Tesla Inc.'s Operations, Logistics, and Supply Chain Management

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Understanding Operations, Logistics and Supply Chain
Management

Table of Contents
Introduction......................................................................................................................................3
Critical review of relevant Operation, Logistics, and Supply Chain Management theories...........4
Analytic discussion with relevant and similar example(s) and applying appropriate solutions of
Operations Management..................................................................................................................7
Conclusion and recommendation..................................................................................................10
Reference list.................................................................................................................................11
2

Introduction
Operations, Supply Chain Management and Logistics are three key aspects present within an
enterprise. All these three facets help a company to manage their products and services and
operate as the way through which profit and reserve creation can be illustrated. Inside this
particular study, Tesla Inc has been taken into consideration. This company is multinational
company that specializes in creating electric cars; some of its most renowned vehicles include
the Model S, X and 3 series. The company has over 45,000 employees, the net income of the
enterprise is around $0.97 billion, and the revenue is around $21 billion. This business has
multiple subsidiaries such as Tesla Grohmann, Maxwell Technologies, and Automation. Elon
Musk and others founded the company in the year 2003 and has yearly production output of
245,162 vehicles (Tesla.com, 2019).
Inside this study, several theories relating to logistics, operation, and supply chain management
will be elaborated and how they may be applied in the case of Tesla and how it can affect their
way of working and efficiency. Here several points of views of multiple scholarly authors will be
taken into consideration and the way they can help in creating a coherent argument. After which,
appropriate examples will be taken in the case of Tesla and issues and problems will be chosen
that must be dealt with.
3

Critical review of relevant Operation, Logistics, and Supply Chain Management theories
Management quality and product delivery is one of the most important things to be considered. It
is continuously reported that the organisation has some issues that are marring the reputation of
Tesla in the market. It is reported that the issues have arise regarding the touch screen failure and
people have reported to be locked outside the car. In order to understanding, the effects of these
factors the management needs to comply with some theories, which are going to help in
managing the operations of an organisation. In order to manage quality considering the TQM
approach will be relevant to Tesla. On the other hand, the location and layout of different
departments play a role in managing the quality related matters, and thus it effects the operations,
logistics and supply chain management process.
The Optimal Layout Theory is considered as the primly considered option for layout
management. From a deep down analysis, it is found that Tesla needs to have a proper kind of
management it the workshop sections where the car is manufactured. It is seen that the
management policies need to be associated with the understanding of the situation. In accordance
with Pourvaziri and Pierreval (2017), the theory says about making a strong relationship with the
demand and, demand fulfilment party so that the management can be done in a proficient
manner. On the other hand, Cai et al. (2016) have argued that, the theory states about the issues
associated with the internal relationship but the performance often depends on the condition of
personal life of the employee. Therefore, it can be deduced that the Optimal Layout Theory has
provided the best kind of ideas concerning the internal connection of the employees and the
employers. It can be stated that the theory has its own approach process to layout management
but has some issues related with the understanding of the matters.
In order to understand the aspects related with the location the theory most of the cases
considered is Theory of Alfred Weber. According to Pajones et al. (2017), it is seen that the
business management process is related with the understanding of the matters that are connected
to the location of the business. A location of the business makes sure that the business is going to
grow or not. In case of Tesla, the location related benefits can be measured and it is seen that the
business management has been positively affected with the help of it. From the viewpoint of
McCann (2016), the theory has potential to detail the possible amendments that are needed in an
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organisation. Tesla has seen issues regarding their supply chain management due to the
mismanagement of resources. The application of the theory will help in reducing the issues
proficiently. The factors associated with attracting a company to localise itself are the most
important thing.
There have been many conditions that are related with the theory and fro the analysis of Mehrez
(2016), it can be elucidated that, Weber’s theory provides the main reasons of socialisation and it
is a guideline as well that can help an organisation to get mix in an environment. The
infrastructures used by the organisation to socialise in the environment are mostly technical.
Tesla is one of the most highly technical organisations and it is pioneer among the electric sports
cars. Tesla’s supply chain includes outlet selling and third party selling. According to Balletto et
al. (2019), in accordance with the location theory, it is essential for an organisation to maintain a
proper connection with the business ambience to have a detail report of what needs to be
introduced in the market. It can be deduced that the business management process is associated
with understanding of the thoughts that makes people buy products. The locality and layout of an
organisation is highly important to consider as a major sales factor. In case of Tesla, the
organisation needs to make sure that they are capitalising these factors in a skilled manner.
Evaluation and amendment is related with the understanding of issues and in this context to
manage the overall performance the organisations often opt for the Total Quality Management
process. The total quality management process is associated with understanding of the
requirements of an organisation and giving it corresponding thing. In accordance with Suyitno,
(2016), the business management process is directly related with understanding of the quality
assessment and flaws. The total quality management process helps in making certain
modifications that are going to magnify the prospects after a quality evaluation. On the other
hand, Papanthymou and Darra (2018), says that, the theory does not help in making modification
in the external activities of an organisation. A legit process implementation and identifying the
issues are the main aspects of the theory. The phases of TQM provides a better kind of prospect
that will help in making changes in the internal functionalities that is going to magnify the
quality service providing aspect.
According to Tanweer and Qadri (2016), TQM is a costly process and hence it might be
unacceptable for organisations with low return on investment rate. The management process
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should be aligned with the requirements of the internal condition of Tesla. For an example, the
technical unit needs to focus on their activities to mitigate issues like being locked outside the
car. This is a quality management issue and for that, a proper approach is needed. On the other
hand, Saleem and Banerjee (2017), the TQM process can help in making adjustments in the
policy management as well, where focus has to be given on the employee demands. Among the
demands only those have to be fulfilled which might not affect Tesla negatively. This will give a
positive feeling to the employees and they will perform more effectively; ultimately resulting in
quality-increased performance.
The issues associated with the management quality and location and layout are avoidable but for
that, a constant monitoring is required. There is a need to proper kind of estimation in future this
is going to help in developing a strong intra-personal relationship, which will help in managing
the situations in a proficient manner.
6

