QAB020N502S: Analysis of Tesla's Supply Chain and Logistics Challenges

This essay provides a detailed analysis of Tesla's supply chain management, logistics, and warehousing operations. It examines the challenges faced by the company, including production delays, missed quotas, and issues related to new production techniques and managing the supply chain. The essay explores the impact of these issues on Tesla's performance and financial standing, including the impact on the company's stock price. It also delves into the implementation of digital supply chains, inventory planning, and the role of logistics in minimizing costs. The assignment highlights the importance of lean management and green supply chain practices to improve efficiency and sustainability. Furthermore, the essay recommends strategies such as lean product development and shared leadership to address the identified issues and improve Tesla's overall supply chain performance, considering economic, social, and environmental factors to achieve sustainable competitiveness. It also explores issues related to leadership and customer service.

SUPPLY CHAIN MANAGEMENT

Contents
Introduction...........................................................................................................................................3
Supply chain, logistics, and warehousing of Tesla to examine the issues faced by the Company.........3
Conclusion...........................................................................................................................................10
References...........................................................................................................................................11

Introduction
The essay comes up to develop proper understanding of operations, SCM, and logistics
contributing to the organisational success. Furthermore, the essay have selected Tesla to
describe complex situations in relation to operations, supply chain management and. Supply
chain management face issue several issues due to dynamic business environment in Tesla.
One can identify service delivery system and manufacturing procedure to support the market.
Furthermore, there are some recommendations to how business have improved performance
by considering triple bottom line, which are incorporated to comply whether Tesla operations
cater economic, social and environmental as its three dimension of sustainability. As the
assessment suggests selecting the core issues affecting Tesla for the supply chain
management such as issues in new production techniques and managing people supply chain
in an inappropriate manner (Lemmens, Decouttere, and Bernuzzi, 2016).
Tesla is an American electric company based on California. The organisation has
specialisation in electric vehicle production. Some of the common issues in supply chain of
Tesla include delay in production, missed quotas, and busted deadlines, which has led to
stock price tumbling with an ain to mitigate the risks; tesla has decided to remove several
colour options. At last, there are few recommendations based on the supply chain issues such
as lean management and total quality management (Jose, and Shanmugam, 2019).
Supply chain, logistics, and warehousing of Tesla to examine the issues faced by the
Company
Supply chain is the collection of suppliers that are needed to attempt in creating specific
product as the chain is made up of links that include several manufactures, completed
product, warehouse, distribution centres so that at final stage they can reach to consumers.
Logistics is viewed as differentiator while determining final bottom line of typical “hard and

tangible goods.” It will enable them to maintain lower costs by providing higher value. Lower
costs is one of the most focused area in logistics with high value (Agrawal, Singh, and
Murtaza, 2018). Logistics is simply concerned with flow of information and materials where
it transfers from supplier to customer. It is not at all related with the inventory resources,
customer response, and using resources in logistics. It established link between marketing and
manufacturing of companies. The approach needed to minimise overall costs to reach
customer can become tough to achieve several number of participants by increasing
efficiency of supply chain. Logistics can cover broad functional areas such as transportation,
inventory management, and network design (Chand, Bhatia, and Singh, 2018).
Manufacturing plans, stores, and warehouses are the facilities that are key components at
network design. For example- Walmart can succeed with few links in the supply chain and
purchasing generic goods that cone from manufacturer rather than any supplier with a brand
name. Vendor managed inventory can mandate manufacturers where they are responsible to
manage items in the warehouse of Walmart. The company is selecting suppliers, collaborate
them, and meet the quantity, which it demands with low price (Barnett, 2018).
Tesla is an automotive company, which have long way as it is making innovative, luxurious
and incredibly popular cars in California as located in incredible costly real estate. More
designing in terms of digital supply chain, which the company promotes. New algorithm
updates can be pushed where digital supply chain is promoted to existing cars owned
(Gaustad, Bustamante, and Badami, 2018). The cost and consistency needed to maintain the
transportation network by determining the mode of goods affecting inventory. These basic
concepts of logistics and supply chain management, inventory planning is the way through
which Tesla can minimise inventory levels because of liner relationships with appropriate
costs. Here demand has been forecasted so that there would be no idea for goods and
inventory, which would not move from warehouses to customers. The forecasted number of

