Logistics and Supply Chain Management: Exploring Key Concepts and Practices in Tesla Company

This article explores the key concepts and practices of logistics and supply chain management in Tesla Company. It discusses good practices and failures, contribution of logistics and supply chain strategy in competitiveness, issues in development of supply chain strategy and solutions based on good practice models, and interrelationships between supply chain and organization areas. The article also covers the principles and process of supply chain management, and the challenges faced by Tesla in developing its supply chain strategy.

LOGISTICS AND
SUPPLY CHAIN
MANAGEMENT

Table of Contents.
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Exploring key supply chain concepts, principles and process in the context of Tesla company
and considering good practices and failure..................................................................................3
Contribution of logistics and supply chain strategy in competitiveness......................................6
Issues in development of supply chain strategy and solutions based on good practice models . 8
Interrelationships between supply chain and organization areas...............................................11
CONCLUSION..............................................................................................................................13
REFERENCES................................................................................................................................1

INTRODUCTION
Supply chain management is process of handling all over production flow from purchasing the
row material to delivering the final good to the end consumer. Logistics is the process of
managing all over the process how to received row material, resources and stored them and how
to transported to their final customer(Cornell B 2021). Supply chain is the network between
company supplier and manufacturing to produce and distribute a specific product and services. In
whole process includes producer, warehouse, transportation, distribution centre, retailer. Tesla
company is an American automotive company, founded in July 2003 by martin Eberhart.
Number of employees approximate 110,000. The name of this company is tribute to investor and
electrical engineer Nikola Tesla.
The current study will explain about supply chain concept, principle and process in the Tesla
company and considering good practices and failure of this company. Analysis how logistics and
supply chain strategies contribute to the competitiveness of the company considering
globalization factor. Describing the issues for development of supply chain strategy identifying
solution based on practices models. Evaluating the interrelation between supply chain
management and other areas of company and considering their importance to success of
business.
MAIN BODY
Exploring key supply chain concepts, principles and process in the context of Tesla company and
considering good practices and failure.
Supply chain concepts -
Supply chain concept define a series of step that help the company to get a product or services to
the customer(Paras M 2020). The steps involve in this is converting the row material into
finished good, transporting that good, and providing to the end consumer. Supply chain help the
Tesla company to getting their car and other product across the world. It is great deal of planning
the product, forecasting the product, according to the product planning, procuring the row
material and converting into the finished good and applying logistics expertise to move the
product to the end customer without strong supply chain company not reach to the customer.
Four components of supply chain in the company is practical integrating, procedure alignment,
network base and market sensitivity. Virtual integration is important for the business to track the
market demander hat the customer want in the market.

SCM involve various steps and process that must be necessary for completing their activity with
more efficiently and on time to the end customer. The main goal of supply chain is providing the
high quality product from the point of origin to the point of end product user. It is two-way flow
of inflow of information and data between supply chain participant so it helps to create profile of
the demand of the parties and fast detect the problem. Supply chain also help the company to
move product back for many reason like repairing, returning, recycling, isposal through supply
chain flow. Because of all this process of supply chain, manager and whole team are require for
the company to manage the all process, taking good decision in the context of what to purchase,
how to proceed, how to sell the product. Basically supply chain focus on distinguishing,
acquiring, access, orienting and management the final goods and finally providing to the end
consumer.
Principles of supply chain -
 Conform supply chain according to customer needs — The Tesla company and supply
chain manager understand the consumer needs, so its require to distribute the customer
into the different segment in order to under them better on the basis of sales volume and
profitability(Srai J S 2019.). Anticipating the customer need is important for supply chain
to aligned to provide to the need.
 Customizing the logistics network -After segment the customer on the basis of their
need, supply chain manager have to make logistic network which help to serve in
different segment. It also prioritizes the delivering process and suitable way to provide
ghastly in the market.
 Compounding demand planning with supply chain -Supply chain team are train to
share data With the company partner in order to avoid the unnecessary stock.
 Differentiate product close to the customer -Standardization and differentiation are two
different think. Differentiate product according to the customer needs, sales, according to
the cost.
 Develop the IT that help to take decision -IT projects done in separations because This
process provide understanding about the process and help to determine the what kind of
innovation are required.