Analytic discussion with relevant and similar example(s) and applying appropriate
solutions of Operations Management
The company faces several issues of supply chain management, level of skill of the labour,
quality of the products, service delivery system and many more. These are few of the several
issues that the Operation Department of the Tesla focuses to control and mitigate. The
Operations Department focuses to incorporate the available resources to deliver the maximum
output with the least input to maintain its market share in the economy (Martin et al., 2017). The
company has a huge dependency on innovative technologies to help deliver superior products
and efficiencies in the overall business functioning. The company incorporates the most efficient
Supply chain Management system based of AI and machine learning to maintain an optimum
flow of goods and final products to maintain a smooth functioning of the organisation (Kalaitzi
et al., 2019). The operations department focuses to update the system of the organisation to
maintain its competitive advantage and deliver organisational excellence.
The company Tesla with its disruptive innovative strategy has penetrated the automobile sector
with is cost effective electric vehicle. The company with its innovative product and disruptive
marketing strategy has incorporated a market for itself, which gives it a leadership position in the
electric vehicle segment. The company to sustain in the innovative and competitive environment
has maintained an efficient and effective Operation Management Department to moderate the
overall functioning of the company. The same helps to develop new and innovative strategies
and ideas to excel in the environment (Nicholas, 2018). The company has incorporated different
strategies of Total Quality Management to maintain and efficient functioning and delivery of
quality products to its consumers to make a niche for itself in the economy in the segment of the
electric vehicles. The efficient Total Quality management approach has helped the company to
deliver a rapid growth in the economy and get a market capitalisation to rival the biggest
competitors in the economy.
The focus of the company is to develop strategies and maintain and efficient workflow structure
to deliver effective products and based on technological advancement and innovation by
delivering efficient cost effective products. With the help of Total Quality Management, the
company has been able to mitigate the unnecessary costs and expenses occurred in the process of
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production and distribution of its cars on a global scale. The Total Quality management helps to
identify cause and areas where the company can reduce the unnecessary expenses to deliver an
organisational excellence to acquire a market competitive advantage and maintain its profit
margins (Fundin et al., 2017). This can be achieved only due to the efficient working and
functioning of a highly skilled and experienced Operations Department which force is the overall
process of the organisation. The Operations Department of the organisation Tesla is focused to
deliver products, which are technologically advanced as compared to its rivals in the economy.
The company by maintaining a very strict and stringent process of quality check and
management to ensure the best quality of products is delivered to its customers. The process has
helped the Operation Department to display its excellence and efficiency in delivering the
highest quality of products and maintain a competitive edge in the economy over its business
rivals. The company being a new entrant in the sector focuses to maintain an efficient Customer
Relationship Management to ensure a good quality and monitoring of the products being
delivered to the customers. The Operation Departments on a constant monitors the quality and
level of satisfaction of the customers through different modes of Customer Relationship
Management tools like survey and discussions to enhance their productivity and quality of the
product (David et al., 2016). The prompt and efficient working of the Customer Relationship
Management operated by the company has helped the company to deliver high level of customer
satisfaction resulting in creating a niche for itself through customer loyalty. The company
