An Analysis of Tesla's Supply Chain Management for Model 3

This report provides a comprehensive analysis of Tesla's supply chain management, specifically focusing on the Model 3. It delves into product operations, examining the sourcing of raw materials, parts procurement, and manufacturing processes. The report explores the effectiveness and ineffectiveness of Tesla's operations, highlighting the company's approach to vertical integration and its use of lean management principles. It also discusses the role of technology and innovation in Tesla's supply chain. The report further provides recommendations for improvements, including suggestions for enhancing technological competencies, monitoring employee performance, and conducting market research. The conclusion emphasizes Tesla's innovative approach, efficient production operations, and the importance of adapting to market trends, positioning Tesla as a leading company in the automobile sector. The report also references the importance of sustainable practices within the supply chain.

COVER PAGE
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EXECUTIVE SUMMARY
The supply chain refers to the operations which runs an organisation which are needed fir designing,
making, delivering and service products and services for the consumers. Performance drivers which
include production, inventories, location, transport, and information is manage well to increase the
capabilities for given supply chain. It is essential for the organisation to have an effective
performance measure to continuously improve its supply chain strategies. The report is based on
Tesla supply chain management which focuses on the model 3 of Tesla.
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TABLE OF CONTENTS
EXECUTIVE SUMMARY...........................................................................................................................2
Introduction...........................................................................................................................................4
Product Operations Management.........................................................................................................4
Effectiveness and ineffectiveness in products operations process........................................................5
Lean management.................................................................................................................................6
Recommendations for improvement in supply chain............................................................................6
Conclusion.............................................................................................................................................6
References.............................................................................................................................................7
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Introduction
Tesla Motors is a renowned brand in the car manufacturing industry, and it competes mainly in
product leaderships. It constantly innovates and introduces new products, which has a lasting impact
on the customers' lives. Tesla manages to dominate the niche market by focusing on electric-
powered vehicles (Teece 2018). Tesla 3 model is the focus product in the report on supply chain
operations. Tesla focuses on stylish and unique products from other automobile companies and
allows flexibility in their supply chain process. The increased productivity of Tesla is dedicated to
efficient supply chain management. Successful supply chain management allows the organization to
make essential strategic decisions in the right way to ensure smooth operations of the business.
Product chosen and why 250
Operations /Processes involved in Producing the Product 500
Supply chain process for product with diagram 500
Diff organization involved in supply chain and their communications 500
Product Operations Management
Tesla starts the operations by exporting raw materials such as steel, aluminum, combat, and nickels
from the region that the operation takes place (Gianesello., Ivanov and Battini 2017). They do not
have any primary supplier for the raw materials, as it has more benefits and can acquire new raw
materials from the local suppliers. It is a way to acquire raw material, which can be quitter
expensive. Still, it lowers the cost of transportation of materials and allows Tesla to build
relationships with the local suppliers.
Apart from the raw materials, Tesla purchases more than 3000 parts which are sourced from 350
suppliers. They have a cordial relationship to the suppliers of the components used in the vehicle
purchased. If one supplier is not able to deliver, they have another supplier who delivers the
components. The raw materials and parts are transported to Tesla facilities for the manufacturing of
vehicles and assembly operations. The raw materials are intended for lithium in cell batteries and
transported to the Gigafactory. Then these raw materials are stored in the leased warehouses near
the manufacturing facilities, which is based on the consumer orders. Tesla approach of vertical
integration in the supply chain permits certain manufacturing components, which is unique to the
vehicles Tesla 3 model taken into the study and assembles the suppliers’ parts and materials at the
Tesla Factory.
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Vehicles are sold to the consumers directly by Tesla through a network of Tesla owed dealership
(Johnson and Reed 2019). These company-owned stores help to facilitate retail growth as they are
located in the highly visible metropolitan area.
Modern product operations management involves four theories, business process redesigning,
reconfigurable manufacturing system, lean manufacturing, and six stigmas (Fan and Stevenson
2018).
In the domain of business process or product redesigning, we take Tesla 3 model into consideration.
The Tesla 3 model car is one of the most exclusive designs and keeps updating the features as time
changes.
In terms of reconfiguring manufacturing system, Toyota the closest competition, is the leader in lean
manufacturing. Elon Musk of Tesla believes in making it manufacturing better by installing robots
and packing the cars to the assembly line (Sull and Reavis 2019). Musk is convinced of the fact that
Tesla can build more models like the successful Tesla 3 with the most productive plant.
Six Sigma focuses on reducing process variations and enhancing process controls, whereas lean
drives the wastes away and promotes standardisation of the work.
The future of Six Stigma takes three days to build a car which starts from the raw to the finishing
line. It practises the Kaizen system for improvements. The robots are built with precision and
repetitions are integrated with actual intelligence given by human engineers who are all in-house.
They are intelligent, educated and educated engineers on the staff who improve the automation.
Tesla creates in one central location, and the set-up is extremely efficient and effective. By
implementing the Tesla Six Stigma, Tesla successfully reduces the time for processing, eliminates the
chances of defects, there is no overproduction, the talent is utilised, and no extra processing adds
value.
Effectiveness and ineffectiveness in products operations process
Tesla is the only manufacturing firm that offers the highest-selling variant model 3; the company
unveiled the flagship model Roadster to be launched in 2020. Tesla operations mainly consists of few
points.
