PININFARNIA THE NEW CUSTOMER DECISION

Alfa Romeo (1930) 2uettottanta (2010)

Car of the year 2010,Geneva

AKSHIT SOBTIANKUR VERMAJASDEEP BEDIABHINAV PARMARBHUPESH SINGH

CONTENTS

Company Background

Position in 1990s

Operations at Pininfarina

Improvement Initiatives in 1990s

Deal with Mitsubishi

Questions

Future Scope

PININFARNIA BACKGROUND

In 1930 Battista “Binin” Farina founded.

Specialized in design and production of custom and small

series automobile.

Greatest success- producing revered designs such as

Ferrari Berlinetta Dino and Alfa Romeo Spider Duetto.

In 1966 after death of Farina, name of business was

changed to Pininfarina.

Throughout the 1960s and 1970s it continued to design

and produce unique automobiles- Ferrari Berlinetta, the

Lancia Flaminia, the Austin A 40 and Morris 1100.

THE NICHE MANUFACTURER

Pininfarnia was considered a niche manufacturer.

Production volume ranged from only one or two cars per day.

For special “sedans” such as Fiat Coupe 50 or 60 cars per day.

It had produced over 17000 Fiat Coupes in 1994.

Volume producer bargaining power was high and niche manufacturer margins were narrow.

Flexibility as they were often given contracts on models that had

higher then usual volume uncertainty and larger seasonal

fluctuations in sales.

Products aimed at narrow market segments that were difficult to

specify and had rapidly shifting tastes.

They coped by developing elaborate contingency plans as this

allowed them to rapidly shift workers from one line to another as

demand fluctuates.

This increases station time so that the line moved more slowly.

ADVANTAGES OF NICHE PRODUCTION:

Niche manufacturer costs for small volume products were

lower than those usually achieved by volume assemblers.

Twice less capital and fixed cost.

General purpose equipments and fewer other specialized

tools needed.

Fewer mechanically performed operations and lower level

of automation.

Do not use continuously moving assembly line, had “stop

and go process”.

Highly competent and renowned design skills in

product and process.

Design services were an independent source of

revenue for them.

In 1994 design and engineering revenue totaled

nearly 90 billion pounds.

Close links and effective joint problem solving

between design and manufacturing was a major

advantage in success of a new car model.

Some designers such as Pininfarnia and Bertone had

widely recognized brand names.

PININFARINA POSITION IN THE 1990

Problems arises like:-

•Capacity utilization

•Global competition

•Japanese firms enter

MANUFACTURING OPERATIONS AT PININFARINA

Pininfarina produced both bodies and fully

assembled cars at two major production

facilities:

1. Grugliasco

2. San Giorgio

IMPROVEMENTS IN THE 1990S

∆ Rapidly phased out the production of

bodies and assembling

∆ Committed toward new models

∆ Operational improvement in quality ,

cost and deliverability

∆ Manufacturing performance improve

WORKFORCE AND QUALITY INITIATIVES

Two major changes

1.Introduced work team system model

2.Training program

specific operation and techniques training

Interpersonal skills training

SUPPLIER DEVELOPMENT

In 1991, Pininfarina had about 650 supplier.

Typically, competitive bids were among supplier

and volumes were split among several supplier.

By 1993, the number of supplier had been

reduced to 350

Advantages :- increase frequency of deliveries

and increase quality

Disadvantages:-decreasing total amount of

combined inspection

By 1996, the number of supplier had been

increased again to 450 driven by

Improved purchase price and inventory

levels.

Used new production model

Manage customer needs

Assemble vehicles

THE NEW CUSTOMER DECISION

Design 

A perfect blend of beauty and technological innovation...

Engineering 

From definition of styling to release of the product...

Manufacturing

Pininfarina is a leader in the production of niche vehicles...

ARC 

The Pininfarina Aero-acoustic and Aerodynamic Research

Centre.