focuses to deliver satisfaction and high quality to maintain efficient relationships, which can give
the organisation a long, term sustainable outlook in the economy in the highly competitive
sector.
The efficient Operation Department of the company Tesla focuses to incorporate the best talent
in the industry. The advent of globalisation has helped the company to acquire highly skilled and
talented labour force from a global pool of talent to incorporate in the organisation to deliver
high productivity and high quality products to its customers (Viswanath, 2018). The company
focuses to maintain a very high and harmonious environment in the workflow culture of the
organisation by incorporating the most efficient Human Resource Management skills and
policies to maintain an overall sustainable outlook for the future. The company has been rapidly
growing and following a disruptive innovative strategy to penetrate into the market with a new
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product segment of electric vehicle. The first mover advantage has been prevailing for the
company Tesla to give it advantages return in the economy and develop a niche in the market
position.
The Operations Department of the company has always marinated an efficient and harmonious
work place environment at the organisation. The amalgamation of the different ethnical group
has helped the company to enhance its productivity and deliver the best quality products to its
customers. The Operations department with in a harmony with the Human resource department
always maintains an environment where the level of motivation of the employees is always high.
The same helps the company to deliver efficient functioning, which is self-sustaining and creates
a long-term sustainable prospect for the organisation. The efficiency of the Operation
Management functions of the company has helped to post revenue of over $ 4.54 billion by 31st
march 2019, which is a 33.23% increase over the previous year. The company’s annual revenue
for the year 2018 stood at $ 21.46 billion, which is a 82.51% high as compared to the previous
year 2017 (Macrotrends.net, 2019).
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Conclusion and recommendation
In this particular report, several areas have been inspected in the case of the multibillion
automobile companies: Tesla Inc. Here perspectives of the company such as operations, supply
chain management along with logistics, and their theories have been illustrated. Here the
application and impacts of all these areas have been elevated in the case of the company and they
can use these features to move forward. Inside these departments, specific functions such as
managing quality and location and layout will be considered along with which a critical review
will be performed. Following which finally, examples for the context that have been illustrated in
the project and the ways in which problems can be mitigated through various solutions has been
taken into consideration.
Two specific areas of failure have been selected for Tesla, which includes total touch screen
failure and being locked out of the car. One area focuses on a display failure another focuses on a
mechanical fall failure. In order to deal with these two areas in a more effective method, the
following recommendations will be provided here below through the usage of the triple bottom
line
Incorporation of economic factor – In order to better the touch screen and lock down feature,
higher funds would be required to be raised from the market through the process of shareholder
pooling through which various types of investors would be invited to contribute their input (Hill
et al., 2014).
Incorporation of environmental factor – the material, which is used within both of the touch
screen and the car-locking feature, must be eco friendly and minimum usage of plastic material
must be there so that there is protection the environment when it is recycled later.
Incorporation of social factor – Surveys and interviewing activities must be performed through
which it can be determined what the consumers want and better bond with the consumers can be
established as well where the concerns of the enterprise would be dealt (Hussain et al., 2018).
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