The first factor is Goods and Service Design.
This is an electric car company, which has innovation and high-tech materials which it uses for
manufacturing. Long-range batteries and solar panels are utilised. Operations managers constantly
focus on parts cost pf the equipment’s to produce vehicles in the organisation; innovative designs of
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the production is implemented for cost efficiency. The main reason behind the design for Tesla
focuses on pure electric vehicles and traditional automobile designs.
Quality management is another vital product operation process effectiveness. Customer’s
satisfaction is dependent on product quality. Operation managers execute different strategies to
improve the quality of the vehicles. Elon Musk decided to manufacture the parts of the plant instead
of directing it to a third party company. The company always conducts quality reviews and executes
enhancements in the process to improve quality. These methods increase the workload on
managers, but it moves the quality.
The process, capacity design and choosing locations. The design focuses on business process and
product standards. Tesla has been innovative in implementing automation and increasing efficiency
in production.
Layout designing and strategies: The distance between plants for the intermediatory process are
minimal in production. Tesla power plant Nevada Gigafactory is constructed to supply power to their
production unit in Fremont, California. The plants are designed in a way that reduces costs for
electric car production.
Tesla inventory management has its ineffectiveness along with effectiveness too. Tesla has a
complete integrated supply chain management system. It has a fully operational plant in California
which illustrates a vertical integration system. Tesla has a supply park just adjacent to the plant to
manufacture car parts at low cost and increase the supply time. Tesla needs an opportunity to
leverage the projected demands for lithium batteries for reduction of the costs faster than the
previous.
Another reason it needs to redesign the plant is reducing the costs faster than the status quo for
achieving economies of scale and logistics waste.
The suppliers state that Tesla has a competitive and impressive manufacturing state (Liu 2021).
Panasonic is the current supplier of Tesla, and it has to be a partner in making the plant in California
where it makes Tesla 3 model. It needs to push the auto industry forward in a disruptive manner to
challenge the automobile makers to keep up.
At present, Tesla is facing hazards with the model 3 production. The company delayed the target
productions due to lack of experience, and some analysts doubt Tesla capabilities. It never faced
mass production. However, Elon Musk believes that once it reaches 5000 cars with six sigma
manufacturing, it will surplus the financial breakdown.
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Lean management
Tesla aims at mass production of electric car with lean management and producing affordable cars
to meet the huge demand that promises pollution-free transportation (Fernandez 2018). The launch
of mass-market Tesla Model 3 has been defined by many unfilled orders exceeding abilities for the
company to deliver.
Tesla should follow the sustainable supply chain practice to focus on the triple bottom approach
(Aybaly et al. 2017). The three facilitation of the approach are Transparency, Strategy, and Risk
Management. Tesla should aim to adopt the proactive supply chain system. It will help Tesla
manager the risks and contingencies by implementing lean management strategies, reducing lead
times, and reducing carbon footprint.
Tesla must invest in material science, especially in regards to new sustainable battery productions in
lean manufacturing without solely relying upon lithium.
Recommendations for improvement in supply chain
The following recommendations can be implemented at Tesla for improving the supply chain
operations in the market.
They should focus on developing the competencies in using the software and technological
advancements at the workplace.
The management should also focus upon monitoring the employees' performance regularly and
reducing the level of mistakes, allowing them to enhance the quality of the product.
They should also perform intensive market research to ensure that they know the trends which exist
in the market. It enables them to understand the requirements and needs of potential customers.
Conclusion
It is clear from the study that Tesla supply chain management is known for its high-quality
production of cars, especially the highest-selling Tesla 3 model. Innovation and the use of
technologies are the keys to ace the competitive industry, which has been implemented and
executed perfectly by Tesla.
Tesla is one of the best-known companies in the automobile sector. Due to the efficient production
operation and supply chain with the right strategies that ensure that the workforce is prepared for
accepting new trends in the market.
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References
Aybaly, R., Guerquin-Kern, L., Manière, I.C., Madacova, D. and van Holt, J., 2017. Sustainability
practices in the luxury industry: How can one be sustainable in an over-consumptive environment?:
Sustainability in the automotive world: The case of Tesla. Procedia computer science, 122, pp.541-
547.
Fan, Y. and Stevenson, M., 2018. A review of supply chain risk management: definition, theory, and
research agenda. International Journal of Physical Distribution & Logistics Management.
Fernandez Garces, P., 2018. Tesla Motors and Lean Manufacturing.
Gianesello, P., Ivanov, D. and Battini, D., 2017. Closed-loop supply chain simulation with disruption
considerations: A case-study on Tesla. International Journal of Inventory Research, 4(4), pp.257-280.
Johnson, A. and Reed, A., 2019. Tesla in Texas: A Showdown Over Showrooms. SAM Advanced
Management Journal, 84(2), pp.47-56.
Liu, S., 2021, March. Competition and Valuation: A Case Study of Tesla Motors. In IOP Conference
Series: Earth and Environmental Science (Vol. 692, No. 2, p. 022103). IOP Publishing.
Sull, D. and Reavis, C., 2019. Tesla’s Entry into the US Auto Industry.
Teece, D.J., 2018. Tesla and the reshaping of the auto industry. Management and Organization
Review, 14(3), pp.501-512.
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