 Follow both services and financial matrices –ABC(always better control) is applies to
determine the customer profitability. Time impelled activity based costing help to
understand the changes in activity, process, customer.
Process of supply chain -
 Planning for the new product — planning is the process of plan for new and innovative
product and imperative to control inventory and manufacture. Tesla company always try
to match supply with the market demand by developing course of action according to
analysis(Xu S2020.). To plan what kind of row material purchase, what kind of enerous
production to make. In this process company also predict the market demand, planning
the requirement of ow material using material tool.
 Original sourcing and natural process of row material — In this process tesla procure
the good and services which help to meet planned demand in most natural and
economical way. There are certain standard that supplier need to full-fill and sourcing
may perishable or non-perishable.
 Refining or manufacturing material into finished good — According the customer
needs, Tesla will perform the activity related to transforming row material into finished
good. Activities like assembling, testing, packing done in the process of supply chain
process by company.
 Selling finished product to end customer — It most important step of supply chain
management to providing or delivering final goods to the customer. It has significant
contribution to flow the company image of the firm. Finished goods demanded by the
customer, have to meet by company logistics channels and services. The firm use various
way for delivery through road, air other. Making the product according the customer
needs and manufacturing theParast M M 2020m and providing to the end customer is the
process of supply chain management .
 Returning finished product by end user – it is the post delivery support system
associated with any kind of returning the product. It is most important part of increasing
the trust of then TESLA and increasing the goodwill in eye of the customer. In the other
side the same process follow for the supplier if any case material or product has low
quality, defective, expired, all row material returning by the company.

Tesla good and failure practices in the context of supply chain,
good practices
Auto-mobile industry has pioneered an amazing number of supply chain innovation. Ford and
Toyota lean manufacturing techniques were extremely valuable for development of supply chain
in other industry(Yuan L 2019). Tesla was few companies into the electric vehicle, and the
company philosophy has centralized optimize the consumer experience and bring the product
that people want most.
Tesla phenomenal growth in the past few years and still one of the smallest auto manufacturing
in the world. Reduction their supply time and cost, Tesla take complete ownership of the supply
chain by picking and choosing between manufacturing practices, it ensures good chemistry with
supplier.
Failure practices
Tesla company struggling about procuring the row material only available in the china for the
battery cell. Now this company face supply chain crises, logistics delay and related issue are
going from seemingly temporary manufacturing annoyances to potholes that are slowing down
development and production. Graphite is essential, for making EV buttery and anodes. Without
this company not manufacture a product.
Contribution of logistics and supply chain strategy in competitiveness
Tesla is working in more than 40 nations and manufacturing its cars (Kim, 2020) It is
inevitable prominent for the company to enhance its capabilities and efficiency to make the
supply chain more inclined to it. The company is practising Flexible supply chain strategy. Over
the time the entire world business has seen different turmoil which affected the flow of supply
chain. Logistic and supply chain strategy contributes bigger to the competitiveness of the
company (Rengarajan, 2019)
With the time and prevailing circumstances, tesla keeps changing its suppliers and also changes
its policies with respect to them. It gives the organization upper hand to acquire needed
materials, goods, equipments on time and on less cost which makes the final products more
competitive in the markets. As per needs of the market organization fabricate different plans
such as adjusting its preferences.
But it is a bit risky too in long run since at once if the company looses its credential in the
suppliers then they would be less likely to support in critical circumstances so may lose its strong

