Tesla Motors Operating Plan

Subject: Business
Type: Exploratory Essay
Pages: 8
Word count: 2042
Topics: Business Plan, Management, Marketing

Describe your company’s ‘supply chain’ (including strategic activities, tactical activities, reverse logistics, supplier network, etc…). 

Tesla Motor Company maximises its production through the use of integrated supply chain for its products. The strategic lessons without paying much attention to the location of the company or the industry itself are overwhelming. The company makes use of the reverse principles that makes its route to the market of which have stayed for decades. The Company operates against the concept of low-cost of labor that is associated with positioning of the manufacturing plants in an area with huge labor supply. It makes its production processes around California.  The concept is similar to Fords plan; a new investment worth $1.6 billion in Mexico (Menguc &Auth, 2010). The plant is 18 miles from its headquarters; the area has vast technical talents regardless of the expensive housing aspect. To balance the housing issue, the company invests in robotics that offer help to the workers making the production process more flexible.  The company uses high stickers for its products that have positive effects on the company. The company makes possible for people to embrace that affordable cars are accessible in the United States. The company is also making investments in supercharge stations around the country. The result of the investment would be making sure that the company’s clients have alternative sources of gases stations that are viable.  The company is also working towards shipment of digital rather than physical products.  The company, having designed a hybrid vehicle between mechanical and the digital technology, it is position to selling new capabilities to its consumers. The technical elements of the company’s stack are aimed at making its supplies faster, cheaper, clean and more easily accessible by customers. One can relate the company’s strategic plan to that of Apple that involved a stack of supply chain from semiconductors to retail.  The company is making use of rubber, iron ore, and glass to come up with adorable products such as the Model Ts as the final product.

What supply chain management information systems and/or technology does your company utilize to gain efficiencies?  

In the modern business world, a business must maintain an MIS system that will help in coordinating and streamlining the complex processes that the business has to undertake. The information system used by the Tesla Company for it to preform better include division of the company’s structure. The company had vast main categories that execute and make plans for functions that are to be done (Gonzales, 2010). The functions that are planned include communication, manufacturing, human resources, supply chain and design. This section only highlights the management information systems and the technologies used by the firm to maximize its output. Since procurement plays a crucial role in the manufacturing process, it is important when checking and suppliers handling is needed. This is done to ensure that timely deliveries are met for the goods and services offered by the industry. With the use of efficient Management Information Systems (MIS), the performance of suppliers is accessed easily. This makes the management decide on whether to proceed with sourcing the information from the suppliers. The procurement system has helped the company register significant success in the industry. The systems make it easer to obtain management feedback, which in return makes it efficient to evaluate the suppliers who meet the set performance target of the firm. Coordination with suppliers has therefore been eased making it possible for the firm to resolve issues that might occur. The problems are the main causative of delays in the company’s daily performance, hence when procurement systems are used; such flaws are eliminated boosting the performance of the firm.

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What are some performance metrics that your company utilizes to evaluate its supply chain? 

The company majors on the quality performance metric. The company main aim is to offer the best to the customers. Focusing on the quality of the products being produced in the industry makes the company stand a step ahead other firms producing products of the same nature by using traditional ways. First, the company has furnished the production and the engineering system of the company so that the firm remains competitive. Regardless of the firm being among the smallest manufacturing industries of automobiles, it struggles to remain in the large scale competitive market (Liao, Chuang & To, 2011). On the ways the firm attains its competitive share is making sure that traditional approaches are not employed during the manufacturing process of its automobiles. The firm has leveraged its unique software and hardware engineering capabilities that are used during the designing process of the vehicles. Customers are always after the best product in the market, with the company having an understanding of the concept, making use of traditional forms of manufacturing would mean the company lowering its supply chain. Hence focusing on a unique design of producing products rather than using supplied components makes it stand a chance to attract more sales in the market.  To boost the quality of the commodities, the company looks for suppliers who major on high power distribution and application that need high electric power. Keeping off from supplies outside the traditional space, and furthering the supply network for the companies dealing with power intensive products, the company develops its supply base. This in return brings in new players hence contributing to competitive pricing (Tesla Motors, 2010).

Describe some uses/purposes of forecasts in your business. In other words, what benefit does your company derive from forecasting?  

It is mandatory for a business to adjust relative to the market demand. In order to make wise decisions the firm must make prediction about the state of the market in the future.  The accuracy of the forecast determines the potential effect of the business either to drag and forge ahead. Business forecasting has helped that company evade the losses attributed with overstocking and under stocking. With the firm producing a number of automobiles that fits the market gap, fewer resources go into waste. The ability to predict the future occurrences with precision has helped the firm win by offering what the market demand with respect to time. In cases where the business objectives seem to be over doing the market requirements, the organization is able to redesign the hypothesis once more to a state that is comfortable with the market. The company’s ability to rely on the future outcomes and, it has been able to predict future events with minimal errors. This has greatly influenced Tesla’s growth as it coincides with the current market gap. 

What methods does your company utilize to forecast? 

