One year at Ducati

Piazza makes big moves
Joe Piazza, Jr., has battled through a tough first year as Ducati’s North American CEO, but 2003 could be much better. Or not.
Piazza, who took over last February, has his hands full, but, he’s moving aggressively to make major changes. Piazza is relocating the company headquarters from New Jersey to California, turning the key on a new computer system, switching to an entirely new distribution arrangement and pushing an aggressive new marketing program to sell one of the company’s most impressive product lineups ever.
And, at the same time, he’s working to improve dealer relationships that were frayed when he took over.
It sounds like a big job.
Moving the headquarters
Piazza is leading a corporate move to California, where Ducati had been located in the 1980s. Piazza grew up in northern California and most recently served as senior vice president of sales and marketing for Global Motorsport Group in Morgan Hill, Calif., a few miles south of San Jose.
This month, Ducati North America will complete the move to a 12,000 sq. ft high tech building in Cupertino that used to belong to Apple Computer.
The move has several advantages for Ducati, says Piazza, and addresses a host of key concerns.
First, it’s larger, adding about 20% more office space than the company had in New Jersey. And since Apple was cutting back, Piazza was able to get a good deal on the turn-key space— about one-third of what it would have cost in 2000.
Second, the high tech feel of the building fits with leading edge technological positioning that Ducati has staked out for its brand.
Third, it provides an excellent vehicle for dealer training. Piazza plans to build a model showroom to help teach dealers how to present the Ducati machines and lifestyle. “The model showroom approach has been successful in Europe,” he says, “and we expect to duplicate that success here. Dealers will be able to see and feel how the showroom can work.”
The new facility also will have plenty of space for dealers to receive technical training. “Dealers will be able to come in for a week of training to an area that’s fun to visit,” says Piazza. “We’re not abandoning the East Coast; we feel this move is an advantage to all Ducati dealers.”
Fourth, simply being located on the West Coast as opposed to the East Coast has several advantages, says Piazza. “Our plan is to be open for the majority of the business day for our dealers from the East Coast to the West Coast. In New Jersey, we closed at 5 pm, but that’s only 2 pm California time. Now, we’ll be in the office during the dealers’ prime times.”
A West Coast location also will give Ducati easy access to most major motorcycle magazines for regular media contact and new bike introductions. And movie studios will provide product placement opportunities, he said. It’s also close to key race venues, another important marketing tool for Ducati. California is the top state for Ducati sales, ringing up 22% of its total. Three area counties — San Mateo, Santa Clara, and San Francisco — contain the highest concentration of Ducati owners in the U.S.
Finally, the move is part of a three-step process that splits the office and distribution facilities.
Outsourcing Distribution
A significant concern facing Piazza when he arrived at Ducati was distribution of machines and parts and accessories.
As part of the reconfiguration of facilities, Ducati has shifted distribution to outside vendors. Machines will be shipped from one UPS Worldwide Freight Service warehouse in Carteret, N.J. The new facility replaces Ducati’s previous headquarters/warehouse facility in New Jersey, which was sold. The move, says Piazza, will dramatically reduce handling and the time it takes for machines to get from Italy to the dealer. Under the old system, for example, it took 40 days for a bike to move from the factory to a West Coast dealer and 25 days to a dealer in New Jersey. Now, it will take five days to ship to New Jersey and 25 days to the West Coast. The system also will reduce handling, which is expected to cut down on shipping damage, Pizza says.
At the same time, Ducati has retained an outside firm to handle distribution of its parts and accessories. Parts distribution will come from a warehouse in Columbus, Ohio. Under this system, dealer orders will be shipped the same day they are received.
“We’ll need patience from our dealers,” cautions Piazza. “It won’t be easy to get through these changes, but we’re really staying focused on getting products to our dealers quicker.”
Switching computer systems
More dealer patience might also be necessary when Ducati North America shifts to a new computer system this month.
Piazza, who’s gone through similar change-overs at Global, knows the pitfalls and challenges of updating computer systems. But he’s got one advantage: The system being implemented in North America has been used with success by 2,500 motorcycle dealers, including 600 Ducati stores, in Europe for nearly four years.
The Internet-based system has been developed by IBM and Oracle. The multi-million dollar worldwide investment will provide better communications between the U.S. and the factory in Bologna, Italy, long a source of frustration. It will cover all aspects of Ducati’s warranty programs, registrations, and the ordering of machines, parts and accessories.
“This will be a real improvement for dealers,” says Piazza. “And it shows the consistency we’re working on. We’re doing our best to manage this process, and we’re launching it in January because that’s the slow season. But we’re going to need patience from our dealers on this.”
Dealer relations
Ducati’s 168 dealers may be willing to give Piazza the necessary time to implement his programs this year.
Ducati has done reasonably well in the U.S. this year, compared to other OEMs, according to figures compiled by the Motorcycle Industry Council (MIC). In the sports category, Ducati was up 1.9%, compared to an overall decline of about 1%. In the sport touring area, Ducati posted a gain of about 13%, exceeding the industry’s 10%. In the touring segment, Ducati was about even, but the industry was down more than 16%.
“We’ve got the best product lineup in the industry,” he says. “These motorcycles are the envy of the industry; they are a specialized product that has to be sold by special dealers.
“Our commitment is to give our dealers the tools to do that and to improve their gross margins. We want to make sure the dealer makes solid (profits) and our customer is taken care of.”