position. Frequently changing the strategies is a tarnishing thing for the organization, and topple
their market credential.
Better supply chain and logistic strategy of the organization makes it cost effective, if the supply
chain is working properly then the operations of the company would not get hindered which will
ultimately reflect higher efficiency of operations and low cost occurrence. Having low cost of the
cars with higher quality allows it to sell more and give tough competition to the other car
manufacturers in the market (Shiddiq, 2020)
On the other side being more tactical with respect to supply chain and logistic
management can also offer some fuzzy consequences too, and despite being cost affective may
also generate unnecessary cost which would give chance to the competitors.
Time management of production and providing products on the promised time, which paves the
way for better supply of products and being more competitive in term of fulfilment of
commitments. In this business line where already a good competition is going on being time
effective gives great opportunities to the company. If the organization is having disrupted supply
chain then both human and non-human resources would not be able to work on their potential
level which would ultimately makes it end up as under-performer.
The company is customer centric this approach can be very risky sometime, forming
good relations with all key participants of supply chain is rigorous responsibility otherwise it
may make it experience severe results of the supply chain priority.
Company ensure that all the participants must perform on their potential which can give it
opportunity to accomplish bigger in term of providing better quality of both its goods and
services too.
Tesla is working in more than forty nations and having it's a wide range of outlets across the
world, so for the luxury car giant it is not possible to be with the same or steady supply chain
strategy, as it follows flexible strategy which can give it upper hand over other competitors to
grab bigger market share and dealing with possible perils in the supply chain.
On the other side it has also been seen that the companies who follow flexible supply
chain strategies make big bluffs in making hasty decision to take advantage of available market
condition. If the company does not abide with fixed policy pertain to supply chain then generally
it is seen that specifically suppliers may have negative convictions about the company which
may be reflected in long run negatively.

If the organization is practising well-structured supply chain strategy then would be able to
perform on its merits up to full potential. The modern market is very much dynamic where new
entrants make their entry easily and can place robust challenge. With this regard the only way to
counter is to be prepared with better supply chain and logistic policy so can meet the operational
efficiency requirements (Wen, 2022)
The entity with well-structured supply chain gets chance to be innovative too and grab short term
opportunities in the market. It has been seen that before making purchase of such capital goods
people ponder over all the associate aspects then make decision, so if the supply chain of the
company is going smoothly then would be able to grab such short term opportunities.
Due to globalization the market is getting complicated at the same time the supply chain
and logistic pattern is also becoming difficult to decipher, so for making sure better performance
and taking competitive advantage in the market a company can not avoid the jeopardies take
place because of globalization.
The key competitors of tesla such as Rivian automotive, nio inc., Li auto, Ford motor,
general motors etc., since the globalization is being surging so a higher competition is also being
experienced so with this regard with the help of strong strategies pertain to logistics and supply
chain Tesla can take competitive advantage in the global market, would be able to eliminate
potential trouble makers too. Strong strategy of supply chain management could reflect
advantages in globalization.
In the time of globalization role of supply chain is very much prominent, as it has been
seen in the hit of pandemics the companies have experienced severe issue of improper supply
chain due to global failure. The company is involved in car manufacturing, where a range of
different participants notch up their presence and make the task difficult (Alghalith, N., 2018)
So for hiking the growth in such an intensive competition, making sure smooth and most
appropriate supply chain would work. With this regard the organization has formed Flexible
supply chain strategy where all key notions are inculcated.
Issues in development of supply chain strategy and solutions based on good practice models
Political
Following the flexible supply chain strategy, some issues can be occurred in developing
those strategies. It is very demanding and challenging for tesla to form a supply chain for their
ambitious goal. Supply chain management of tesla quality customer service is based on the needs

