PININFARNIA THE NEW CUSTOMER DECISION

AKSHIT SOBTI ANKUR VERMA JASDEEP BEDI ABHINAV PARMAR BHUPESH 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

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

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.

CUSTOMERS
Ferrari, 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 Pininfarinas existing customers.

Some in the company believed the Mitsubishi might demand the defect level to be th 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&A
1. 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 Pininfarinas Operation.

2. Pininfarinas 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 checkup 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.