inventory had been maintained to settle down the demand as the cost of unsatisfied
customers. Overstock will lead to cost of working capital needs, blocking resources and
insurance costs or else it can lead to incurring to operate production (Tramarico, Salomon,
and Marins, 2017). Although, the company often manages its complex supply chain to reduce
cost, increasing fuel efficiency, and waste. Tesla make accurate forecasts, streamline
logistics, less executive travel, and optimise routes (Chand, Bhatia, and Singh, 2018). To
have a complete view of supply chain and pricing factors, which is easy to capitalise on
favourable tools and then come forward for production, order, and then deliver maximum
sales. Streamlined logistics can manage the fleet by availing solution for all transport models,
ensure orders, transport efficiently to reduce the fuel consumption. As far as the future of
demand, driving can complete visibility in supply chain, which indicates better staff
rostering, connecting collaboration, smart new services, and automated processes (Fernie, and
Sparks, 2018). Automated procedure can be used to order the replenished order by straight to
systems. Use Tesla business procedure can exchange players in supply chain management
across Tesla cloud based business to business to collaborate efficiently with partners. Better
staff rostering can enable them to update loading dockyards on the arrival of trucks. Forecast
will depend on historical baseline for sales, recent trends, seasonality, recent trends, business
cycles, and promotional offers, which can further drive average marketing programs (Singh,
and Trivedi, 2016). The type of transportation employed in organisation is strategic decision
based on needed level of risks exposure. To determine the packaging factor, the main of end
goals can differ for end customers as functions can play packaging role for the logistics
operations (Barnett, 2018).
Most common issues faced by the Tesla covers new product development and managing
people on the supply chain. In 2016, Tesla has planned to ramp up the production of the
customer model-3 electric car to reach at least 500000 by the end of 2020. However, for the

last two years, Tesla has issues number of bold prediction who has ghosted emerging
technology by resembling sci-fi novel to deliver colossal tasks (Rajeev, Pati, Padhi, and
Govindan, 2017). This continue for producing goods to world as solar power production by
figuring out that in 2017, the company started facing issues for its Model-3 and its supply
chain because of inappropriate vehicle battery design and issues with the automation. Only
220 model were delivered on 2017 for which there is a brutal statistics of nearly 400000
consumer, who has already paid by pre-ordering the car (Fernie, and Sparks, 2018). Investors
have become offended because of decreasing share price and the company has been reporting
losses. Furthermore, recently Elon Musk has announced and tweeted that the company must
buy back its equity shares and then create it as private company so that it can focus on
creating and producing 3S model Hussain, Rigoni, and Orij, 2018). Here musk has been
marked as unethical as he does not want anyone to enter into this decision and buy back
equity funds so that it can focus on its production. This issue of producing new model and its
associated issues, it is seen that misadventure on the part of supply chain issue on Tesla who
has such big brand name. The resolution to this problem has been given that a company
should not overpromise customers as Elon Musk has started the quick production to 500000
cars as an impractical goal. Although musk is an extraordinary leader but overpromising and
then underestimating inevitable problems in production, he has started employee’s robots on
the factory floor (Smartsheet, 2019). Now, Musk is trying not to make any announcements
regarding the production timeline. Musk has been suffering from lack of imagination at
different and then think about the lean management where waste reduction and continuous
improvements can be done to improve the world of innovation and product development.
Innovation is about technology and transplantation of high capital, regular physical product,
and complex (Yawar, and Seuring, 2019). Product development has failed in a sense where it
has not met the target, reworks in the manufacturing abounds, critical regulations, and