Tesla uses two methods to make its forecast. First, it uses a model that is highly parameterized and non-linear. It also makes use of a time series filter to make its forecast. The non-linear method involves stratifying of the samples between the winter and summer seasons, the data is furthermore divided into sections of weekdays and weekends. The model makes use of the variable parameter in cases where the explanatory variables tend to be significant relative to the operational and statistical measures (Eberhard & Tarpenning, 2006). The response of dependent variables remains inconstant. For instance, the energy demand in relation to the temperature may not be similar across the week or hours in a day. Similarly, linearization makes a recognition that the energy requirement to the relevant variables remains to be non-linear. 

Describe how your company manages (and/or tracks) its inputs and/or finished goods inventory? 

First, the company maintains an inventory having more raw materials that the finished products. This makes it possible to deduce that the company does not have an inventory problem.  The company’s raw materials are at an increase with a growth rate of 3% while on the other hand the finished products.  The company had an increase of about 12.3 % of raw materials while the finished products go down by 32.3%, a prove that the company is selling its products at a higher rate as shown by the table below. Most of the inventories are human managed.

Describe your company’s aggregate operations plan (including any variables that are considered)

Tesla organization plan is designed to offer support to the continuous growth of the firm. The company employs a traditional approach giving attention to the company’s limited approach towards the development of the production facility. Being an electric motors produce, the firm takes advantage of its corporate structure to govern the organization’s control. The company on the other hand utilizes fully the implementation ability for new strategies. The operations plan enables the organization managerial group to exercise full control of the firm despite the growth in international operations (Eberhard &Tarpenning, 2006).  The firm has various features such as the global hierarchy, minimal regional divisions, and global centralization.  Global hierarchy incorporates functional groups that help in overseeing both the domestic and international tasks. The primary aim of the structure is making sure that the organization maintain strict follow-up of the processes being carried out. Global centralization is involved in taking control of the organization depending on the decisions accrued to by the central team. Each office head takes part on the formation of the central headquarters, which are thereafter involved in controlling the overall processes. The Minimal Regional Divisions are involved in implementation of various strategies. They are also entitled to monitor marketing campaigns and to participate in organizing financial reports and records. 

Describe your company’s scheduling process, and/or any constraints/obstacles that add complexity to scheduling at your company

The scheduling process of the company is carried with a lot of care considering that the failure of a single process can fail the firms operations. Short-term schedules are focused on as they help to determine the amount of resources to be utilized within a specified period of time. The managers (operations) address the issue with reference to the market structure within the period.  Schedules are integrated with automated process for better performances. As for the market scheduling, the company takes concentrates on the actual demand by the market. The data received is used as a guide in the production process of the automobiles. However, errors found in the process have the potential to cause inefficiency to the firm. To fight the possibility of errors schedules are intertwined with the automated systems. Productivity is therefore enhanced within the company.

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Based on your research and analysis, describe your short-term (0-5 years) and long-term (5+ years) operations recommendations for this company

Based on the research done and the findings about the company, it is possible to give the following recommendations. With reference to the structure of the company, it is possible to identify a point that the company can implement the IS: integration and coordination. Accounting the analysis of the established information systems, the company can create coordination as well as integration among the different departments. This would help eliminate the inefficiencies on the firm’s performance that are triggered by the forms complex bureaucracy (Berdichevsky, 2006).

Integrated Design system:  it is true that the main agenda behind designing new autos is to meet the market expectations. Therefore, it is important to identify the useful of marketing individuals. Through building of the system, the engineering and designing duties are shared among the marketing personals as well as the technical group (Berdichevsky, 2006). The way the new design behaves in the market- by use of the integrated system, mistakes and decisions are derived over a short time giving room for production of a new design that meets the market expectations; this would result into an increase on the turn around period for the company.

Automated system for the Inventory and supply chain management:  with the knowledge that the company posse’s connections with other companies in its car production process, it makes the car industry a specialized industry.  The fact makes it possible to acclaim that there are some areas that are set through a consensus between the organizations. The innovation would increase to number of vehicles produced, and innovation. Although it result to a problem in inventory keeping, to solve the issue, making an automated supply chain would make the  company increase its output, avoid problem with supply, and more importantly reduce the number of waste of the supplies (Berdichevsky, 2006).

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  1. Berdichevsky, G., Kelty, K., Straubel, J. B., & Toomre, E. (2006). The tesla roadster battery system. Tesla Motors, 1(5).
  2. Eberhard, M., & Tarpenning, M. (2006). The 21 st Century Electric Car Tesla Motors. Tesla Motors.
  3. Eberhard, M., & Tarpenning, M. (2006). The 21 st Century Electric Car Tesla Motors. Tesla Motors.
  4. Gonzalez, Catherine; Parker, Crystal; Stevens, Jason; Wilkinson, Sarah (2010). Tesla Motors Global Business Plan.
  5. Liao, C., Chuang, S. H., & To, P. L. (2011). How knowledge management mediates the relationship between environment and organizational structure. Journal of Business Research, 64(7), 728-736.
  6. Menguc, B., & Auh, S. (2010). Development and return on execution of product innovation capabilities: The role of organizational structure. Industrial marketing management, 39(5), 820-831.
  7. Tesla Motors webpage. About Tesla. 2010. Retrieved from https://www.teslamotors.com/about.
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