of consumers, they must provide right quality product to the customers for the valuable costing
in particular time period ( Cheung, Bell and Bhattacharjya, 2021).
Economic
Cost of raw materials and labour is in demand due to economical restriction. It comes
from many areas while deficiency of visibility or accountability in reducing forms aspects of rise
in operational experiences. Accordingly, in that term tesla uses raw materials for its battery
production like aluminium, copper, steel, cobalt etc. while the demand of E-segment vehicles
will increase in the future. It will create issues in raw material's crisis. Also, risk issues can be
appeared as changes in market including variety of sources like consumer needs or global
sourcing cause the difficulties in the operations. For supply chain management new changes in
market comes with arrival of new issues in economy variables such as market growth, currency
exchange can impact on growth. Trade agreements with different countries improves the chances
of expanding in various locations but economic factors are also to be considered.
Social
The emerging trend of using eco-friendly products that can provide benefit to the
environment such as the battery operated electric cars and vehicles that does not release harmful
pollutants is suddenly increasing in UK (Tu, 2018). This can benefit the business in the country
because the cars TESLA produces are completely battery operated which does not releases any
harmful pollutant. In taking step further to expansion among different countries, it is mainly to
be considered the buying power of people as many of middle class people make investment
according to their ability to afford. The shortage of the products in that manner creates supply
chain risk and cause reminiscence of costly products which can reflect upon the customers trust
issues. Many sources of risk can negatively influence supply chain in which connection with
other suppliers who suddenly gets affected by getting in trouble and those effect will be reflected
on supply chain strategies.
Technological
The UK is a technology driven country that uses the modern technologies that can be
used by TESLA which can help in effective production and sales of their cars in UK.
Furthermore, the brand expands their business to higher levels or in global markets,
determination of the current products need a change in supply chain. Globalization brings critical
prospect in supply chain challenges, outsourcing production consist of not only individual

country but as well as various countries for parts. With widening the process of global
production it also the procurement network.
Legal
There are various types of laws that TESLA is required to comply with in UK for
successfully running their business in the country. The organization is going to sell their cars to
the customers for which they are required to follow The Consumer Rights Act, 2015 (The
Consumer Right of UK. 2022). Whereas having suppliers in geographic locations complex the
chain. In that case company deal with coordinating with their respective customers in terms of
manufacturing or logistics. Tesla accept placing their products to different cultures and
preferences with there is risk of losing control and proper management. Controlling freight cost
in the common issue in transportation and logistics it is challenging due to far deliveries of
vehicles to customers as they are concerned.
Environmental
The increasing concern among the people of UK which makes the citizen of country to
reduce the use of vehicles that releases harmful substance that harms the environment which can
affect the business in UK. This can benefit the organization as the people will using the electric
vehicles so that harm to environment can be reduced. Whereas, this brings negative aspects as
compare to the fast timing of delivery and service gains more customers and their positive
reviews. In discussing the issues third party service providers and dealers consumes more time
usage in transportation service. They also face challenges in political instability in the located
countries which may cause interference in supply chain as financial loss. There are many
sourcing partners from all around whom supply is relay upon political stability of the respective
country and foreign relationship country with America (Govindan and et.al., 2018).
Good practice models of supply chain
In the discussion of providing solutions based on supply chain models are discussed. By
following the Flexible supply chain model company meets unexpected demand and faces high
demand and long periods of low workload. Accepting is the key and management which should
focus on ensuring flexibility and it is consisted of four main capability such as extra capacity of
tough resources, fast responding, technical strengths of product engineering with process which
can be easily reconfigurable (Verhoeven, Sinn and Herden, 2018). By this model company can
deal with various suppliers according to their pricing, it will provide the solution to the costing

and benefit to the respective customers. Also, raw materials are provided easily provided to the
manufactures which decreases the overall costing and forward company can provide low costing
rates to their customers. The modelling is important for satisfy the customer, those who take
interest in buying more products which builds brand loyalty and recognition.
By fast chain model, manufacturing of products is based on shorter time period and
follow the trend of market. It is also flexible and company can bring trendy ideas or strategy in
market to attract more number of customers which increase the demand and sales. Customer
satisfaction starts from providing a perfect product to providing solution to effective problems.
By following the continuous flow or agile model, it is suitable for the company who gets
demand uncertainly, for this company must reliable to their supply chain operations for changing
demands in the market trends. This model allows tesla to react the changes to meet market
demands quickly and improve their delivery issues. Manufacturing based on demands are
dependent on trends and behaviour (Ripanti and Tjahjono, 2019).
Interrelationships between supply chain and organization areas
There are various types of interrelationships between the supply chain management and
other areas of organization which can contribute in the successful operations of the business.
Different areas of the organization are directly affected by the supply chain of the company since
the efficiency of purchase, sales, marketing etc. depends on the supply chain and if there is any
fluctuation in the performance of supply chain then it would severely impact the performance of
the company (Anca, 2019).
Relationship of supply chain with purchasing and procurement
Procurement is method of getting goods as per company needs while supply chain help to
convert those goods into products and distribution in the market to reach variety of customers in
an efficient manner. Procurement exist as branch in supply chain management and both work
together to provide the finished goods. Same procedure the tesla follows as their products is
defined by its won quality and its demand it very high the markets. The production of company
is supported by procurement and supply chain finishes production and distributions terms of the
company, As the demand gets high supply chain will process faster to deliver the final product.
Purchasing departments plays role at midpoint of successful supply chain management. They
help different departments to determine needs, manages the structure of competitive prices.

