Ducati’s Value Chain Analysis

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Ducati’s Value Chain Analysis Primary Activities Inbound Logistics: The Platform Production approach reduced the need for handling and storing of raw material. The inbound logistics at Ducati were raw material required for crank cases, cylinder heads and subassemblies coming from its tier 1 supplier. This decreased the need for keeping large raw material warehouses. The presence of Ducati’s suppliers near its Bolonga plant also helped Ducati and its suppliers to maintain fewer inventories and be quick to production response. Operations: Ducati in 2000 was following a Platform Production approach which made possible to increase production outsourcing to 87%. A tier 1 supplier was responsible for manufacturing and assembling sub-assemblies whereas the tier 2 suppliers were responsible for producing components by purchasing raw material from tier 3 suppliers. The tier 1 supplier was also responsible for managing tier 2 & 3 suppliers. Therefore, Ducati was only producing final assemblies and few engine components (crank cases & cylinder heads) at their plant. This setup helped Ducati to reduce its fixed cost of developing production facilities and hiring of skilled labor. Managing only tier 1 supplier also reduced its transaction costs, order processing costs and inventory management costs. Outbound Logistics: Ducati established totally owned sales and marketing subsidiaries in Japan, France, Germany, UK, Holland and USA. Since Ducati was positioned in the premium motor bike market unlike Honda, Yamaha and Suzuki, which also produced bikes for non-sports segment, therefore it did not aim to increase geographical reach and developed high quality exclusive dealers. The company also had a chain of Ducati Stores that presented a unique Ducati Sports Biker Lifestyle. Ducati Stores provided superior technical support, performance accessories, riding gears and apparel in

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