Tesla

Tesla’s operation management constitute several strategies which aims at the efficient
management of operations, to ensure the increase in efficiency and productivity. Some of the
strategies are listed below:

Production strategy
Tesla's production strategy includes a high degree of vertical integration which includes
producing vehicle components as well as building proprietary stations where customers can
charge Tesla vehicles. Vertical integration is rare in the automotive industry, where
companies typically focus on engine manufacturing and final assembly.

Process
Tesla follows the Assemble to order (ATO) mode of production and customers generally wait
for 2-3 months for the delivery, wherein a high level of integration is involved with over 160-
170 specialist robots doing the job.

Product Development
Tesla can deliver great new functionality on their product rapidly because it uses Agile which
is a software development methodology, through this it can focus on smaller areas within a
shorter time compared to its competitors. The company generally announces new features
which are delivered within a month in comparison to their competitors who take a couple of
years to do the same thing.

Technology
Through innovation, Tesla have gained the success in improvement of the processes. For
example, Tesla has used technology to customize Model S for some markets such as China
and Japan. Tesla has also used technological processes to increase the comfort and flexibility
of driving by using mobile app that monitors battery voltage, motor control, diagnostics and
traction control etc.

Supply Chain Management

The company’s vehicles were initially built by Lotus in the United Kingdom then they were
flown to the United States to its customers. Tesla later acquired the NUMMI factory in
California. An assembly center was opened in Netherlands, which was supposed to assemble
the Model S manufactured by Tesla for their customers in Europe. The company is aiming to
be an Original Equipment Manufacturers (OEMs) which include managing logistics and
supply chain.

Inventory Management
Tesla earlier had challenges with inventory management as it had a significant number of
new vehicles that were unsold. In order to cope up with the situation, they followed following
measures:
• No traditional- franchise dealership
• Sold products directly to the customer
• By keeping very less inventory and essentially producing on demand, Tesla
minimised the amount of capital and risk tied up with the storing excess inventory.