Purchasing also focus on mechanized prospects in relationship of suppliers and buyers, without
these process working this relationship will not work (El Baz Laguir and Stekelorum, 2018).
Relationship of supply chain with marketing
Maintained supply chain reduces company expenses and builds the overall profit aspects.
A good supply chain also gives benefit to the company, to make customer value much better
marketing looks upon maintaining, developing and improving relationships in supply chain.
Also, by the new changes in market and rapidly changes in demand of customer needs are
observed. Supply chain fulfils the customer needs, basically as the demand increases the supply
will automatically fall up. Promoting the products through advertisements, discounts etc. leads
sales to increase. Stock-out are the disadvantage which also known as walkouts, customers lose
their interest of purchasing while facing the issue of no stock. It put negative impact on the
behaviour. It is important to consider while setting up promotions by the marketing team to
communicate with supply chain to prevent the measures of stock-outs. If the supply chain of the
organization is not absolute then the marketing strategy would also not work since the main aim
of marketing is to ensure better appearance of the product among the customers, improper supply
chain adversely affects the marketing strategy of the company.
Relationship of supply chain with sales department
Supply chain manages flow of goods and services whereas sales is part of supply chain
management and planning operations which go through the departments like sales, finance, other
operational to carry out the supply and demand plans. Supply management works accordingly on
the basis of analysis information provided by the sales department. In tesla sales department
work with cooperating with all other departments to get the budget of sales ratio. By which the
supply managers will work on providing goods and services. The efficiency of sales department
totally lies on the efficiency of the efficiency of supply chain in an organization. If the supply
chain is not appropriately working then the organization would not be able to meet the demand
of the product and ultimately sales department would underperform (Chiappetta Jabbour and
et.al., 2019). The company is working globally so it is very essential for them to hike their sales
to be in competition.
Relationship of supply chain with human resource
Human resource department hire the professionals for the task. For supply chain hiring
the people who can perform their duty well as selecting the wrong ones will put impact on the

supply chain working process and it leads threat for company. Human resource management
issues in supply chain are employee attraction, training and educating them before and after
selection (Zijm and et.al., 2019). Forming team related to supplier and problem solving trainings
are interrelated to success of supply chain success, If the changes are being made in supply chain
the department of HR must check with the adaptability of the existing workers to adopt the
change. For the newly hired peoples training is necessary to improve their performance. Supply
chain management is different department but it comes under human resource department. All
other departments are concerned with HR team where the HR teams keep their details and look
after them in development and satisfaction. Moreover, they are involved in supply chain
decisions.
CONCLUSION
Form the report above it can be concluded that in the development and growth of an
organization there is a great contribution of their strategy pertain to supply chain management.
The report had discussed various aspects such as supply chain concepts, principles, process in
Tesla and also considered their good practices and some areas with shortcomings. A broad
picture with critical analysis were presented to articulate the contribution of supply chain
strategy to the company to take competitive advantage in the market and also ensuring better
growth in the age of globalization. The issues come, while developing a supply chain strategy
had been deciphered along with some set of solutions based on good practice models used by the
organization. At the end of the report the interrelationship between supply chain and other areas
of the company were evaluated, taking prominence to the success of the entity into consideration.

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