Earlier this month there was an announcement from icon luxury sports car designer Ferrari N.V. on the appointment of the auto maker’s newly appointed CEO.
Perhaps our Supply Chain Matters readers may or may not have read of this appointment. However, this Editor could not resist penning this commentary, not only to provide a perspective on the significance, but also from a personal passion that I have always had for sports cars. After all, I share the similar last name, but unfortunately, not directed related to the original founders.
After literally months of speculation, Benedetto Vigna, who provides a 26-year management career working for European semiconductor company STMicroelectroncs, will lead the luxury sports car company at the beginning of September. Mr. Vigna most recent leadership position was President of STMicroelectroncs Analog, MEMS (Micro-electromechanical Systems) and Sensors Group.
The announcement had considerable uptake in industry and business media, especially in the backdrop of the ongoing global wide semiconductor device shortages that continue impacting multiple global automotive brands.
Reporting on the appointment, The Wall Street Journal Heard on the Street column wrote that Ferrari Chairman John Elkann had been stressing the importance of technology development to the luxury sports car icon. Rumored CEO candidates reportedly came with luxury brand leadership backgrounds. The column pointed out:” One of the master strokes of former Ferrari CEO Sergio Marchionne was to convince financial markets that Ferrari should be valued as a maker of luxury goods rather than vehicles.”
For this Editor, that is indeed exactly the significance of this appointment.
The global automotive industry is in the throes of multi-year vehicle development transformational efforts leading to more technology laden, higher performance and more sustainably powered electric and hybrid vehicles. Ferrari Motor itself is ranked among the global leaders in environmental performance and transparency in the annual report published by the Carbon Disclosure Project.
The industry transformation is dependent on a global supply network that is not just purview of the automotive industry, but others as well. That has been the genesis of the current global demand and supply imbalance of semiconductors, sharing in the misery index.
As with most technology innovation in this industry, the luxury and sports car segment have been the early innovators. You can always look to the racetracks to ascertain what advanced technologies are destined for automobiles, from the numerous on-board digital sensors accessed remotely to the higher performance engines and safety systems. Watch previous episodes of either Top Gear, The Grand Tour, Formula One or a NASCAR event and you can gain a sense of how technology has been developed and tested initially in high performance environments. Luxury sports car brands are expected to be the technology innovators.
When Tesla first arrived in the market as a designer of innovative electric vehicles, its reputation for engineering excellence was garnered in the premium luxury car segment, along with the significant price points. As we have written on Supply Chain Matters, Tesla’s most significant challenges have been in designing, producing and distributing more affordable vehicles, complete with all of the manufacturing and supply chain challenges. That now includes demand and supply shortfalls of semiconductors.
Ferrari’s current goal is to offer an all-electric powered vehicle by 2025. Some hard-core enthusiasts would argue that Ferrari should never abandon fossil-fueled vehicles because of the sheer power, engine roar and speed characteristics. After all, shelling out the funds required to own and operate a Ferrari are for the chosen few.
On the other hand, this appointment indeed has significance of the recognition that the industry’s future rests with technology and the strategic core of automotive technology will be in battery and semiconductor technology components.
One of the lessons derived from the ongoing automotive industry transformation is that automotive OEM’s can no longer portend to be the bully of the supply network. Production control systems predicated on Kanban and Just-in-Time inventory management work fine when there is reliable inventory availability. They are tested with conditions of supply network shortages and risks.
Supply network availability of batteries, semiconductor devices and other advanced electronic components are now also the purview of the planning and execution of multiple industry supply networks, not just automotive. Each industry demands its own priorities of supply.
Indeed, Ferrari’s new CEO appointment can be a statement that the new leadership of this industry will be a possible breath of fresh air. A far more tech attuned and tech-savvy leadership style instead of command-and-control supply network bullying. The emphasis turns to longer term supply network sourcing and joint technology development.
It’s no longer just the glitz of marketing and the brand on the racetrack, but rather tech knowledge and strategic supply network savviness. Not just Ferrari, but the senior ranks of other automakers, which we are already observing.
All of this is good.
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