Ferrari: Organisational Structure

What's the structure from the top down in Ferrari?

The structure is pretty traditional. You have the CTO, chief technical officer; you have manufacturing and technology, so a chief manufacturing officer; then you have a chief marketing and sales officer, who holds the subsidiaries and sales and pricing and marketing; then of course you have a CFO; then you have a chief design guy, who is obviously a very important person in your organisation; and you have the head of the Formula 1 team, so the managing director of Formula 1. That's the top management team. Of course, you have other functions that are important to the operation like legal, et cetera. But these are the guys who make up the group executive council.

So it's unusual for the purchasing guy to report to the chief technical officer?

It's completely unusual. It's instrumental in delivering the product development of new cars in the context where the contribution of suppliers is so critical. Typically, you split the two functions quite clearly, so that there’s no overlap.

And that drives accountability in terms of integrating with the supply chain and driving the technical performance of the car.

The most important issue is that when you develop new cars, which, by definition is doing something that is unheard of or unproven or up to the limit of performance, you need to have your suppliers on board to deliver that performance, because otherwise you won't deliver the car. So, it’s so important to have purchasing as a product development leader, which is why purchasing reports to the chief technical officer.

What are the big challenges with this model?

Every model has its pros and cons. The challenge is obviously the pressure. How do you make sure that you also have a focus on efficiency and on product cost reduction? That is precisely the reason why my function was created, to create product competitiveness. I was exactly in between the two of them to run cost transparency and to make sure that the products were developed with the right fixed costs, so capex and R&D on one side, but also with the right variable costs. So it's driving purchasing and manufacturing efficiency, that was my primary objective. At the end, people tend to underestimate it, but the cost of the car is very critical. It's a clear component of profitability. Ferrari is making money not only because of price but also because the cost is good, otherwise you don't make money at the end. It's not only because of price power. Yes, price power is a clear factor, but the cars are cost-effective as well.