the end of this year. By the beginning of 2014 the plan is to have all the production lines covered by the same MES. We will then have in place one common platform between our ERP and MES systems."
The MES project was followed by the start of an implementation process involving two Product Lifecycle Management (PLM) systems. "We began the PLM implementation in January this year," explained Boero, "so we are now only a few weeks into this very big project that will probably take two or three years to complete." Ferrari's PLM of choice is a mixed solution comprising Windchill FlexPLM from PTC and Enovia V6 from Dassault Systemes.
"We have some very special configurations that we plan to adopt," said Boero. "The PTC system will be the main collector of the information and be the official PLM for Ferrari GT, while some of our R&D activities will be covered by the Enovia V6 solution. Once the two PLM systems are fully integrated we will have a system that is unique in the market at this time. To achieve this we are working with both vendors to fully integrate the two platforms."
RFID is another technology that Ferrari has recently introduced. This implementation was focused on managing the new V6 engines produced on the company's new production line as well as for related warehouse activities. The Infor RFID solution went live in February of this year.
On the design front, Ferrari is currently adopting Catia V6, V5 and V4 CAD packages for the design of the cars and uses Pro-E as its preferred solution for engine design. These are used for the design of both the GT and Sport Car ranges. This information is integrated with Ferrari's Bill of Materials.
"What we want to achieve is full PLM integration in order to develop drawings for new products, to develop the designs and to execute our R&D processes as effectively as possible," said Boero. "At the end of the new process through the implementation of the PLM system our target is to have one single bill of material with one unique description of the product adopted by all the departments within the company."
Ferrari's all-important data centre is led and managed by Ferrari's CTO and its internal resources, while also calling on support from local companies for the daily operation management when required. Here, Ferrari houses all the applications needed for the normal planning of the operations of both the GT and Sport Car business units. In addition, the data centre houses Ferrari's high-performance computers, used for all the calculations related to the Formula One cars, including calculations related to computer fluid dynamics. Within the data centre's technical stack Ferrari has a wide portfolio of systems supplied by leading brands such as HP and AMD.
In terms of serving new major growth markets such as the Far East and Middle East, the management and supervision is under the control of Ferrari's internal IT team. "This is because we need to have full control over the demand management," said Boero. "Therefore what I have required of my team is to lead the activities in terms of business requirement collection; that was fully under our responsibility." Boero explained that, in terms of technical activity – the translation from business requirements to technical requirements – this was undertaken by Infor and KPMG. "The functional requirements were managed by KPMG and the technical development by Infor," he elaborated.
And how is the new IT regime facilitating greater efficiency speed agility for Ferrari in the world of Formula One? "I believe the most important thing we have provided to the F1 team is support in the R&D area," said Boero. "During the F1 season we need to react very quickly to new things being developed all the time, and modifications that need to be done quickly. Technical parts need to be updated from one race to the next. This is the most critical area for us, and this is something that we are always focused on."
Returning to the ERP solution, Boero points out that Ferrari will continue to exploit the advanced Planning & Scheduling, Enterprise Asset Management, Assembly Line Aanagement, and Supply Chain Management capabilities within Infor LN. The extra capacity that has been realised by the use of LN will also enable Ferrari to make engines for other members of the Fiat group such as Maserati.
"We are much happier with our new IT infrastructure," said Boero. "As well as improving flexibility, we have reduced the number of anomalies in the system which is streamlining the production process further. It has also been a useful experience for us to make these changes and an opportunity to improve the knowledge all our staff have of our internal processes. With the change encompassing both physical production and the IT supporting it, as well as processes originating at the dealerships, we have been able to establish better relationships between many business departments and IT."
As for the lessons Boero and his team have learnt, he reflects that it was the right decision to begin with a careful analysis of Ferrari's existing processes, identifying the specific weak points and how they could best be tackled. He added that the company is also focused on benchmarking so that it knows it has a system that delivers some of the best manufacturing processes used by high-end car manufacturers.
Boero also explains that this approach will be also replicated in the next waves planned for the completion of the ERP implementation and other systems. "As we proceed to the next phases of the programme, we believe we have the right ways of working to continue to be highly effective," he concluded.