Pininfarina Extra 

Enter the Pininfarina world of the product and interior design.

Special Projects 

Looking for the car of your dreams? Pininfarina will create it for you.

Consultancy

In this section you can find all the information about the services

offered by Pininfarina Consulting

Customers

 Alfa Romeo, Ferrari, Ford, Mitsubishi, Volvo and many other leading

names on the world automotive scene..

SERVICES Car, automobiles, design, style, history, heritage, collectors, dream car, engineering, production, Pininfarina, vehicles, niche, creativity, prototypes, show car.

CUSTOMERSFerrari, Maserati, Fiat , Lancia, Alfa Romeo, Peugeot, Citroen, Rolls-Royce, Daewoo, Honda, Hyundai, General Motors, Brilliance, AviChina – Hafei, Chery, JAC, Ford, Jaguar, Volvo, Mitsubishi

CAPITAL INVESTMENT

New production facilities would have to be acquired

and equipped for Mitsubishi production.

Additional expenses related to the paint shop which

would have to run for additional shift.

The Pajero would offer a two tone painting option,

and this also posed some problem for the paint shop.

Space is required to dry and store vehicles in

between painting stages.

QUALITY

Bertrandi knew that Mitsubishi consider its own quality

standards to be very high and that it focus differ from

Pininfarina’s existing customers.

Some in the company believed the Mitsubishi might demand

the defect level to be ¼th of Pininfarina.

Experience shows that different customers considered

different things in deciding what was the defect.

Some customers specified the quality as harness of engine

compartment, while other manufacturer only functionality

was considered.

PARTS AND LOGISTICS Major mechanical parts like engines would be supplied by

the production in Japan either from Mitsubushi itself or from

one of its suppliers.

Other parts are sourced from Europe.

Mitsubushi agreed to own the inventory until it arrived at

Pininfarina.

Pininfarina has some experience in long distance supply

chain.

Pininfarina calculated that 13 days shipping would be

required.

WORK-FORCE

600 additional Direct Workers 200-240 Indirect Workers Full Utilization of present Resources

Possible Ramped Down existing Contracts

business

Q&A1. Should Pininfarina Accept the Mitsubishi Business or Not ?Yes !

Learning Opportunity

Chance to improve Operation system and make compatible

with global competition

Promises Utilization of extra facilities available due to

retirement of old models

Chance to be a GLOBAL LEADER in Niche manufacturer

Easily Adaptable Japanese Model with Pininfarina’s

Operation.

2. Pininfarina’s Possible Strategies for future

Competition

• Should Adopt the Japanese Operation system as

Japanese manufacturers are the big threat in

European Auto market at that time

• May Identify Itself as Global Niche Manufacturer

by getting order from almost all Volume

manufacturers.

• Same time should Joint Venture for designing with

big players of Auto market

THE DEAL

The agreement between Mitsubishi Motors and Pininfarina would involve purchasing an

industrial site as a production facility dedicated to the production of the new Mitsubishi

PAJERO PININ. Initial production with basic facilities would cost around ₤4 billion.

The plant will carry out the assembly and finishing operations, as well as the final check-

up and testing on the track adjacent to the plant. The body assembly and paint shop would

remain at the Industrie Pininfarina factory in Grugliasco.

For Pininfarina, this agreement means not only a significant increase in its manufacturing

operations, but also opens the door on an extremely promising market sector. The compact

SUV segment (small size Sport Utility Vehicles) have been one of the fastest growing

segments in the European automotive market. Sales volume of compact SUVs are expected

to reach approximately 440,000 units by the year 2000.

The Group has reached a level of excellence in the quality/cost/service ratio, also in its

manufacturing activities, like the ones of design and creativity, and represents a particularly

significant event in the current automotive scenario, both from the industrial point of view and as

regards employment.

The plant will provide the local economy a substantial boost. It will employ 450 people,

creating 200 new jobs and transferring 250 jobs from other Pininfarina plants.

Thank You