increasing costs with current`s burn rate. It is seen that the situation has become drastic day
after day as a trick, which suggest “production hell.” For the resolution, there is a need to
treat supply chain; lean product development is the best practise to include suppliers in its
design. It will lead to assessment of actual customer assessment of customer value against the
potential risks allowing the ranks to execute the risks of the company (Tate, and Bals, 2018).
Treat the supply chain properly because lean product development is the practise to include
suppliers in its design, integrate appropriate innovation, giving best possible design for
success, and reducing the risks of designers and suppliers (Barnett, 2018). Organic program
development and training in entire company is to collaborate and execute detailed plan. It
would employ basic engineering procedures where team can maintain composition to plan
and execute appropriate solution, which are expensive. Program development can control
risks, assess, and prioritise the work so that it can ensure and optimise detailed plan by taking
and executing plans (Supply Chain Game Changer, 2019). Since 2019, Tesla has been facing
challenges such as layoffs, lost consumer reports commissions, investigation in deadly
crashes, and accusing Musk when he violated the settlement of buy back of equity shares.
This chaos amongst the management of people is customer service where annual survey says
that Tesla consumer reports have stopped endorsement of model due to reliability concerns as
it faces production issues, delivery issues, and workforce layoffs. The chaos amongst people
is due to leadership issues wrapping up in bundle. Bizarre statements while earnings calls is
under justification, which is explosive and combative leadership style (Barnett, 2018).

(Source: 123RF, 2019)
With an aim to improve and enhance the issues related to supply chain, the organisation has
to conduct operations in such a way that it can aim sustainable competitiveness through
maintaining social, environment, and economic factors (Wise, 2016). Triple bottom line is
accounting framework, which comes up with holding company with combined standard
metrics of success and then measure environmental and social justice by including
consumption of resources, omission of pollution, and maintaining the water quality.
According to triple bottom line, the company has to work on three bottom lines named as
profit, people, and planet. These factors can support the company to support sustainability
goals (Tate, and Bals, 2018). Tesla can use lean practise as Green supply chain management
where profits and environment can go hand in hand. Commitment for lean practises is to do
with inefficiencies so that it can reduce waste and minimal impact on environment Hussain,
Rigoni, and Orij, 2018). The focus has continued with product flows, maintaining product

quality and standardisation contributing gradual decrease in waste level (Supply Chain Game
Changer, 2019). Green logistics can refer to logistics, which will implement green storage,
green circulation procedure, and green recovery. The company can connect with the supply
chain partners to manage well-integrated blueprint of carbon emissions (Lambert, and Enz,
2017). Fully managed and less harming supply chain can improve efficiency and user`s
experience improving application performance by enhancing user`s experience in scalable
and secure manner. Furthermore, lean management has few advantages, which the manager
can get by applying focus, improving efficiency and productivity, smarter procedure, and
better use of resources. Lean management is likely to create a stable organisation, which will
constantly help them to identify the actual issue and remove it by creating value, and creating
stable workflow based on actual demand (Supply Chain Game Changer, 2019).
Managing network can save the hassles of creating, monitoring, and finally maintaining
networks to have freedom so that they can focus on core business (Wise, 2016). As a
recommendation to improve the supply chain, it is seen that lean management can deliver
value from client`s outlook, eliminate waste, and improve continuously. To resolve the
supply chain issues for Tesla, it can encourage shared leadership, shared responsibility, which
depends on two pillars such as respect for people, and then continue improvements (Barnett,
2018). To improve and enhance the Tesla`s talent optimisation by defining and aligning
business strategies, identifying the leadership gaps, sorting the team, and current setting of
leaders designed in such a way that it can reach strategic goals (Wise, 2016).

In order to manage the new product developments, Tesla has to comply with sustainability
methods to achieve it so that it can continue teamwork, challenges, respect for people, and
kaizen change theory to manage the supply chain issues (Barnett, 2018).
Conclusion
From the above discussion, it is seen that supply chain management, logistics, and
warehousing of Tesla has been evaluated in such a way where it faces issues in new product
development and management of the people in the company. Recently the company has
promised to manufacture a particular number of cars but it was not able to accomplish it in
long term. Tesla follows an innovative supply chain with the concept of supply chain. It is
quite complex as each link is connected to direction and order to the next link, which can be
accomplished once first link is not done. Every link can add to costs such as transportation,
parts, and labour. Each product carry its own supply chain as organisation may use and create
suppliers for several products. Furthermore, total quality management is continuous
procedure, which can detect sand reduce errors in manufacturing, which has not allowed
Tesla to achieve the standard quantity, which it has targeted to achieve. The above essay
states that there is a greater need to apply total quality management, JIT (Just in Time), and
lean management to improve and enhance the quality of supply chain management. In this
way, Tesla will be able to sort its issues and solve them with the help of proper models.

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